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Commitment to DEI is a leadership imperative

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The research is clear: Diverse teams and inclusive work environments produce better results. 

A 2018 report from Deloitte revealed that diverse teams are twice as likely to meet or exceed financial targets, three times as likely to be high-performing, six times as likely to be innovative and agile, and eight times more likely to achieve better business outcomes than monochromatic teams. Research from CNBC also shows that 78% of the workforce says it’s important to work for an organization that prioritizes diversity and inclusion, leaving employers with happier workers and better retention. 

Yet, despite all the well-researched positive attributes that a demonstrated commitment to diversity, equity and inclusion can bring to the workplace, the economy and to a person’s overall well being, DEI progress is stalling. In fact, leadership consulting firm DDI noted, “Many companies are taking steps backward, to the brink of a DEI backslide.”

This comes at a time when the accounting industry is grappling with a critical challenge: finding talent. Demographic trends and financial hurdles have led to fewer people entering the profession, resulting in over 135,000 anticipated job openings through 2031, according to the U.S. Bureau of Labor Statistics. However, research from the Institute of Management Accountants reveals a concerning statistic: one in 10 accounting professionals has left the profession due to a lack of inclusion and equity. With talent retention being paramount, neglecting DEI initiatives poses a significant risk that our profession cannot afford to overlook.

We must prioritize DEI to combat the talent shortage. A new report by the Massachusetts Society of CPAs (MassCPAs) offers valuable insights and best practices to help firms and organizations maintain their commitment to DEI. Here are five:

  1. Drive meaningful change by establishing DEI as a business strategy and embedding it in all parts of the business. This approach tells employees their leaders are committed. It establishes momentum and drives sustainability. 
  2. Establish a DEI philosophy that is both human-centered and systems-oriented. The human element emphasizes the power of personal connection and equips individuals with greater awareness of bias and tools for interventions, while the systems approach ensures that biases in processes like recruitment, hiring and promotion get addressed.
  3. Identify problems and solutions that are unique to our profession and your organization. The accounting field must address systemic barriers that inhibit access to internships for students from underrepresented communities.
  4. Nurture an authentically inclusive workplace culture. We interviewed numerous young career entrants for the report. They consistently emphasized the importance of work cultures that make them feel valued, offer mentoring, maintain active employee resource groups, and make space for honest conversations about the differences.
  5. Hold everyone accountable. Organization-wide accountability, starting at the top, drives responsibility and ensures action. Measures can be as varied as manager performance objectives linked to DEI, transparency about setbacks, and all-employee celebrations of success.

In every industry, and especially in accounting, leaders have an inclusion mandate. As we work to leverage DEI strategies that support workers and enhance performance, let’s start by communicating shared values that most people can agree on: Diversity means we cast a wide talent net to hire a representative group of qualified candidates. Equity means we craft systems and processes that enable everyone to do their best. And inclusion reminds us to create cultures of belonging where all employees can thrive.

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Accounting

How to Reconcile Cash Flow Statements with Bookkeeping Records

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Reconcile Cash Flow Statements with Bookkeeping Records

In the world of financial management, reconciling cash flow statements with bookkeeping records is an essential process that ensures financial accuracy, transparency, and alignment. Far from being a routine task, this practice validates financial reports and offers deep insights into an organization’s financial health. Let’s explore the steps and strategies involved in this critical reconciliation process.

Understanding the Reconciliation Process

At its heart, reconciling cash flow statements involves comparing them with the general ledger and bank statements. This three-way alignment ensures that all cash movements are accurately recorded and categorized. By identifying discrepancies, businesses can maintain trust in their financial data and make more informed decisions.

Step-by-Step Reconciliation

A systematic approach to reconciliation is vital. Start by confirming the opening and closing cash balances in the cash flow statement against the corresponding balances in the ledger and bank statements. Next, work through the three sections of the cash flow statement: operating, investing, and financing activities. This methodical process ensures every transaction is accounted for and helps isolate variances quickly.

Leveraging Financial Software for Automation

Advanced financial software can significantly simplify the reconciliation process. Many platforms now include automated tools that flag discrepancies, generate exception reports, and streamline adjustments. These technologies not only save time but also reduce the likelihood of human error, enabling finance professionals to focus on analysis and decision-making.

Addressing Non-Cash Transactions

Non-cash transactions such as depreciation, amortization, and unrealized gains or losses require special attention. While these items do not directly affect cash balances, they are integral to accurate financial reporting. Ensuring these transactions are correctly recorded in the cash flow statement without artificially altering cash totals is crucial for maintaining transparency.

Maintaining Accurate Timing

Timing discrepancies are a common source of variance during reconciliation. To prevent mismatches, ensure that all transactions are recorded in the correct accounting period. This practice not only avoids artificial discrepancies but also provides a clear and accurate picture of cash flow for the designated timeframe.

Documenting the Reconciliation Process

Thorough documentation is a cornerstone of successful reconciliation. Every adjustment made during the process should be explained and supported by detailed notes. This practice creates a clear audit trail, simplifies future reconciliations, and ensures transparency during external audits.

Benefits of Regular Reconciliation

Frequent reconciliation offers numerous advantages. It ensures that financial statements remain accurate and compliant with regulatory standards, strengthens internal controls, and enhances decision-making capabilities. Moreover, regular reviews can uncover inefficiencies, detect fraud, and provide early warnings about potential cash flow challenges.

Conclusion

Reconciling cash flow statements with bookkeeping records is more than a compliance requirement—it is a strategic process that safeguards financial integrity and supports sound decision-making. By adopting a structured approach, leveraging technology, and paying close attention to non-cash transactions and timing, businesses can achieve financial alignment and transparency.

For finance professionals and business leaders, mastering this process is key to maintaining accurate financial records, building stakeholder trust, and driving sustainable growth in today’s competitive business environment.

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Accounting

Gig workers unaware of lower Form 1099-K threshold

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Millions more taxpayers will be receiving the Form 1099-K in the mail this year for the first time if they were paid $5,000 or more last year through a service such as Venmo, PayPal, Cash App, StubHub, Etsy and Airbnb, and most won’t be expecting it.

New research from tax automation provider Avalara found 61% of gig economy workers are unaware of recently lowered 1099-K reporting thresholds aimed at capturing unreported online sales income, Nearly three-fourths (73%) of the gig workers surveyed don’t know the payment threshold above which they would receive a Form 1099-K and be required to file an IRS tax return.

Gig workers will be looking for advice from a tax preparer. Over 20% of the survey respondents plan to pay a tax professional for the first time as a result of 1099-K reporting changes and complexity.

Last year, the IRS extended its transition relief for the new Form 1099-K information reporting threshold, setting it at $5,000 for 2024 and $2,500 in 2025 before reaching the statutory level of $600 in 2026 and thereafter. The previous threshold was $20,000 in gross proceeds and over 200 transactions, but it was lowered to $600 and any number of transactions by the American Rescue Plan Act of 2021. While there have been a number of bills introduced in Congress to raise the threshold, none of them has passed so far, prompting the IRS to repeatedly delay and plan to phase in the requirement, raising the ire of some lawmakers who have complained the IRS doesn’t have that authority.

The Avalara survey found that while 61% of respondents claim to be knowledgeable about Form 1099-K and its purpose, an equal proportion of 61% don’t know the 1099-K reporting threshold is lower this year and subsequent tax years. For subsequent tax seasons on the way to a $600 1099-K reporting threshold, only 18% surveyed could identify the correct threshold for 2026 and the final $600 reporting threshold for the 2027 tax season.

The respondents offered various predictions for how they would fare from the new income reporting requirements: 37% believe their business will be profitable following tax season, 36% responded they’ll likely break even, and 17% predict they’ll lose money due to the IRS changes.

More than one-third (37%) of gig workers surveyed said this is the first year they’re receiving a 1099-K, so 21% of respondents plan to engage a tax professional for the first time. Another factor in seeking professional advice could be the number of gigs these workers are juggling: 75% of survey respondents have two or more sources of income, 45% have three or more, and 16% have four or more. Accountants and bookkeepers will be essential to helping 1099-K newbies sort out the reporting and tax implications of multiple income sources.

The survey also indicated how respondents plan to move forward after tax season. To avoid crossing the $2,500 1099-K threshold next year, over 20% of workers expect to be quitting one or more of their gig economy jobs and 19% are changing their earnings strategy, while 15% will be using tax software for the first time. Another 20% intend to take on more under-the-table work, and 15% will switch to Zelle to avoid IRS reporting rules associated with PayPal and Venmo. Some 40% of those surveyed say they’ll take on one or more additional gig economy jobs. And 16% of survey respondents said they will be leaving the gig economy altogether and pursuing different work.

“Our survey data reveals the urgent need for basic knowledge and orderly direction on the part of gig economy workers to determine how best to comply with the lowered 1099-K digital payments threshold,” said Avalara general manager Kael Kelly in a statement Thursday. “This scrappy segment of our economy demonstrates DIY drive in creating a living from engaging in multiple jobs, non-traditional work, and sometimes essential services that support how consumers want to buy and receive goods and services – and they’re now faced with the additional challenge of sorting out new, last-minute tax regulations and reporting requirements. Businesses of all sizes, including independent workers, need a fast, robust, easy, and affordable way to e-file 1099 forms, and that capability is within reach through modern cloud software.”  

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Accounting

ACCA foresees global economic growth in 2025

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The global economy is poised for “reasonable, but not particularly exciting” growth this year, yet uncertainties abound, according to a new report from the Association of Chartered Certified Accountants.

The report, released Thursday, is the second edition of the ACCA’s annual economic outlook. 

“The global economy should continue to grow at a reasonable, but not particularly exciting pace in 2025,” said ACCA chief economist Jonathan Ashworth in the report. “But it is a world marked by significant uncertainty. The risks are predominantly on the downside, amid potential changes in U.S. trade policy, a challenging geopolitical backdrop, political uncertainty and rising government bond yields.”

Economist Charles Goodhart suggested the U,S. economy may perform strongly in 2025, but Europe and the U.K. could struggle. Goodhart believes inflation could fall in the short run but will probably rebound in 2026 and 2027. 

“My guess, on which I would not place a great deal of weight, is that the U.S. economy will do very well in 2025,” he said. “Both Europe and the U.K. will do relatively badly. Not only will higher U.S. import tariffs be a problem for Europe, but higher U.S. tariffs on imports from China will probably mean that China will want to export more of its goods to Europe, at a time when Germany’s business model is already under extreme stress.”

The emergence of AI agents promises new productivity breakthroughs, but hybrid solutions integrating other technologies will be crucial for sustained value, according to the report.

The ACCA interviewed seven CFOs from across the globe in various sectors for the report. While the interviewees did not appear to be expecting a notable slowing in global growth in 2025, there was some caution given the significant global uncertainty, including that related to the policies of President Trump. 

“Technology, particularly AI, continues to be a priority, with businesses recognising both its potential and disruptive challenges,” said the report. “A wide range of risks were highlighted, including inflation (and changes in the price of important commodities), policy changes in large economies, cybersecurity, exchange rate movements, supply chains, climate change, social tensions, geopolitics, and fast-changing consumer habits. The latter two were also cited as opportunities. A recurring theme among  CFOs is the need for agility, innovation and resilience in navigating an uncertain economic landscape.” 

The ACCA also releases a quarterly Global Economic Conditions Survey in conjunction with the Institute of Management Accountants. Most recently in the fourth quarter of last year, they found economic confidence growing among accountants in the U.S., but plummeting globally.

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