Accounting
Inside Schellman’s journey to provide certification for ISO 42001 AI framework
As a technology assurance specialist, Top 50 firm
ISO 42001 sets out a structured way for organizations to manage risks and opportunities associated with AI, balancing innovation with governance. Desai said that while there have been other AI-related standards, this is a comprehensive framework covering multiple aspects of the technology.
The rise in AI-related regulatory measures over the last few years — from the White House
“So, we had to get accredited. It’s not about checking the box or offering another service but all about helping our clients responsibly leverage emerging technology. We want to be a true partner to organizations. We’re not check-the-box auditors. We want to make sure our clients can navigate the opportunities and risks of AI adoption,” she said.
What followed was a major undertaking that lasted from the beginning of February to around the end of September, working directly with the ISO’s U.S. representative, the American National Standards Institute’s National Accreditation Board (ANAB). The process involved partnering with organizations to audit while the ANAB watched to see if they were capable of acting as a certification body.
Schellman first partnered with Evisort, an AI-driven contract management company, to undertake the “rigorous, detailed” process that involved auditing the company’s AI governance, then getting and responding to feedback from ANAB and adjusting as needed. This process went through several iterations before then doing it all again with another company, StackAware, which itself is an AI risk solutions provider. Once the audits were done, ANAB then did an office visit where they examined Schellman’s own policies and procedures as well.
While all this was going on, Schellman was also working to comply with the framework themselves, as the firm deploys its own custom AI tools in its work. “We eat our own dog food,” said Desai, so the firm needed to train its own people in the standard and all the necessary processes, too.
This was the first time anyone had gone through this process, including the ANAB, and as such it was a learning process for all sides. For example, at first the certification process required companies to make their algorithms transparent, which Desai said few organizations would ever want to do, as algorithms are often proprietary information.
“At the end of the day, they’re not practitioners. We’re practitioners and our clients are innovators and the last thing that frameworks and laws should do is stifle innovation. So we had to make sure we pushed back on certain things,” she said.
In this case, the ANAB eventually agreed with Schellman on this issue, as it is a matter of intellectual property, though without algorithm transparency there were questions of how to account for things like bias and hallucinations without revealing proprietary information.
“So we had this kind of back and forth and that is why [this feedback] is really important. Now I understand why ISO does these witness audits, it’s very important to have the practitioner and operator saying, ‘This doesn’t work, this is physically impossible for us to meet this standard without potentially being detrimental to our business,'” she said.
Ready to meet demand
With the accreditation now granted, Schellman became the first ANAB-authorized body to provide independent third-party certification for compliance with ISO 420001. So, for example, if a client with this certification is producing large language models, they can tell their own customers that they are meeting global standards and have controls in place for responsible AI. This commitment to responsible innovation can give them a competitive edge, as the certification speaks to a certain level of trust and differentiation in a fast-moving market.
While technically 42001 certification is now available as a standalone service, Desai noted that modern AI models typically touch other domains like cybersecurity, privacy, operational resilience and data integrity. She anticipates, then, that this will usually be bundled with other certification processes, such as compliance with ISO 27001, which concerns information security.
There is already significant demand for this ISO 42001 certification. Desai said the firm already has 26 contracts signed with clients who want to undergo the process themselves. People interested in this, she said, generally fall into three categories: those who are building AI on top of their services, AI developers themselves, and those who are building and running their own bespoke models, though she added that it seems everyone is talking about it these days.
For instance, one client is a very large real estate company with buildings all over the world. They have access to AI systems that can identify how many square feet a tenant actually needs. While she said it does not fit the typical profile, people are concerned about the data collection implications of this AI system and so the company believes certification can help quell some of those worries.
Desai doesn’t think these sorts of worries will be going away anytime soon, which underscores the importance of certifications like this. The technology is moving fast, and regulations rarely keep up the pace.
“We went from regular AI to generative AI and now agentic AI — none of these frameworks talk about agentic AI — and I can say people are probably not trained for the next thing… . The way we audit today will be very different from how we audit next year because I think the technology will really change as well,” she said.
Schellman is currently in the process of getting similar accreditation in the U.K. as well.
The Internal Revenue Service may be facing steep cuts in its budget with the win on Tuesday night of President-elect Donald Trump.
Funding for the IRS has become a political issue, with Republicans successfully pushing to cut the extra $80 billion funding from the Inflation Reduction Act of 2022 already during battles over the debt limit.
“I think IRS funding is at significant risk right now, both the annual appropriation funding as well as the remaining IRA funding,” said Washington National Tax Office principal Rochelle Hodes at the Top 25 Firm Crowe LLP.
Win McNamee/Getty Images
So far, Republicans have mainly called for cuts in the IRS’s enforcement budget. The increase in enforcement is supposed to be used to pay for the cost of the IRA, but the funding increase is also supposed to be used for taxpayer service and technology improvements.
“The only question for me on funding is, will any portion of the funding remain available for taxpayer service-related improvements at the IRS?” said Hodes.
The Direct File free tax prep program that the IRA funded could also be targeted, even as the IRS makes plans to
“I don’t think that will be in the sight line, but the IRA money is part of what’s being used for that,” said Hodes. “As we’ve seen in appropriations bills, there could be language directed at that, that no money can be spent on that initiative.”
A more important priority will be the extension of the expiring provisions of the Tax Cuts and Jobs Act of 2017. “Getting TCJA resolved is going to be the first priority,” said Hodes. “The second question is, how will the cost of that endeavor be determined. If the view that is held by several Senate Republicans wins the day, then the cost of extending the expiring provisions will not be counted under those particular budget rules that are created dealing with extending current policy. If, however, that view is not adopted, then there is a high cost just to TCJA, and so any other provisions with cost will sort of stretch the boundaries of what many in Congress would be comfortable with. I think it will be necessary to see how the scoring goes for extending TCJA provisions.”
Trump has also called for exempting various forms of income, such as tip income, Social Security income and overtime from taxes.
“I also am not sure which of the ideas that were put forward on the campaign trail, other than extending TCJA, are provisions that have true champions who will want to pursue those,” said Hodes.
That may depend on who ends up in Congress, with several important races in the House yet to be decided.
“Although the House remains undecided, the Republicans’ control of the Senate makes it much more likely that Republicans will be able to implement many of Trump’s proposed tax policies, such as making parts of the expiring 2017 TCJA provisions permanent,” said John Gimigliano, principal in charge of the Federal Legislative & Regulatory Services group within KPMG’s Washington National Tax practice, in a statement. “The pressing question now is how the Administration and Congress will fund such an ambitious agenda and what additional measures they might introduce, such as eliminating taxes on tips and overtime. These items will only add to the hefty $4+ trillion price tag they face. Until then, taxpayers should continue to stay apprised of developments and scenario plan for the different outcomes to get ahead.”
Over half of accounting and tax firms plan to increase fees across all services in 2025, according to a new survey.
The
Some 57% of the respondents plan to increase fees across all services. With regard to tax preparation specifically, 90% of the survey respondents plan to increase fees for individual tax returns, and 87% plan to increase fees for business tax returns. In addition, 70% plan to increase fees for tax planning and advisory services;. 85% plan to increase fees for bookkeeping and accounting services; and 76% plan to increase fees for CFO and controller services.
“While accounting firm owners are embracing price increases in 2025, the report shows that the majority (around 58%) cite rising business costs as the main motivator,” said Ignition global president Greg Strickland in a statement. “Only 5% are raising prices to increase revenue, which indicates an opportunity for firms to leverage pricing as a strategic tool to unlock revenue growth.”
The report found a shift from hourly billing to fixed-fee and value-based pricing, with 79% of the survey respondents indicating they use fixed-fee or value-based pricing for bookkeeping and accounting services. Over half (54%) use fixed-fee or value-based pricing for tax preparation services, 67% use fixed-fee or value-based pricing for tax planning and advisory services, and 75% use fixed-fee or value-based pricing for CFO and controller services.
The report benchmarked current fees for tax, accounting and advisory services, which varied based on firms’ annual revenue range. The biggest variation in pricing was for tax planning and advisory services in particular. For firms with revenue of as much as $250,000, approximately 23% said they charge less than $500 for these services, while a nearly equal number (around 21%) indicated they charge more than $2000.
Illinois voters approved a nonbinding proposal to add an extra 3% levy on annual incomes of more than $1 million, which could fuel a new effort to raise taxes on the state’s highest earners.
The ballot measure – which was an advisory
“The vote is a gigantic step in the right direction,” said former Governor Pat Quinn, a supporter of the measure.
Daniel Acker/Bloomberg
While the proposal has no legal effect, the vote opens the door to a new debate over ramping up taxes on the rich even as Illinois and Chicago, its biggest city, contend with population declines and a string of departures by major companies and wealthy residents. In 2020, voters rejected a separate measure backed by Governor JB Pritzker to replace the state’s flat tax on incomes with a graduated system that would raise rates on higher-earners.
The Pritzker plan drew staunch opposition from billionaire financier Ken Griffin, who donated about $50 million to help torpedo the initiative. Griffin then left Chicago for Miami in 2022, moving the headquarters of his Citadel empire there as well. Companies from Caterpillar Inc. to Boeing Co. have also departed amid rising concerns over public safety, regulation and taxes.
This year’s referendum asked voters if the Illinois Constitution should be amended to create the additional tax on income over $1 million. It called for using the proceeds to ease the state’s notoriously high property levies.
Costco shoppers stocked up on supplies as hurricanes, port strike hit. The trend hurt sales in October.
Democrats need to understand: Americans think they’re worse
Trump win and threat of more tariffs raises expectations for more China stimulus
Are American progressives making themselves sad?
U.S. Beneficial Ownership Information Registry Now Accepting Reports
CPA licensure program off to ‘promising’ start
-
Technology4 days agoAI for Business Transformation and its Disruptive Impact in 2025 and Beyond
-
Personal Finance1 week agoInflation is down, but the middle class remains under pressure
-
Accounting1 week agoThomson Reuters makes major investment in AI cross-selling software provider Propense
-
Accounting1 week agoUS, Taiwan to begin talks on a deal to address double taxation
-
Economics6 days agoFriday’s jobs report is expected to show the slowest pace of hiring in years
-
Accounting1 week agoInside ISO 42001 framework on AI management systems
-
Accounting4 days agoBoosting Bookkeeping Efficiency: Key Strategies for Streamlined Financial Management
-
Personal Finance1 week agoOnly high earners can ‘easily afford’ holiday spending this year