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Inside Schellman’s journey to provide certification for ISO 42001 AI framework

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As a technology assurance specialist, Top 50 firm Schellman was already well familiar with AI when it captured the public’s attention a few years back. But as clients began making major investments in the technology — and as regulators became increasingly wary of it — CEO Avani Desai knew they would need more support with the increasingly vital matter of AI governance. To this end, the firm embarked on an eight-month journey to become the first ANSI-accredited body allowed to audit and grant certification for compliance with the new ISO 42001 standard on artificial intelligence management systems, which the firm finally accomplished in September. 

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 executive order to the EU AI Act — signaled to Desai that there would soon be a need to work with clients to demonstrate responsible use of the technology through strong AI governance. To this end, the firm decided in January to place extra strong emphasis on the matter, as clients planned to make major AI investments over the next few years. Becoming an accredited certification body for this new ISO standard was a key part of how Schellman planned to support these clients.

2023 Best Firms - Schellman

“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.

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BDO CEO Wayne Berson to retire, Matthew Becker tapped as successor

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BDO USA CEO Wayne Berson will retire effective June 30, 2026, and the firm’s national managing principal of tax Matthew Becker has been tapped by the board of directors to succeed him.

Under the Top 10 Firm’s CEO succession process, the board of directors selects a candidate and its principal group ratifies the candidate. Berson and Becker will meet with the firm’s principals over the next several weeks ahead of the ratification vote, which is expected to take place in July. Once a successor is agreed upon by a majority vote, the board of directors will announce the next CEO, whose term is expected to begin on July 1, 2026.

BDO USA CEO Wayne Berson

BDO USA CEO Wayne Berson

Berson has served as CEO since 2012. During his tenure, the firm has grown nearly 400% to annual revenues of roughly $3 billion, and he oversaw the firm’s transition from a partnership to a corporation and then an ESOP company. He is a member of BDO USA’s board of directors and is a chair on BDO International’s global board of directors, and will continue to serve on both boards until his retirement. He is also a regular member of Accounting Today’s annual listing of the Most Influential People in Accounting.

As national managing principal of tax, Becker oversees the strategy and operations of BDO’s tax practice, which includes over 3,500 tax professionals. He is a member of BDO’s executive leadership team and a member of BDO International’s global tax advisory committee. Becker has also served as chairperson of BDO USA’s board of directors.

The firm plans to provide no further updates until the conclusion of the voting process to ensure a “thorough and unbiased evaluation period for BDO”s principal group,” according to the release.

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Tax Fraud Blotter: Side hustles

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Pardon us; no relief in sight; down on the farm; and other highlights of recent tax cases.

San Francisco: Winery co-owner Brian Fleury, 64, of Napa County, California, has pleaded guilty to aiding and assisting the preparation of a false return.

Fleury and his spouse owned the winery Metropolitan Wines and several vineyards in Napa Valley. For tax years 2014 through 2018, Fleury underreported Metropolitan’s income to his tax preparer. Fleury directed some customers to pay with checks directly to Fleury instead of to Metropolitan and wrote or told his employees to “off the books,” on some of these customers’ invoices. Fleury kept these payments for himself and did not report this as income.

Between 2014 and 2018, he underreported his and his spouse’s income by $822,450.

Fleury also admitted that from 2007 through 2019, he failed to pay federal excise tax that was due on brandy he received, possessed and sold, filing annual reports with the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau that he knew were false.  

In total, he caused a tax loss to the IRS and TTB of $211,092.

Washington, D.C.: President Trump has pardoned Paul Walczak of Palm Beach Gardens, Florida, two weeks after Walczak’s sentencing for tax crimes, according to news reports.

Walczak, who was convicted of evading more than $10.9 million in payroll taxes and sentenced to 18 months in prison and two years of supervised release, controlled a network of interconnected health care companies operating under various names, employing more than 600 people.

In 2011, Walczak did not pay two quarters of withheld taxes to the IRS. He evaded collection efforts and continued not paying over taxes from employees’ paychecks and keeping the money to fund what authorities called a lavish lifestyle, including the purchase of a yacht.

He caused a total federal tax loss of $10,912,334.80 and was also ordered to pay $4,381,265.76 in restitution. 

Walczak is the son of Betsy Fago, a longtime Republican donor who recently attended a Trump fundraising dinner, news reports said. Walczak’s attorneys also reportedly maintained that his family sold an engagement ring, a car and a $12.5 million home to repay the tax loss.

Trump was slated to pardon reality show stars Julie and Todd Chrisley, who were found guilty in 2022 of conspiring to defraud community banks out of more than $30 million. A jury convicted them of conspiracy to commit bank fraud, wire fraud and conspiracy to commit tax evasion. Trump has also reportedly pardoned former Republican Rep. Michael Grimm of New York, who was convicted in November 2014 of tax fraud and related charges stemming from his ownership of a Manhattan restaurant.

Athens, Georgia: Tax preparer Jessica Crawford, 34, who previously admitted filing more than $3.5 million in fraudulent returns tied to a multistate pandemic benefit scheme, has been sentenced to eight years in prison.

FBI agents investigating a multistate unemployment benefit scheme that was conducted during the pandemic discovered texts between conspirators and Crawford, a preparer with Crawford Tax Services. Crawford filed for PUA benefits on behalf of those individuals who had created fake businesses or submitted false information to steal benefits. In return, she received a percentage of the gains.

In 2022, an undercover IRS agent met Crawford to have their taxes prepared, and Crawford asked if the agent did anything on the side. At first the agent said no; Crawford replied that expenses could be deducted. The agent said he sometimes mowed an aunt’s lawn but provided no income or expense amounts. Crawford created a Schedule C business for landscaping on the agent’s federal return and prepared a 1040 and a fictitious Schedule C loss of $19,373, as well as claimed an Earned Income Tax Credit, a Child Tax Credit and a qualified business income deduction. As a result, the agent’s return claimed a fraudulent federal income tax refund of $12,359.

The IRS reviewed 1,261 returns filed by Crawford in tax years 2020 and 2021 and determined that she fraudulently filed returns on behalf of clients, resulting in losses to the IRS exceeding $3 million from false 7202 credits for sick leave and family leave, tax credits and dependent care credits.

Hands-in-jail-Blotter

Marina Del Rey, California: Elana Cohen-Roth, 81, a retired IRS agent, has been sentenced to 12 years in prison after being convicted of 23 felony offenses related to defrauding an elderly victim of her life savings.

Cohen-Roth exploited a professional and personal relationship she’d had with an elderly area resident. A retired IRS agent and professional tax preparer, Cohen-Roth began preparing the then 66-year-old victim’s taxes in 2013. From their friendship, Cohen-Roth gained access to all the victim’s financial information. Cohen-Roth told the victim she would invest in some type of real estate to earn at least 10% at “no risk.”

From December 2013 through September 2019, Cohen-Roth extended “investment opportunities” to the victim on more than 20 occasions in amounts from $25,000 to $150,000. Each time, the victim took money from her legitimate investments and wired it to Cohen-Roth.

Bank records revealed that Cohen-Roth was running a Ponzi scheme where other investors also deposited large sums into her account. Cohen-Roth used some of the elderly victim’s money to pay off these earlier investors and used the rest to support her lavish lifestyle and make gifts to family members.

By September of 2019, the victim had depleted her investment accounts and took out a reverse mortgage to send additional money to Cohen-Roth. The scheme collapsed in 2020 when the victim demanded a return of some of her money so that she could move near her family. Cohen-Roth did not have another source to repay the victim, who did not receive any of her money back.

A jury convicted Cohen-Roth of all 23 felony financial fraud charges. Because of her age, she was sentenced to the middle term of 12 years in state prison rather than the maximum of 28 years.

Richmond, Virginia: Tax preparer Baltej Singh Brar, 42, of South Richmond Hill, New York, has been sentenced to two years in prison for making false statements on loan applications he submitted for clients through pandemic relief.

Brar owned and operated Aspire Tax & Accounting Services and in 2021 began filing loan applications on behalf of other individuals through the Paycheck Protection Program. He advertised that he would file loan applications in exchange for an upfront fee and 10% of the loan value after approval.

Brar instructed prospective applicants to provide him with their Social Security numbers, a copy of their driver’s license, email address, prior bank statements, their 2019 return and a voided check to be used as supporting documentation. Most of Brar’s clients were sole proprietors, including taxi drivers, truck drivers and construction workers. Where clients’ prior year incomes fell below the threshold to receive the maximum PPP loan of $20,833, Brar inflated the income amounts in the applications. Brar caused the Small Business Administration at least $550,000 in losses.

Greensburg, Pennsylvania: Accountant Jonathan A. Weston, a resident of Canonsburg, Pennsylvania, has been sentenced to 27 months in prison and ordered to pay more than $8 million in restitution after being convicted of fraud conspiracy, conspiracy to commit money laundering and filing false income tax returns.

From October 2005 to January 2019, Weston, an accountant for Hillandale Farms Co., schemed with another employee to embezzle some $6.8 million from the company and launder the money through businesses they both controlled to buy collectible cars, real estate and other items. 

Between 2013 and 2018, Weston also either failed to file or filed false federal personal income tax returns, including filing a false return in which he underreported more than $500,000 stolen from Hillandale.

He was ordered to pay $6,870,128 in restitution to Hillandale Farms and $1,216,176 to the IRS. He was also ordered to forfeit assets from his crime, including a 2008 Aston Martin, a 1933 Ford Model 40 Coupe and a condominium.

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Counties with highest capital gains per 2025 study

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The more value that investors can receive in the form of long-term capital gains rather than ordinary income, the less they will pay back to Uncle Sam.

Those in the 20 counties below ranked by the average net capital gains reported on their federal returns to the IRS are getting above-average appreciation on their assets with much lower tax rates, generally, than their incoming income, according to a study last month by advisor lead generation and client matchmaking service SmartAsset. The mix of areas known for a large concentration of wealthy residents and regions that don’t immediately come to mind as a home to lots of rich people offered only more evidence of the investment industry’s national scope.

For financial advisors and their clients, the list provided geographic insights into the potential wealth management client base in the areas, and a reminder of important state-level variations in taxes that could affect portfolios and after-tax yields.

“Net capital gains represent the profits a taxpayer recognizes from selling a capital asset after offsetting capital losses. These gains are often created by highly appreciated assets,” Kathy Buchs, a senior tax advisor, team leader and managing director with Cleveland, Ohio-based registered investment advisory firm MAI Capital Management, said in an email.

“We take geography into account when advising clients to sell an asset or consider tax loss harvesting due to state income tax ramifications,” Buchs continued. “For example, California is a high-tax state that does not have preferential rates for capital gains. Therefore, it tends to be much more expensive to recognize gains in that state as compared to others.” 

That difference in tax rules at the state level raises the possibility of strategies such as an incomplete gift non-grantor trust that, in some areas, could “eliminate the state taxation of the trust-owned portfolio,” said Richard Austin, an executive director for estate and business planning with San Diego and Waltham, Massachusetts-based RIA firm Integrated Partners. In some cases, investors can even offset their capital gains for federal tax purposes based on losses in other holdings, he noted in an email.

“Tax efficiency significantly impacts the performance of a client’s portfolio by maximizing the after-tax return on investments,” Austin said. “Investing across different countries and regions can reduce portfolio volatility. Markets in different parts of the world often have low correlation, meaning they don’t always move in the same direction at the same time. If one market experiences a downturn, others might perform well, potentially stabilizing overall returns and the potential for future capital gains. State-specific tax rates impact tax efficiency of a portfolio. The difference in state income taxes creates a significant layer of complexity in achieving tax efficiency for a client’s portfolio.”

Even though any type of data presents the possibility of noise factors affecting any particular region, the study “highlights that taking geography into account is essential when advising clients on their asset allocations,” said Michelle Ash, a senior wealth advisor with the Jacksonville, Florida-based office of RIA firm Mercer Advisors.

“Net capital gains is measured when a person is selling assets, and so it requires past investment success to be in that position,” Ash said in an email. “It’s no surprise to me that Florida would be the top state by this metric. Florida has no state income, inheritance or estate taxes, and so it’s a beneficial place to live when you’re selling assets. These Florida traits also attract a lot of retiring individuals who may be selling assets like homes and businesses when they retire or move.”

In focusing on capital gains, SmartAsset sought to home in on the areas where investors netted the most gains with preferential rates compared to ordinary income, according to the report’s author, SmartAsset Director of Economic Analysis Jaclyn DeJohn.

“Net capital gains, the profits from selling assets like stocks, real estate or businesses, are a key measure of investment success and regional wealth,” DeJohn wrote. “Overall, high net capital gains can signal robust markets and affluent populations, with realized gains potentially boosting local economies through tax revenues and spending.” 

Besides the listing below, here are some of the other interesting takeaways from the study:

  • Three Georgia counties, Chattahoochee, Quitman and Taliaferro, displayed the smallest average net capital gains, at $2,400 or less. Fewer than 10% of returns in the counties had net capital gains.
  • At the state level, West Virginia tax returns had the lowest average net capital gains at $14,612, followed by Wisconsin with $19,590 and Iowa with $20,220.
  • On the other end of the spectrum among the states, federal returns out of Florida ($84,911), Wyoming ($84,246), Nevada ($77,491), the District of Columbia ($58,733) and Texas ($52,926) reported the highest average net capital gains.

Scroll down the slideshow for the ranking of the top 20 counties in the U.S. in terms of average net capital gains. To see a list of the top 10 cities with the highest income among retirees, click here. For the group of the top 20 metropolitan areas where financial advisors’ median pay increased the most last year, follow this link.

Note: The below rankings are based on a report by SmartAsset called, “Where Americans Earn the Most From Investments.” The study crunched the latest tax return data for the 2022 tax year released by the IRS across 3,022 U.S. counties and for each of the 50 states and the District of Columbia. The data include average net capital gains and investment-yield figures like taxable and tax-exempt interest and ordinary and qualified dividends.

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