PKF O’Connor Davies Merges In Hodulik & Morrison

New York-based PKF O’Connor Davies (FY17 net revenue of $160 million) has merged in Hodulik & Morrison of Highland Park, N.J.

The firm says the move was designed to expand expertise in its public sector practice.

“Hodulik & Morrison has earned its reputation as a leading accounting resource for the public sector,” says MP Kevin J. Keane. “We’re excited to work with talented individuals who are as passionate about serving clients as we are. We welcome Bob, Andy and the entire Hodulik & Morrison team and look forward to combining our efforts.”

Two partners and more than a dozen team members will join the firm’s Cranford, N.J., office. For nearly three decades, Hodulik & Morrison has provided government accounting services with a focus on auditing, management advisory and financial advisory services for county, municipal, authority, school district and commercial clients.

“We’re thrilled to combine our experience in government audits with PKF O’Connor Davies’ industry-leading client service,” said Andrew Hodulik. “It’s exciting to join a network of professionals who share our commitment to serving central and northern New Jersey public entities.”

PKF O’Connor Davies has 11 offices in five states as it continues to expand through organic growth and acquisitions on the East Coast. Hodulik & Morrison is the third firm to join PKF O’Connor Davies in the last six months.

In February, the firm announced that Batchelor Frechette McCrory Michael & Co. (BFMM) of Providence, R.I., joined the firm. And in December of last year, Chestnut Ridge, N.Y.-based GKG CPAs joined PKF O’Connor Davies.

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Armanino Launches AI Lab

An IPA Best of the Best firm, San Ramon, Calif.-based Armanino LLP (FY17 net revenue of $242.7 million) has launched the Armanino AI Lab, designed to help businesses interested in using AI technologies.

“More than 75% of companies believe AI is fundamental to their future success, but the majority of those aren’t taking advantage of AI technology today and don’t know how to,” says Tom Mescall, PIC of Armanino’s consulting practice. “Armanino’s AI Lab will serve as a one-stop shop that enables its members to harness the opportunities that AI offers without being left behind by their competitors.”

The announcement came May 20 at the Artificial Intelligence (AI) Executive Roundtable, hosted by Armanino at its offices for C-level executives to see a demonstration of AI and discuss practical ways to apply it.

The three components of AI are predictive analytics, robotic process automation and virtual assistants. Members of the Armanino AI Lab can access peer-to-peer meetings, exclusive product and vendor reviews, Armanino’s data scientists and AI developers and consultants. Members can also learn about AI best practices and execute on AI proof of concepts.

The firm says that in a survey of the Roundtable event attendees, more than 75% ranked predictive analytics as most important to their organizations. Additionally, 83% believe their data infrastructure will need further improvement to achieve the best results. Meanwhile, 60% of event attendees have not started their first initiative.

Prior to launching its AI Lab, Armanino researched the most common business cases for using AI – from finance, supply chain, customer experience and talent management to compliance and privacy.

“As we continue to build out the Armanino AI Lab, we are proud to align ourselves with many of the world’s technology and software leaders in the AI space,” says John Horner, PIC of Armanino’s data and analytics practice. “This makes it easy for clients to access our knowledge and relationships, thereby decreasing their investment time and increasing their benefits of embracing AI technology.”

Armanino has already accepted several existing clients into the Armanino AI Lab and will continue to add members. To submit your membership application, visit:

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IRS Provides Filing Extension For Returns Affected By Wolters Kluwer Outage

Wolters Kluwer has announced that the IRS has approved a filing extension for certain May 15 federal returns, which are now due on May 22.

Deadlines are extended for returns that were affected by the outage of Wolters Kluwer’s Electronic Filing System during the week of May 6 – Form 990, Return of Organization Exempt from Income Tax; Form 1065, U.S. Return of Partnership Income; and Form 1120, U.S. Corporation Income Tax Return.

The IRS is providing simple, specific instructions that return preparers must follow for any of these returns that are filed after May 15, but no later than May 22, 2019.

Wolters Kluwer says it is working with state tax agencies to obtain similar relief. Updates will be provided to return preparers as new information becomes available. Tax practitioners with questions can call Wolters Kluwer at 800.930.1753. Live chat is available at

IPA Vendor Spotlight On . . . TaxConnex

Name: Robert Dumas

Robert Dumas

Company: TaxConnex

Title: Founder and Managing Partner


  • Founded what would become the country’s largest sales tax compliance service bureau in 1996 which was acquired by The Thomson Corporation (now Thomson Reuters) in 2005
  • Served as Vice President of Operations at The Thomson Corporation until founding TaxConnex in 2006
  • Is a nationally recognized expert in telecommunications tax and a frequent speaker on the subjects of sales and use tax, as well as sales tax compliance

What is the biggest sales tax issue facing small to mid-sized business clients today?

With the recent South Dakota vs. Wayfair ruling, the sales tax world has been turned upside down. Historically, small to mid-sized businesses needed to be concerned about sales tax only if they had a substantial physical presence in a state. What determines a substantial physical presence was and continues to be challenging to determine. With Wayfair, small to mid-sized businesses now need to be concerned about sales tax if they meet certain economic thresholds defined by the amount of sales revenue and/or the number of sales transactions in a given state. These new economic nexus rules apply to all businesses – not just those selling online. A business that previously only had to think about sales tax in their home state, now can be exposed to sales tax in 30 or more states.

Why do firm leaders need to know about the recent sales tax changes?

Your clients expect you to know the new economic nexus rules. They are reading about these changes and are concerned about potential exposure. They are looking to you to guide them through the maze of uncertainty and doubt. If you’re not equipped to answer their questions, they will seek out someone that can – likely your competitor.

How can businesses handle the challenges of keeping up with constantly changing federal and local sales tax rules?

It is unlikely that sales tax will ever be simplified to the point of full automation. It seems as if every attempt to simplify sales tax adds another layer of complexity. The new economic nexus rules are a good example. One way to stay current with changing federal, state and local sales tax rules is to utilize some type of sales tax calculation software that has the taxability rules and rates built into it. These systems can be effective in certain situations, but they are not a necessity for every business. Businesses with a limited number of states in which they need to collect sales tax, or a relatively simple product line, may not need the sophistication of sales tax calculation software. There are less expensive alternatives to consider, including tax rate subscription services.

Is sales tax automation the best solution for small to mid-size business clients?

Automation can definitely play a role. But what I often see is a business attempting to put a square peg in a round hole. Some sales tax software vendors believe they have a solution that plugs in and solves all of a business’ sales tax issues.  They may refer to it as the “easy button.”  Unfortunately, sales tax compliance is not easy. We help companies determine the best way to manage sales tax for their business.

What options do firms have to provide sales tax compliance services to their clients?

Firms can either build a process internally, buy a sales tax compliance process from another firm, or partner with an independent company. We have found that most of the Top 400 accounting firms, with the exception of some of the largest national firms, don’t want to provide sales tax compliance services. It typically does not align with their standard billing rates and the risk of not filing a return or making a payment on time is too great. As a result, we see these firms partnering with sales tax specific providers like TaxConnex to bring sales tax compliance to their clients. In deciding with whom to partner, we believe there are a few key factors: (1) Will the partner uphold the firm’s commitment to responsiveness? (2) Will the partner compete against the firm for the firm’s core business including income tax work or sales tax consulting work? (3) And will the partner help maintain the firm’s reputation in the market?

Moore Stephens North America Announces Award Winners

The accounting association Moore Stephens North America (MSNA) has announced the winners of its second annual MSNA awards that recognize significant contributions to the advancement of the organization.

The winners were announced recently at the MSNA Spring Conference in Chicago.

The 2019 Collaboration Award was presented to the team at Beene Garter of Grant Rapids, Mich. (FY18 net revenue of $14.5 million).

“Over the years, Beene Garter has been a firm that consistently collaborates in areas we are both working in, as well as areas each other may be exploring,” says Tony Caleca, MP of Creve Coeur, Mo.-based Brown Smith Wallace (FY17 net revenue of $46.3 million).

Moore Stephens Award Winners

Caleca notes the regular collaborations in audit and tax, as well as the opportunities Beene Garter has made possible through the sharing of new software and processes. With a “what can we do to help” approach, their eagerness to collaborate has led to great referrals and additional business on both ends.

The 2019 Improvement Award was presented to the team at Vancouver, British Columbia-based DMCL. DMCL has grown by more than 40% in the past three years, and the firm plans to continue serving the community as the largest independently owned accounting firm in the Lower Mainland.

The 2019 Innovation Award was presented to the team at Woburn, Mass.-based DiCicco Gulman & Company (FY17 net revenue of $26.4 million). Through its weekly comedy program, “The Breather,” DGC has introduced a form of stress release through these four-minute videos, while also helping their growing firm get to know their coworkers a little better. With a huge impact on company morale, these videos prove the different ways that innovation can help move firms forward.

“While our members have seen substantial growth and success across the board, we feel it’s important to highlight those firms and individuals who have gone above and beyond,” says MSNA CEO Tony Szczepaniak. “We are proud to acknowledge their accomplishments and give them the accolades they deserve.”

Employees from member firms nominated the individuals, teams or firms the awards, with winners selected by the MSNA Executive Office.

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Malware Attack Against Wolters Kluwer Angers Firms And Delays Work

Wolters Kluwer’s malware attack that shut down access to massive databases of tax information on May 6, is not only stopping work at accounting firms around the country but also raising fears about the safety of client data.

The company released a statement saying that it is working “around the clock” on the issue and that service has been restored “to a number of applications and platforms.”

Firms have been outraged by the delay, and nonprofit clients with a May 15 tax deadline are being impacted the most.

Accounting professionals began airing their concerns in almost 500 comments on Reddit.  One reads, “If this is indeed a crypto attack that has disabled Axcess, e-filing, support website and even the phone system, then this really means that CCH is in no position to even be offering Software-as-a-Service because such an incident would mean they don’t understand the basics of cloud security.”

No information on the specific type of attack against the company has been released. Because the company took many of its systems offline after the attack – to prevent it from spreading further ­– accountants and IT staff were initially unable to reach the company, which is based in the Netherlands. Wolters Kluwer provides software and services, including the popular cloud-based CCH products, to all of the top 100 accounting firms in the U.S., according to its website.

“CCH needs to think long and hard about how their network infrastructure is set up, just like how all its clients are going to think long and hard about whether or not to stick around,” reads another Reddit comment. “I mean my God, one chink in the armor half-way around the world brought down their entire global infrastructure. This is why you need proper network segmentation and isolation.” Meanwhile, marketing professionals were scrambling to determine the best way to communicate with clients.

Wolters Kluwer is being bombarded with questions and criticism on Twitter. Many say the company is failing to be transparent. Consider this Tweet: “Like everyone else, I don’t know what to tell my staff or my clients. Our website is hosted through CCH and even that is down. From a client’s perspective this is OUR problem. It’s impossible to even tell them what’s wrong if we don’t have a clue. This information is not enough.”

Wolters Kluwer issued a statement that says client data is safe. Its website says, “We have seen no evidence that customer data was taken or that there was a breach of confidentiality of that data. Also, there is no reason to believe that our customers have been infected through our platforms and applications.” (See all Wolters Kluwer statements here.)

Salt Lake City Firm Joins BKD

Stayner Bates of Salt Lake City is joining Springfield, Mo.-based BKD (FY18 net revenue of $594.6 million) on June 1, BKD announced.

Stayner Bates specializes in assurance, tax, consulting and business valuation services, and has about 35 team members, including four partners. They will work from their existing office in Salt Lake City.

“With the addition of Stayner Bates, BKD has accomplished a long-standing goal of joining the Utah market,” says Jeff Ronsse, MP of BKD’s Colorado offices. “The combination enhances BKD’s resources and provides Stayner Bates with greater growth opportunities and market presence.” BKD CEO Ted Dickman adds, “Stayner Bates’ commitment to client service and true expertise will assist us in accomplishing our goals as we move forward.”

Steve Hanni, president of Stayner Bates, calls the union a win-win. “We’re happy to be joining BKD and using our industry knowledge and familiarity with this region to help better serve our clients and grow the firm.”

Last year, Rylander Clay & Opitz LLP of Fort Worth, Texas, and Loeb & Troper LLP of New York joined the firm. The firm also acquired a portion of the Wichita, Kan., audit and tax practices at Chicago-based Grant Thornton LLP and the financial institution practice of Harper & Pearson Company of Houston.

BKD, which ranked No. 12 on the 2018 IPA 100 list, has 38 offices in 17 states and more than 2,710 personnel, including more than 300 partners.

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Dalby Wendland & Co. Names Chris West as CEO

Christopher L. West

Grand Junction, Colo.-based Dalby Wendland & Co. (FY18 net revenue of $13 million) announces the election of Christopher L. West as the firm’s CEO, effective July 1.

“We are positioning Dalby Wendland for a dynamic future,” says firm president Greg Keller. “Chris has shown strong leadership, insight and is committed to our people, clients and communities. He is the right person to lead this organization and successfully implement our firm’s vision.

As CEO, West will focus on firm leadership and vision direction, including operations, people, client service, technology and overall growth strategies. He is a Colorado native and started with Dalby Wendland in 1996. He became a tax principal in 2009.

Dalby Wendland & Co. has six offices in Colorado: Aspen, Glenwood Springs, Grand Junction, Montrose, Rifle and Telluride.

U.K. Watchdog Calls for Audit Market Shakeup

A U.K. regulator has found “deep-seated problems” in the country’s audit market due to domination by the Big 4 firms, and has recommended “an operational split between the audit and non-audit practices of the biggest firms in the U.K.”

According to, PwC, KMPG, Deloitte and EY sign off on the accounts of 97% of the U.K.’s 350 largest listed companies.

The accounting industry has been under fire in the wake of corporate collapses such as those of building contractor Carillion Plc and bakery chain Patisserie Valerie Holdings Ltd.

A parliamentary committee has called for a “full structural breakup” of the Big 4, saying that it would be more effective than other options. On April 17, though, the Competition and Markets Authority (CMA) recommended the audit/non-audit split.

“The case [for a full separation] made by the Select Committee is strong, given the shortcomings of the current market,” the CMA said. But it also noted that the Big 4 “are global firms carrying out global audits. Such a separation would have to be carried out internationally in order to be fully effective.”

Among the problems identified by the watchdog are companies selecting their auditors, the high concentration among the Big 4, and audits being carried out by firms whose main business is not audit. Reuters called the CMA recommendations “the most radical reform of auditing yet.”

The CMA says, “Auditors should focus exclusively on producing the most challenging and objective audits, rather than being influenced by their much larger consultancy businesses.” reports that the CMA believes creating a separate status for audit practices “will increase the focus on audit quality, with a reduction in the distracting interest in non-audit work,” and “create transparency around audit practice.”

EY reacted by disagreeing with the concept of a split. “It appears ill-timed for the CMA to restrict the skills needed to deliver high quality audit now and in the future,” the firm said.

According to Bloomberg, government officials say the CMA’s finding provided a “strong evidence base, which we will consider carefully.” It will “bring forward reforms to ensure UK remains a place offering the highest standards in audit,” business minister Greg Clark said in a statement.

Many Paid More in Federal Taxes This Tax Season: NJCPA Survey

In a New Jersey Society of Certified Public Accountants’ (NJCPA) survey of more than 500 CPAs taken after tax season in April, an average of 36% of their clients paid more in federal taxes in 2018.

The NJCPA conducted the survey to determine the impact of the Tax Cuts and Jobs Act (TCJA) on individual and family clients’ federal tax liability this tax season. Nearly 60% of respondents said that the TCJA either “definitely” or “somewhat” increased the number of clients that they would advise to leave the state. The TCJA’s cap on state and local tax (SALT) deductions has led many taxpayers to consider selling property or leaving the state.

More than 75% of respondents noted that this tax season was worse than prior years, with 34% noting that it was the “worst tax season ever.” Additionally, nearly 30% of the CPAs surveyed said they counseled “most” of their clients to adjust their withholdings in 2019 based on their 2018 tax returns, while 24% said they counseled “almost all” of their clients to adjust.

“Surveys like these show the value that CPAs bring to the table and the importance of tax consequences on individuals and corporations,” says Ralph Albert Thomas, CEO and executive director of the NJCPA. “New Jersey is high-tax state, and our residents did not benefit nearly as much from the tax reform package as many other states. We need to work together on both the federal and state levels to improve the tax inequities so that individuals and companies will stay in New Jersey and thrive.”