SB 253, known as the Climate Corporate Data Accountability Act, casts its regulatory net over public and private companies conducting business in California. For companies with annual revenue surpassing $1 billion, the foremost requirement is the obligatory public disclosure of Scope 1 and 2 emissions. Beginning in 2026, these companies will also be compelled to incorporate Scope 3 emissions in their reporting. This means if your company is part of the value chain of any organization directly impacted by this disclosure mandate, those reporting entities may request your company’s emissions data to meet their own Scope 3 reporting obligations.
SB 261, titled Greenhouse Gases: Climate-related Financial Risk, applies to both public and private companies operating in California with annual revenue exceeding $500 million. Under this legislation, companies meeting the revenue threshold will be obligated to divulge information about climate-related financial risks and the strategies they have employed to mitigate and adapt to these risks.
Earlier this year, and in advance of these new regulations, BPM finalized a new strategic alliance between the Firm’s Environmental, Sustainability and Governance Advisory Services practice and carbon accounting company Sustain. Life, which provides a software as a service platform that helps future-proof companies by decarbonizing and taking climate action. Our clients gain access to a suite of carbon accounting, ESG administration and emissions reduction services, as Sustain. Life’s software capabilities amplify BPM’s ability to help clients keep up with market demands, comply with these and other environmental regulations and position themselves for funding opportunities.
Jeff Belingheri: The new tax legislation that typically passes shortly after presidential elections combined with shifts of power in Congress are always challenging. For instance, gaining a complete understanding of and doing planning around the QBI deduction that became law in 2018 was rather complicated. Also, the PTE Elective Tax Payment program (i.e., AB 150) has added a whole new dimension of tax planning for pass-through entity clients.
Jon Dal Poggetto: Currently, the aftermath of the Tax Cuts and Jobs Act of 2017 is creating challenges due to expiring tax favorable provisions of that legislation.
Brent Garrison: Changes to the GAAP treatment for leases has been an adjustment to the historical way of accounting for these matters. Property and vehicle leases which were historically not reported on the balance sheet have now been written on.
Craig Underhill: The 2017 Tax Cuts & Job Act introduced a requirement to capitalize research & experimentation costs, effective Jan. 1, 2022. Originally, Congress planned to adjust this provision before its effective date. However, other priorities sidetracked these adjustments, and by 2022, with no consensus in Congress, the provision took effect. This left CPA firms like ours without clear guidance, causing significant potential tax implications for businesses. For instance, a winery with $10M in sales had an added $1.5M in taxable income in 2022. Now, with Congress contemplating a potential retroactive fix or a 2024 change, businesses face challenges in cash flow planning.
Are you implementing AI (artificial intelligence) in your work?
Michelle Muth Ausburn: Yes, we believe AI holds significant promise in enhancing value for our clients. We approach this with an awareness of the positive impact it can have while prioritizing security and control measures to mitigate potential risks.
We acknowledge the transformative potential of AI, especially generative AI, in various operational facets. We view AI as a tool to augment our workforce rather than replace it, and we are responsibly exploring additional use cases within the framework we have established.
We see that AI can increase value and empower our employees to focus on more intricate projects and future innovations. Furthermore, we believe AI can enrich learning and training initiatives by tailoring them to individual needs, yielding improved performance outcomes.
Jeff Belingheri: We are starting to use TaxCaddy and SurePrep 1040 Tax, which utilizes AI to populate Lacerte with client income and expense data.
Jon Dal Poggetto: We are using it primarily for tax research activities.
Brent Garrison: We are! Machine learning has made significant advancements in recent years, and Allen Wine Group is committed to staying at the cutting edge of this technology. We are leveraging AI to enhance various aspects of our operations, from data analysis and automation to improving decision-making processes. This allows us to be more efficient and effective in serving our clients and adapting to the evolving business landscape.
Craig Underhill: We began integrating AI into our audit and advisory services more than five years ago. Innovation is at the heart of our operations, and we constantly seek ways to enhance our offerings. By embracing cutting-edge technology, we aim to unlock unparalleled benefits for our customers.
What do you wish your clients knew before sitting down with you?
Michelle Muth Ausburn: I’d like my clients to know that we don’t create the regulatory framework but must operate within it. Our commitment is to assist our clients in achieving the most favorable outcome, tailored to their unique needs and business objectives, while serving the public interest and honoring the public trust.
Jeff Belingheri: Nothing really … its more about me asking questions and finding out about my clients’ specific situations and needs. By asking questions and exploring things with my clients, they learn most things that they need to know about me and BCo.
Jon Dal Poggetto: My job becomes much easier when they have a clear idea of their goals and are able to articulate them to me.
Brent Garrison: Choosing the right accounting and financial partner can have tremendously positive impact on your business. Allen Wine Group is deeply committed to the success of our client partners as our success is intricately linked to the growth and prosperity of our clients’ businesses. We genuinely care about their well-being, and we are dedicated to providing the support, expertise, and services they need to thrive.
Craig Underhill: When clients sit down with us at BDCo, it’s less about the immediate paperwork and more about open dialogue. We hope for transparency about where they envision their business heading and the challenges they face. By shedding light on their aspirations and hurdles, we can forge a genuine business partnership, guiding them both in the immediate concerns and long-term endeavors.
Here’s to crafting a journey together, blending expertise with shared goals. Cheers to mutual growth and understanding!
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