Help Stop Staged Accidents From Raising Your Insurance Costs

According to the FBI, staged auto accidents account for approximately $20 billion a year in losses. This type of insurance fraud is particularly harmful to the insurance companies that must pay out liability, disability, medical and other types of claims.

All of this may sound troubling, but what does it have to do with noninsurance businesses? Insurance fraud raises rates for everyone and generally increases your company’s insurance costs. And if your employees either stage accidents or are victims of staged accidents while driving for business purposes, your company could suffer more direct consequences.

Just the facts

Staged accidents are often part of coordinated fraud schemes. In some cases, they may include unscrupulous attorneys and “medical mills” — groups of doctors and other health practitioners who prescribe unnecessary procedures and bill for unperformed services. In some cases, complicit law enforcement officers (and in at least one large-scale scam, 911 operators) are involved.

These illegal enterprises recruit people to sustain “injuries.” Often, crash victims are innocent individuals recruited off the street and promised a quick buck to act as passengers. In staged crashes, one car usually rear-ends, sideswipes or “T-bones” another. After the crash, the claimants or the attorney coordinating the scam submit a police report documenting it.

Passengers are referred to participating doctors, physical therapists, chiropractors and other specialists. The medical practitioners then write up fake treatment plans and send them to insurers for payment. When insurance payments (or legal damages if a case proceeds to litigation) are processed, scheme participants receive kickbacks.

Actual harm

Aside from the aggravation (and, potentially, real physical injuries) they cause, staged accidents pose a serious threat to your company’s insurance coverage. If an innocent employee driving a company vehicle is involved in a staged accident, you could experience commercial liability rate increases and possible reduction — or even elimination — of coverage. The same is true of your company’s health or disability premiums if a dishonest employee fraudulently files claims.

In fact, insurers may either adjust coverage or withdraw from entire geographic areas where medical mills and staged accidents have caused them big losses. Staged accidents are particularly prevalent in big cities and in such states as Florida, New York, California, Texas and Maryland, according to National Insurance Crime Bureau data.

Your business might also be sued for the “pain and suffering” of so-called victims. If your insurance coverage is inadequate, you could incur significant out-of-pocket costs.

Your role in prevention

To help protect your business, establish a company vehicle use policy that documents zero tolerance for intentional involvement in insurance fraud. Also ensure that authorized drivers meet all requirements under your insurance coverage. And train employees who drive on company business on what to do if they’re involved in a collision — for example, wait for the police to arrive, document accident details, and, if possible, obtain witness contact information. Employee drivers should be required to inform someone in your company immediately.

You may also want to strengthen internal controls. For example, conduct appropriate background checks on employees with driving roles.

If an auto accident involves injuries or requires costly repairs, work closely with your insurer and attorney. Most insurance companies are familiar with the red flags of staged accidents, such as passengers claiming major medical expenses after what appears to be a minor collision or hiring disreputable lawyers to sue for damages.

Get involved

To help control rising insurance costs, it’s important to take an active role in preventing insurance fraud. If you’re concerned about the legitimacy of a work-related accident, treat the event like any potential fraud and investigate with the support of appropriate legal and forensic accounting advisors. Contact us. We can help you assess fraud exposure, strengthen internal controls and evaluate the adequacy of your insurance coverage.

Companies that engage in research and development activities may qualify for a federal tax credit for some of those expenses. The credit is complicated to calculate, and not all research activities are eligible — but the tax savings can be significant. Here are answers to questions you might have about this potentially lucrative tax break.

What’s it worth?

The federal research credit — sometimes referred to as the research and development (R&D) credit — is for increasing research activities. Generally, it’s equal to 20% of the amount by which qualified research expenditures (QREs) in a tax year exceed a base amount derived from your company’s historical research expenditures. (There are alternative computation methods for startups and other companies without sufficient historical data.) QREs include wages, supplies, and certain consulting and contract research fees related to qualified research activities.

The credit is nonrefundable — that is, it can’t be used to generate a loss — but unused credits may be carried back one year or forward up to 20 years. Limits on general business credits also prevent companies from using tax credits to erase their tax liability entirely.

In addition, startups may elect to offset research credits against up to $500,000 in employer-paid payroll taxes. For this purpose, “startups” are generally businesses in operation for less than five years with less than $5 million in gross receipts.

And sole proprietors and owners of small pass-through entities (including S corporations, partnerships and most limited liability companies) can use the credit to reduce their alternative minimum tax liability. For this purpose, “small” businesses are generally those with average gross receipts of no more than $50 million for the three preceding tax years.

What costs qualify?

The research credit isn’t just for scientific research. Generally, to qualify for the credit, a research activity must:

Relate to the development or improvement of a “business component,” such as a product, process, technique or software program,
Strive to eliminate uncertainty over how (and whether) the business component can be developed or improved,
Involve a “process of experimentation,” using techniques such as modeling, simulation or systematic trial and error, and
Be technological in nature — that is, it must rely on “hard science,” such as engineering, computer science, physics, chemistry or biology.

To claim the credit, you must bear the financial risk associated with the research and enjoy substantial rights to the results. Otherwise, it will be considered “funded research,” which is ineligible for the credit.

These criteria are broad enough to encompass a wide range of business activities. Examples include developing new products, improving processes (including business or financial processes that involve computer technology) and developing software for internal use.

Finally, only domestic research costs qualify for the federal research credit. Foreign research expenses are excluded and must instead be capitalized and amortized over 15 years.

Can businesses claim the research credit for deductible R&E costs?

Research-related expenses may qualify for two tax breaks. The first is the research credit; the second is the deduction for research and experimental (R&E) costs. Businesses can immediately deduct domestic R&E expenditures paid or incurred in tax years beginning after December 31, 2024. However, you can’t claim both breaks for the same expenses.

In general, the expenses that qualify for the research credit are narrower than those that qualify for the R&E deduction. If you claim the research credit, you must reduce the amount otherwise deductible (or capitalized) for R&E expenditures by the amount of the credit. However, under the One Big Beautiful Bill Act, the amount deducted or charged to a capital account for R&E costs is reduced by the full amount of the research credit, as opposed to being subject to a more complex calculation in effect under prior law.

Next steps

Many businesses overlook the federal research credit because of its complexity. But the tax savings can be substantial — and many states offer research tax incentives in addition to those available at the federal level. If your business invests in developing or improving products, processes or software, we can help you assess eligibility, quantify potential benefits and ensure your research-related tax breaks are properly supported. Contact us for more information.

Many small business owners start with simple accounting processes. But as their companies grow, the choice of accounting method can significantly impact taxes, financial reporting and access to financing. Understanding the differences between the cash and accrual methods — and when each makes sense — can help you make more informed decisions as your business develops.

Cash-basis accounting: Simplicity and tax flexibility

Under the cash method, companies recognize revenue when payments are received and expenses when they’re paid. As a result, cash-basis entities may report fluctuations in profits from period to period, especially if they’re working on long-term projects. This can make it hard to benchmark a company’s performance from year to year — or against other entities that use the accrual method.

Small businesses with average annual gross receipts below an inflation-adjusted threshold may qualify to use the cash method for federal tax purposes. For the 2025 tax year, the inflation-adjusted gross receipts threshold was $31 million. For 2026, the threshold increases to $32 million. These tax thresholds apply to most small businesses, including sole proprietorships, partnerships and corporations.

Businesses that are eligible to use the cash method of accounting for tax purposes may have some ability to manage the timing of income and deductions within the boundaries of tax rules. This typically involves planning around when income is received and expenses are paid.

In some cases, businesses may benefit from deferring revenue and accelerating expenses near year end to reduce current-year taxable income. However, this approach should be evaluated carefully, as it may also make the business appear less profitable to lenders or investors. Conversely, if tax rates are expected to increase substantially in the coming year, it may be advantageous to accelerate revenue recognition and defer expenses at year end. This strategy may increase current-year tax liability but could result in overall tax savings if future rates change.

Accrual-basis accounting: Clearer financial picture for decision-making

The accrual method is more complex but provides a more complete view of a company’s financial performance. It conforms to the matching principle under Generally Accepted Accounting Principles (GAAP), meaning companies recognize revenue and expenses in the period they’re earned or incurred. This method reduces major fluctuations in profits from one period to the next, making performance easier to benchmark.

For example, a business that delivers services in December but isn’t paid until January would still report that revenue in December under the accrual method — providing a more accurate picture of when the work was performed.

In addition, accrual-basis businesses report several asset and liability accounts that are generally absent on a cash-basis balance sheet. Examples include prepaid expenses, accounts receivable, accounts payable, work-in-process inventory and accrued expenses.

The U.S. Securities and Exchange Commission requires public companies to issue financial statements that conform to GAAP, which prescribes the usage of the accrual method. Private companies that are large enough to consider going public, or that are contemplating mergers or acquisitions, may want to issue GAAP financial statements to facilitate these transactions. Likewise, many lenders prefer GAAP financials for underwriting and due diligence purposes.

Some states also require sales tax returns to be filed on an accrual basis. If you don’t track and plan carefully in these states, you might get hit with a sales tax bill on payments you haven’t yet collected. This can affect your cash flow.

Which method is right for you?

Many businesses begin with the cash method but revisit that choice as operations become more complex. Choosing the wrong accounting method — or failing to revisit your approach as your business grows — can affect everything from tax liability to financing opportunities. We can help you evaluate whether your current method remains appropriate and guide you through the transition if a change makes sense. Contact us to evaluate your financial reporting options and help you make an informed decision.

Among employers, the notion of focusing more on skills than education when hiring has gained momentum over the last several years. A recent survey indicates the trend is continuing.

At the end of 2025, Western Governors University (WGU) released its inaugural Workforce Decoded report. It includes results from a survey of more than 3,100 U.S.-based participants representing organizations of various sizes across a range of industries. Notably, 78% of respondents said work experience is equal to or more valuable than a degree, and 86% cited nondegree certificates as valuable indicators of job readiness.

Considerable adjustment

Skills-based hiring represents a considerable adjustment for people raised on the idea that going to college automatically and significantly increases the likelihood of getting a good job. It also suggests that societal attitudes toward university education are changing.

The escalating price tag of tuition and anxiety about student debt have many younger people rethinking whether they want to attend traditional colleges. Meanwhile, the WGU report suggests that employers increasingly value specific job-ready skills alongside or, in some cases, over traditional degrees.

There are other reasons for the ascendance of skills-based hiring. Proponents argue that it may help reduce bias, strengthen objectivity and boost diversity. They say job candidates are more likely to be judged on the skills they bring to the table rather than the prestige of the institution of higher learning they attended. It can also expand candidate pools and influence how your organization defines roles, evaluates performance and compensates workers.

Practical reasons … and risks

If you’re looking for more practical reasons to adjust your organization’s hiring approach, there are plenty. Focusing on skills rather than education may lead to better “job matching” — that is, aligning job listings more closely with qualified applicants. This can reduce time to hire while improving employee engagement and retention. Employees are brought on to do what they do best, rather than based on an educational background that may not fully align with the organization’s needs.

Of course, skills-based hiring has risks all its own. Employers that focus too narrowly on technical abilities may overlook other critical qualities, such as:

Adaptability,
Communication skills,
Leadership potential, and
Alignment with organizational culture.

There’s also the challenge of accurately assessing whether candidates can apply their skills in real-world situations. Resumés, certificates and interviews may provide useful insight, but they don’t always tell the whole story. One way to dig deeper is to incorporate brief, carefully designed and low-pressure skills exercises into the hiring process. It’s also important to consistently evaluate employees’ performance to better assess the long-term results of hiring decisions.

Direct impact

Ultimately, skills-based hiring is an important trend worth keeping an eye on. After all, how your organization fills open positions directly impacts its financial performance. Successful job matching reduces turnover and builds stronger teams, bolstering your ability to control labor costs and support long-term growth. We’d be happy to help you measure and analyze hiring, compensation and labor costs so you can make informed decisions that support both operational goals and financial success.

Life insurance can provide peace of mind. But if your estate is large enough that estate taxes are a concern, it’s important not to own the policy at death. Why? The policy’s proceeds will be included in your taxable estate. To avoid this result, a common estate planning strategy is to set up an irrevocable life insurance trust (ILIT) to hold the policy.

However, there may come a time when you no longer need the ILIT. Does its irrevocable nature mean you’re stuck with it forever? Maybe not. Depending on the ILIT’s terms and applicable state law, you might have the option of pulling a life insurance policy out of an ILIT or even unwinding the ILIT entirely.

How does an ILIT work?

An ILIT shields life insurance proceeds from estate tax because the trust, rather than the insured, owns the policy. (Note, however, that under the “three-year rule,” if you transfer an existing policy to an ILIT and then die within three years, the proceeds remain taxable. That’s why it’s preferable to have the ILIT purchase a new policy, if possible, rather than transferring an existing policy to the trust.)

The key to removing the policy from your taxable estate is to relinquish all “incidents of ownership.” This means, for example, that you can’t retain the power to change beneficiaries; assign, surrender or cancel the policy; borrow against the policy’s cash value; or pledge the policy as security for a loan (though the trustee may have the power to do these things).

What are the options for undoing an ILIT?

Generally, there are two reasons you might want to undo an ILIT:

You no longer need life insurance, or
You still need life insurance, but your estate isn’t large enough to trigger estate tax, and you’d like to eliminate the restrictions and expense associated with the ILIT structure.

Although your ability to undo an ILIT depends on the ILIT’s terms and applicable state law, potential options include:

Allowing the insurance to lapse. This may be a viable option if the ILIT holds a term life insurance policy that you no longer need (and no other assets). You simply stop making contributions to the trust to cover premium payments. Technically, the ILIT continues to exist. But once the policy lapses, the ILIT owns no assets. It’s also possible to allow a permanent life insurance policy to lapse, but other options may be preferable — especially if the policy has a significant cash value.

Swapping the policy for cash or other assets. Many ILITs permit the grantor to retrieve a policy from an ILIT by substituting cash or other assets of equivalent value. If you have illiquid assets but need cash, you may be able to gain access to a policy’s cash value by swapping the policy for illiquid assets of equivalent value.

Surrendering or selling the policy. If your ILIT holds a permanent insurance policy, the trust might surrender it, which will preserve its cash value but avoid the need to continue paying premiums. Alternatively, if you’re eligible, the trust could sell the policy in a life settlement transaction.

Distributing the trust assets. Some ILITs give the trustee the discretion to distribute trust funds (including the policy’s cash value, other trust assets or possibly the policy itself) to your beneficiaries, such as your spouse or children. Typically, these distributions are limited to funds needed for “health, education, maintenance and support.”

Going to court. If the ILIT’s terms don’t permit the trustee to unwind the trust, it may be possible to obtain a court order to terminate it. For example, state law may permit a court to modify or terminate an ILIT if unanticipated circumstances require changes to achieve the trust’s purposes or if the grantor and all beneficiaries consent.

We’re here to help

These are some, but by no means all, of the strategies that may be available to unwind an ILIT. Bear in mind that some of these solutions can have tax implications for you or your beneficiaries. Contact us to learn more about ILITs.

With caregiving costs rising faster than inflation, it’s harder than ever to juggle parenting young children or caring for elderly relatives while also working nine to five. Your business can help support caregiving employees and boost productivity by offering dependent care flexible spending accounts (FSAs). This benefit provides a tax-advantaged method to pay for eligible caregiving expenses using pretax dollars.

Or maybe you want to make a bigger commitment but are concerned about the costs. If you provide child care directly to workers — for example, by setting up a day care facility in your building — your company may qualify for a significant tax credit.

When employees opt in

To sponsor dependent care FSAs, you’ll need to implement a dependent care assistance program (DCAP), which enables you to retain ownership of your workers’ FSAs. Participating employees must opt in, typically during your company’s open enrollment period or after experiencing a qualifying life event. Then they make pretax compensation deferrals to their accounts, up to $7,500 annually for married couples filing jointly, single filers and heads of households, $3,750 for those married and filing separately. These amounts aren’t indexed for inflation.

Workers can use their FSA balances to pay for eligible expenses, including day care, before- and after-school care, summer day camps, and care for dependent adults who can’t care for themselves. Qualifying expenses must enable participants (and, if applicable, their spouses) to work or seek employment. Using pretax dollars to fund accounts allows participants to pay for qualifying care while reducing their taxable incomes.

Employers win, too

For employers, sponsoring dependent care FSAs also offers potential advantages. First, these accounts can help attract strong job candidates and retain employees.

Second, because participants’ contributions occur pretax, they’re exempt from Social Security and Medicare taxes. That reduces your business’s (and your employees’) payroll tax burden. To increase dependent care FSA participation, you may make contributions to employees’ accounts. However, the $7,500/$3,750 annual contribution limits apply to combined employer-employee contributions. Note that you can’t deduct contributions as a business expense.

You’ll need to ensure that your DCAP complies with IRS regulations, including nondiscrimination rules. Proper recordkeeping, timely reimbursements and clear communication are also critical. Be sure to educate participants about the “use-it-or-lose-it” rule that says FSA balances generally must be spent by the end of the year. (Unused account funds generally revert to employers.) Be sure to train employees to estimate expenses and submit claims to minimize the risk of losing FSA funds. And let participants know their FSAs aren’t portable — meaning they can’t take their balances with them if they leave your company.

Tax help with costs

Another way to retain loyal, hardworking staff is to provide child care directly. For 2026, you may be able to claim an employer-provided child care tax credit equal to 40% of your qualified expenses for providing child care to employees, plus 10% of qualified resource and referral expenditures, up to $500,000. For eligible small businesses, these amounts are 50% and up to $600,000, respectively. The maximum dollar amount will be adjusted annually for inflation after 2026. (The additional 10% credit for resource and referral expenses will continue to be available.)

Qualified costs include those spent to acquire, construct, renovate and operate a child care facility. Or you can claim expenses for contracting with a licensed child care facility. If you provide on-site care, at least 30% of the enrolled children must be your employees’ dependents.

Competitive package

Dependent care FSAs and employer-offered child care can be competitive additions to your employee benefits package. But because of the resources involved, think carefully before designing a DCAP or establishing a child care facility. Your workforce may not want them. Consider distributing a survey to gauge interest before you commit to offering new fringe benefits.

And to help ensure you’re offering the most cost- and tax-effective benefits to your workforce, contact us. We can review your benefits lineup, potentially suggest changes and advise on program setup and administration.

Yeo & Yeo CPAs & Advisors is proud to announce that Steven Treece, CPA, PFS, has received the Tomorrow’s 20 Award presented by the Auburn Hills Chamber of Commerce. This award recognizes emerging leaders who demonstrate influence in the community through excellence in business leadership, dedication to innovation, and community service.

Steven Treece joined Yeo & Yeo in 2013 and has built a reputation as a trusted advisor to clients across Michigan and a respected firmwide leader. As a Certified Public Accountant and Personal Financial Specialist, he focuses on complex tax planning and strategy for individuals and closely held businesses, with expertise in real estate, estate and trust planning, and wealth strategy. He is an active member of Yeo & Yeo’s Agribusiness Services Group, Estate & Trust Services Group, and Real Estate Services Group, working closely with business owners and families navigating growth, transition, and long-term planning.

A graduate of the BDO Alliance USA Emerging Leaders program, Treece brings a forward-looking perspective to practice management and innovation. He has authored articles on tax and industry-specific issues, contributed to implementing Yeo & Yeo’s YeoLEAN Tax process, and helped develop the firm’s Prospective Client Acceptance Matrix—initiatives that enhance efficiency, quality, and sustainable growth.

Treece is also recognized for his commitment to developing others. He serves as a Career Advocate for professionals across multiple offices, teaches best practices in client service, and has hosted internal podcasts focused on elevating service excellence. His leadership has earned recognition both inside and outside the firm, including being named to the Flint & Genesee Group’s 40 Under 40.

As Yeo & Yeo’s presence and client base in Southeast Michigan have expanded, Steve made a purposeful decision to relocate and be based in the Auburn Hills/Troy area to more directly support clients with his technical expertise. That same commitment to being present and engaged extends beyond his professional role. His commitment to community service is longstanding and hands-on. Treece is a past president of the Rotary Club of Burton and has volunteered with Boy Scouts of America, Old Newsboys of Flint, the Food Bank of Eastern Michigan, and Genesee County Habitat for Humanity. As he deepens his roots in the Auburn Hills/Troy area, Treece looks forward to expanding his involvement throughout Southeast Michigan.

“Steve cares deeply about developing the people he leads,” said Tammy Moncrief, CPA, Managing Principal of Yeo & Yeo’s Troy office. “Beyond his professional expertise, he consistently offers encouragement and support as his team takes on new challenges, and his mentorship has a lasting impact. He is a strong role model and well-deserving of this recognition.”

The Tomorrow’s 20 award recipients will be honored at a gala hosted by the Auburn Hills Chamber on April 29 in Pontiac, Michigan.

Annuities have recently gained attention as an employee benefit because of changes in federal retirement law. But their use in workplace plans remains limited. The 68th Annual 401(k) Survey by the Plan Sponsor Council of America, published in late 2025, found that only 8.9% of respondents had an in-plan annuity for the 2024 plan year. That doesn’t mean you should ignore the option, though — particularly if your organization has key employees who’d value this benefit or if it could help attract mission-critical hires.

Defining the concept

Annuities are contracts issued by insurance companies that can provide guaranteed income in retirement, often until the end of the contract owner’s life. Traditional annuity contracts require an individual to make either a lump-sum payment or a series of payments to the insurer in exchange for income paid out at regular intervals during retirement.

Because traditional annuity contracts are typically bought with after-tax dollars, the buyer generally doesn’t receive a current tax deduction. Later, when distributions begin, the earnings portion of each payment is usually taxable as ordinary income, while the portion representing the buyer’s original investment typically isn’t taxed again.

An alternate version is the qualified employee annuity. Under these arrangements, an employer sponsors an annuity through a qualified retirement plan or as a retirement benefit under a plan that meets certain Internal Revenue Code requirements.

In many cases, the annuity serves as an investment or distribution option within a plan rather than as a separate benefit. Contributions are generally made with pretax dollars, earnings grow tax-deferred and distributions are generally taxed as ordinary income. (A portion may be tax-free if after-tax contributions are involved.) In this context, the annuity is simply the investment vehicle — the tax treatment generally follows the rules of the underlying retirement plan.

Recognizing the differences

Annuities and traditional 401(k) plans are similar in that they allow tax-deferred growth of account funds. But they also have key differences, which some employees may appreciate. For example, as mentioned, annuities can provide a predictable income stream that might last throughout a participant’s lifetime. A traditional 401(k) account balance, by itself, doesn’t come with that kind of guarantee.

Also, employee-participants can contribute only a specific amount to their respective 401(k) accounts annually. In 2026, the limit is $24,500 (not including catch-up contributions, if applicable). Whether contribution limits apply to an annuity depends on how it’s offered. If the annuity is held within a qualified retirement plan, the usual limits still apply. That said, some employees may find annuities appealing for their income guarantee rather than for contribution flexibility.

Then again, the fixed rate of return guaranteed by an annuity may be lower than the returns available through other investments. Also, unlike a 401(k), some annuities’ payout options may provide little or no value to heirs after the account owner’s death, depending on the contract terms. (Some annuities can include survivor or death benefit features.)

Another consideration is that annuities typically don’t permit participants to borrow money from their accounts. A loan feature, common to many 401(k) plans, is often appreciated by participants for emergencies, despite the downsides of taking out such loans.

Participants may be able to take early distributions from a qualified employee annuity if the plan permits them. However, the taxable portion is generally subject to ordinary income tax and may also be subject to a 10% additional tax if taken before age 59½, unless an eligible exception applies.

Catching up with the changes

Although 401(k) plans could include annuity features before 2019, the SECURE Act encouraged wider adoption by:

Giving plan sponsors a clearer fiduciary safe harbor for selecting insurers, and
Making certain lifetime income investments easier to preserve when employees change jobs.

SECURE 2.0, enacted in 2022, made several related rule changes. These include updates affecting longevity annuities and retirement plan distributions, which may further support lifetime income planning. In many cases, employers that sponsor annuities do so by offering a lifetime income option within an existing defined contribution plan rather than by replacing the plan altogether.

Assessing the complexities

Many employers remain hesitant to sponsor annuities because of their complexity and fiduciary considerations. For instance, choosing a provider requires a careful review of the insurer’s financial strength, the contract terms and the associated costs. Also, there are generally fees involved with annuities that vary by provider and contract, adding another layer of complexity to administering annuities — particularly when participants leave the organization.

In addition, employers need to think about employee communication. Annuities can be complicated, and participants may need help understanding fees, liquidity restrictions, payout options and beneficiary implications before electing this type of benefit.

Making the right call

For some small and midsize employers, offering an annuity-related benefit may be a worthwhile addition to their benefits package. But, as you can see, these products are hardly simple. Contact us for help determining whether an annuity plan or feature is right for your organization.

GASB Statement No. 103, Financial Reporting Model Improvements, is not a full overhaul like GASB 34 was; instead, it is a targeted refinement. Its new requirements directly affect how government entities prepare annual financial statements, particularly in the areas of MD&A, unusual or infrequent items, proprietary fund reporting, component unit presentation, and budgetary comparisons.

A Sharper, More Analytical MD&A

Under GASB 103, the Management’s Discussion and Analysis (MD&A) must focus on five required areas:

Overview of the financial statements
Financial summary
Detailed analyses
Significant capital and long‑term financing activity
Currently known facts or conditions

This means government entities can no longer rely on template‑style MD&A narratives. Instead, they must provide clear explanations of why property taxes, state funding levels, federal grants, staffing shifts, or capital project activity affected financial results. Think of it as a shift toward an analytical narrative where the MD&A provides explanations as to why things changed, not just what changed. There is also a requirement for a clear distinction between the primary government and any component units.

Reclassification of Unusual or Infrequent Items

GASB 103 replaces “special” and “extraordinary” items with a single category: unusual or infrequent items. For government entities, this may apply to events such as unexpected facility damages, one‑time legal settlements, or rare funding adjustments.

Proprietary Funds

Government entities must follow updated proprietary fund reporting requirements. GASB 103 maintains the distinction between operating and nonoperating activities but updates presentation rules to improve consistency.

Major Component Unit Presentation

GASB 103 enhances consistency in how component units are presented. The standard requires greater disaggregation of major component units to improve consistency and comparability.

Budgetary Comparison Enhancements

Government entities must also adapt to improved consistency requirements for budgetary comparison schedules. These refinements reduce diversity in practice and improve the clarity and comparability of budgetary reporting.

Implementation Timeline

GASB 103 is effective for fiscal years beginning after June 15, 2025, meaning this will be effective starting with the June 30, 2026, financial statements.

If you need assistance or have questions, please contact your auditor or a member of Yeo & Yeo’s Government Services Group. We are here to help.

Be on the lookout for our upcoming webinar in May 2026, where we’ll explore GASB 103 in greater detail.

Yeo & Yeo’s Education Services Group professionals are pleased to present several sessions during the April 21-23 MSBO Conference & Exhibit Show at the Amway Grand Plaza and DeVos Place in Grand Rapids.

We are excited to share our insights to help districts navigate the complexities of school financial management. We look forward to seeing you there and working together to support MSBO and the broader education community.

Tuesday, April 21

Accounting and Auditing Update – 9:30-10:30 a.m.

- Jennifer Watkins, CPA, Yeo & Yeo Principal, shares insights on the latest accounting pronouncements and preparing for this audit season.

Thursday, April 23

School Nutrition Program Financial Reporting and Auditing Considerations – 8:20-9:20 a.m.
- Kristi Krafft-Bellsky, CPA, Yeo & Yeo Principal, joins Michelle Needham, MDE, to help you learn about the main compliance and audit issues in the food service fund and how to navigate them.
Allowable Expenditures – 9:40-10:40 a.m.
- Jacob Walter, Yeo & Yeo Senior Accountant, and Jeremy S. Motz, Clark Hill PLC, share insights on reviewing guidelines for allowable expenditures.
Contractor vs. Employee Tax Filing – 9:40-10:40 a.m.
- Jennifer Watkins, CPA, Yeo & Yeo Principal, joins Jolene Compton, Bay City Public Schools, to share insights into 1099 filing and ensuring you are filing tax forms correctly for staff, vendors, and contractors.
Frequently Found Audit Issues – 1:15-1:45 p.m.
- Jennifer Watkins, CPA, Yeo & Yeo Principal, joins Joselito Quintero and Gloria Jean Suggitt, MDE, to help you understand common audit findings, including compliance and internal controls issues.
Student and School Activity Funds – 1:15-1:45 p.m.
- Jordan Bohlinger, Yeo & Yeo Manager, revisits GASB 84 to help you understand the rules and accounting guidance, and to answer common questions.

Visit our booth!

Stop by Yeo & Yeo’s booth 403 and enter our prize drawing! Our K-12 Education Services Group members welcome the opportunity to hear about challenges your district may be facing and share helpful insights. Hope to see you there!

Yeo & Yeo CPAs & Advisors, a leading Michigan-based accounting and advisory firm, has been named one of West Michigan’s Best and Brightest Companies to Work For for the twenty-second consecutive year.

The Best and Brightest program identifies and honors organizations that excel in their human resource practices and employee enrichment. An independent research firm assesses organizations in categories such as communication, work-life balance, employee education, recognition, retention, and more.

Yeo & Yeo’s long-standing recognition reflects the firm’s commitment to continuous improvement and listening to employee feedback. In the past year, the firm introduced new benefits, including pet insurance, and continues to support employees through its expanded parental leave program and extra time off for long-term team members. A newly formed learning and development committee has enhanced training pathways, refreshed learning guides, and created development plans to support employee growth and advancement.

Beyond professional development, Yeo & Yeo invests in programs that strengthen connection and well-being. From personalized coaching through Boon Health to firmwide appreciation events and summer half-day Fridays, the firm continues to find new ways to help its people thrive—both personally and professionally.

“Receiving this recognition year after year is an incredible achievement and a reflection of the culture we’ve built together,” said David Jewell, Managing Principal of the firm’s Kalamazoo office. “What makes it meaningful is that we’ve never stopped evolving. As we continue to grow and welcome new talent, we remain focused on creating an environment where every employee feels supported, valued, and empowered to succeed.”

The select companies will be honored on Thursday, June 4, 2026, at the JW Marriott Grand Rapids in Grand Rapids, Mich.

“Cross-functional” sales teams that collaborate with other departments often perform more effectively than siloed ones. By providing feedback and support, employees with varied skill sets and knowledge bases can help your sales team create more holistic sales strategies, better align product offerings with customer needs and efficiently adapt to market changes. Here’s how sales can leverage the expertise of marketing, product development, customer service, finance and other internal stakeholders.

Fighting silos

A cross-functional team is any group of employees from different departments brought together to solve a problem or pursue a goal. Your company might assemble such teams to develop new products or services, implement technology upgrades, and complete short-term projects. However, the cross-functional approach really shines when applied to sales and marketing. Even though these departments are closely connected, they often operate in separate spheres.

Silos can also exist within the sales team, where individuals work largely on their own and share limited information. Many salespeople spend their time interacting with prospective customers or clients. They might only “come up for air” to share information and experiences at sales meetings or in conversations with managers. This can result in missed opportunities to communicate insights on customers, prices and other issues.

Team members

By building a cross-functional sales team, you can eliminate such silos. You should aim to create an environment where employees feel comfortable sharing information and working together. Seek early buy-in from employees who communicate well and are open to collaboration. They can help you promote the concept and encourage broader employee buy-in.

Your team will obviously need to include members of both the sales and marketing departments. But don’t stop there. Someone from your IT department could help recommend tech solutions for sales department challenges. A customer service rep might be able to provide insights into how customers are likely to respond to changes in product features. A finance team member could weigh in on profitability by product or customer.

Cross-functional sales teams don’t require complex leadership structures. In fact, appointing a team leader from within the group can encourage open participation and accountability.

Other benefits

The advantages of forming a cross-functional sales team extend beyond improving sales results: Such teams can infuse fresh perspectives into all your departments, inspire greater communication companywide and support more consistent decision-making.

Over time, this approach can lead to clearer visibility into what’s driving revenue and profitability. If you’re looking to better align sales with your overall business strategy, contact us. We can help you identify where cross-functional collaboration will likely pay off.

GASB Statement No. 103, Financial Reporting Model Improvements, marks the most significant update to governmental financial reporting since GASB 34. Its new requirements directly affect how public school districts prepare annual financial statements, particularly in the areas of MD&A, unusual or infrequent items, proprietary fund reporting, and budgetary comparisons.

A Sharper, More Analytical MD&A for School Districts

Under GASB 103, the Management’s Discussion and Analysis (MD&A) must focus on five required areas:

Overview of the financial statements
Financial summary
Detailed analyses
Significant capital and long‑term financing activity
Currently known facts or conditions

This means school districts can no longer rely on template‑style MD&A narratives. Instead, they must provide clear explanations of why enrollment changes, state funding levels, federal grants, staffing shifts, or capital project activity affected financial results.

Reclassification of Unusual or Infrequent Items

GASB 103 replaces “special” and “extraordinary” items with a single category: unusual or infrequent items. For school districts, this may apply to events such as unexpected facility damages, one‑time legal settlements, or rare funding adjustments.

Proprietary Funds and Student Service Operations

Districts with internal service funds must follow updated proprietary fund reporting requirements. GASB 103 maintains the distinction between operating and nonoperating activities but updates presentation rules to improve consistency.

Budgetary Comparison Enhancements

School districts must also adapt to improved consistency requirements for budgetary comparison schedules. GASB 103 modernizes these presentations to support better evaluation of how actual revenues and expenditures compare to board‑approved budgets.

Implementation Timeline for Schools

GASB 103 is effective for fiscal years beginning after June 15, 2025, meaning most school districts will first implement it in their June 30, 2026, financial statements.

If you need assistance or have questions, please contact your auditor or a member of Yeo & Yeo’s Education Services Group. We are here to help.

Spring cleaning is usually associated with closets, garages, and storage rooms. But financial clutter can accumulate just as easily, and often with greater long-term cost.

Recurring charges, dormant accounts, and overlooked assets rarely attract attention because none of them feel urgent on their own. Yet even modest inefficiencies can gradually erode cash flow and make your financial picture harder to manage.

Taking a few hours each spring, or even a few times a year, to review your financial accounts can uncover immediate savings, recover forgotten funds, and ensure your financial systems are still working the way you expect.

Subscription drift

One of the most common sources of financial clutter is recurring subscriptions.

Individually, these charges can seem insignificant. A $49 monthly subscription may not draw much attention when it first appears on a statement. Over the course of a year, however, that single charge becomes $588. Multiply that across several streaming services, software subscriptions, fitness memberships, or apps, and the total can easily reach several thousand dollars annually.

Because these charges are automatic, they often continue long after their usefulness has passed.

Reviewing bank and credit card statements is usually enough to identify services that are rarely used or easily replaced by platforms you already have. Even when a service is still useful, it’s worth checking whether the pricing still makes sense. Many providers quietly increase prices or introduce new plans over time.

In some cases, savings can come from bundling services together or switching to packages that combine several subscriptions at a lower overall cost. These options are not always advertised to existing customers, so a quick comparison of available plans can occasionally reveal savings without changing the services you already use.

Billing structure can also make a difference. Services used consistently throughout the year may offer meaningful discounts for annual billing, while others may be better kept on a monthly basis and canceled when they are not needed.

The goal is not to eliminate every subscription; it’s to ensure each one still delivers enough value to justify the cost and to optimize how those services are priced.

Dormant and overlooked assets

Financial clutter can also appear in the form of assets that have simply been forgotten.

Old bank accounts, small brokerage balances, uncashed checks, and refunds, sometimes remain scattered across financial institutions. If accounts remain inactive long enough, they may eventually be transferred to state custody as unclaimed property.

While most individual claims are relatively small, the process of checking is quick. Each year, billions of dollars sit in state unclaimed property divisions across the country. A search of the official database for states where you have lived or worked takes only a few minutes and can occasionally uncover funds that belong to you.

It can also be worthwhile to check for family members who may not be as comfortable navigating these systems. Many unclaimed property databases contain records that have gone unnoticed for years simply because no one thought to look.

This exercise is less about budgeting and more about recovery – identifying assets that already exist but have slipped off the radar.

Reducing administrative drag

Disorganized financial systems can also create practical risks.

Missed cancellation deadlines, outdated beneficiary designations, overlapping insurance policies, or incomplete documentation are all common examples. None of these issues may seem significant individually, but they can create unnecessary cost or complications when left unaddressed.

A periodic review provides an opportunity to verify that key financial details are still accurate. Beneficiary designations on retirement accounts and insurance policies should reflect current intentions. Insurance coverage should match the assets you actually own (and their current values), and deductibles should still align with your ability to absorb risk.

Credit cards are another area worth reviewing. Cards with annual fees may no longer justify their cost if spending patterns have changed, and rewards programs may not align with how you currently use them. In some cases, issuers may be willing to reduce or waive annual fees if you call and ask.

It can also be helpful to review credit utilization. If balances regularly approach 30% of available credit, paying those balances down (or spreading usage across multiple accounts) can improve both liquidity and credit health.

Reviewing automatic financial systems

Automation is one of the most useful financial tools available, but automated systems still need occasional review.

Savings transfers, investment contributions, and automatic payments are often set up with good intentions and then left unchanged for years. As income, expenses, and priorities evolve, those settings may no longer reflect your current financial goals.

Periodic review helps ensure these systems still operate as intended. Automatic savings transfers may need to be increased as income grows, while certain recurring payments should be confirmed to ensure they are still required.

It is also worth verifying that automatic bill payments stop when obligations end. In rare cases, outdated payment instructions can continue sending funds long after a balance has been satisfied, leaving money sitting in the wrong place instead of being invested or used more productively.

The goal is simple: automation should be working for you, not continuing indefinitely without oversight.

The return

A short financial review can produce results that extend well beyond the time invested.

Unused subscriptions can be eliminated or optimized. Forgotten assets can be recovered. Insurance coverage and credit accounts can be aligned with current needs. Automated systems can be adjusted so they continue supporting long-term financial goals.

More importantly, the process restores clarity. When accounts, subscriptions, and financial systems are reviewed periodically, it becomes much easier to identify opportunities for improvement and avoid preventable mistakes.

For many households, financial spring cleaning is not about reducing spending. It is about ensuring that the money already being spent, and the systems managing it, are working as efficiently as possible.

If you are reviewing your finances this season and discover questions about tax planning, charitable giving, account structure, or broader financial strategy, it may be worth discussing those items during your next planning conversation with your CPA. Small adjustments uncovered during a routine review can sometimes lead to meaningful improvements in your overall financial plan. For more personalized guidance, please contact our office.

“Lulling” may sound comforting, but in a fraud context, it’s far from it. This term refers to techniques fraud perpetrators use to prevent suspicious businesses or individuals from asking questions, getting angry — or even contacting law enforcement. To lull someone into inaction, a fraudster might offer excuses, make promises, blame delays on someone else or create the impression that a problem is only temporary. It’s important to recognize these warning signs and be ready to act.

What makes it dangerous

Dishonest employees, vendors and third parties might use lulling tactics to prevent detection and extend a fraud scheme’s life. Sometimes, efforts to lull victims start only after a scam is well underway. In other cases, lulling is built into the scam from the beginning with small transactions and limited follow-through designed to make the victim believe the perpetrator is well-intentioned and legitimate. These tactics are usually effective because they appear to be ordinary delays, misunderstandings or attempts to fix honest errors.

What makes lulling so dangerous is that it’s often part of the fraud itself. Communications between perpetrators and victims — including in-person and phone conversations and email and text messages — aim to soothe concerns and delay complaints. This matters because the longer a scheme continues, the costlier it’s likely to be. Buying a few more months can enable perpetrators to steal additional funds. It also gives them more time to cover their tracks, destroy records, spend ill-gotten gains, and, in many cases, find their next victim.

False sense of hope

Companies can be especially vulnerable to lulling techniques because they want to appear fair, avoid overreacting and preserve business relationships. Fraud perpetrators exploit what, in other circumstances, would be considered smart business practices.

Fraudsters might give victims hope that they’re making progress by providing a partial payment for goods or as a “return” on a fake investment. A token repayment can be enough to persuade even cautious people to hang on and wait for full payment. Similarly, a substitute item or a promise wrapped in paperwork can create just enough hope to delay scrutiny for another day.

Other lulling methods involve blaming a third party. For example, perpetrators might attribute delayed payments to bank errors or problems in their accounts payable department. Or they might buy time by claiming, for example, a death in the family or another personal emergency. In general, you should be wary of stalling efforts and emotional manipulation. Dishonest employees attempting to cover up occupational fraud schemes often use these last two tactics to control colleagues and supervisors. After all, they have the advantage of knowing their victims and their vulnerabilities.

Document, document, document

To potentially limit the duration of a fraud scheme involving lulling, document transactions and interactions — particularly if they seem “off.” Documentation enables you to objectively examine signs that someone might be lulling you into a false sense of security. Documentation also produces a paper trail of possible evidence that can be useful if you later refer a case to law enforcement or try to track down stolen funds.

Be sure to document clear timelines and retain emails, texts, voicemails, contracts, promissory notes, photos, videos, financial records, social media posts, and, where permitted under applicable law, recorded calls. If you involve legal counsel or a forensic accountant to help investigate possible fraud, provide them with copies of these records.

Pay attention

You’re busy, and lulling makes it easy to ignore suspicious behavior. But it’s important to pay attention. Recognizing reassurance tactics early can be the difference between containing losses and giving a fraudster time to inflict serious financial damage. Contact us for help investigating suspicious activity and strengthening internal controls to prevent fraud.

Most businesses close their books for tax and accounting purposes on December 31 because it aligns with the calendar year. But a calendar year isn’t always the best option. For some companies, choosing a fiscal year end that better reflects their business cycle can improve financial reporting and simplify year-end procedures and tax filing. Here’s what you should know when deciding on the right tax year end for your business.

Fiscal-year basics

A fiscal year is a 12-month accounting period that doesn’t end on December 31. For example, a company might operate on a fiscal year running from July 1 through June 30.

Some businesses use a 52- or 53-week fiscal year. These periods don’t necessarily end on the last day of a month. Instead, they may close on the same weekday each year, such as the last Friday in March. This approach is common in industries where weekly activity cycles are more meaningful than monthly reporting.

Using a fiscal year also changes tax filing deadlines. Pass-through entities — including partnerships, limited liability companies and S corporations — generally must file their tax returns by the 15th day of the third month after their fiscal year ends. For example, a business with a June 30 fiscal year end would file its return by September 15. Fiscal-year C corporations generally must file by the 15th day of the fourth month following the fiscal year close. (These correspond to the calendar-year deadlines of March 15 for pass-throughs, which is the 15th day of the third month after December 31, and April 15 for C corporations, which is the 15th day of the fourth month after December 31.)

When a fiscal year makes sense

Not every business can choose its own tax year. Sole proprietorships typically must use a calendar year because the business isn’t legally separate from its owner, who files an individual tax return based on the calendar year.

Other businesses may be able to adopt a fiscal year if they can demonstrate a valid business purpose or qualify for certain IRS elections. In practice, this usually means aligning the tax year with the company’s operating cycle. For seasonal businesses, a fiscal year can provide a clearer view of performance. Construction companies, farms, accounting firms and retailers often experience significant fluctuations throughout the year.

Consider a snowplowing company that earns most of its revenue between November and March. A December 31 year end divides one winter season into two tax years, making it harder to evaluate profitability for that period. A fiscal year ending after the winter season may present financial results more accurately than a calendar year would.

Businesses that restructure or significantly change their operations may also consider changing their tax year. Doing so generally requires IRS approval by filing Form 1128, “Application to Adopt, Change or Retain a Tax Year.” Companies that change their tax year usually must also file a return for the short period created during the transition.

Beyond taxes

The benefits of adopting a fiscal year aren’t limited to tax reporting. Choosing the right year end can also make financial reporting and planning easier.

If a company’s busiest months fall late in the calendar year, closing the books on December 31 can disrupt operations and strain accounting staff during an already demanding period. Moving the year end to a slower time can make it easier to perform inventory counts, review contracts and complete financial statements. This can be especially helpful for businesses that rely on detailed job costing or inventory management. Completing year-end accounting tasks when operations are less hectic can reduce errors and improve the financial data that business owners and stakeholders rely on for decision-making.

We can help

Selecting a fiscal year end involves more than choosing a convenient date. The right year end can streamline reporting, provide more meaningful insights and support better planning. If you’re thinking about a change, contact us. We’ll help you determine the best fit for your operations and guide you through the IRS approval process.

Yeo & Yeo CPAs & Advisors is proud to announce that Makena Welch, Marketing Associate, was awarded the Creative Marketing Award at the Troy Chamber of Commerce Business Excellence Awards program on March 5.

The Creative Marketing Award recognizes professionals who demonstrate exceptional creativity, innovation, and impact in marketing communications. Welch was honored for her dynamic contributions to Yeo & Yeo’s brand storytelling and marketing initiatives across multiple platforms.

Welch has been with Yeo & Yeo for four years and serves in the firm’s marketing department, where she leads efforts in video, social media, creative development, graphic design, and brand management. Her work plays a key role in shaping and maintaining the firm’s brand identity while engaging audiences through compelling visual storytelling. In addition to her creative responsibilities, Welch is actively involved in the Troy Chamber of Commerce and participates in a variety of Southeast Michigan business and community events, further supporting Yeo & Yeo’s regional presence.

“Makena’s creativity and talent shine through in every project,” said Kim Dahl, Director of Marketing at Yeo & Yeo. “She has a unique ability to take our ideas and transform them into powerful visuals and messages that truly resonate. Her passion for creative marketing and her commitment to excellence make her incredibly deserving of this recognition.”

Yeo & Yeo was also proud to see additional members of its team and organization recognized during the awards program. Michael Rolka, CPA, CGFM, Principal, was nominated for the Client Service Excellence Award, highlighting his dedication to delivering exceptional service and building strong client relationships. In addition, Yeo & Yeo was nominated for the Community Impact Award, recognizing the firm’s ongoing commitment to giving back and supporting the communities it serves.

Further underscoring that commitment, Yeo & Yeo sponsored the Nonprofit Excellence Award, reflecting the firm’s continued support of nonprofit organizations and community-focused initiatives throughout the region.

The Troy Chamber Business Excellence Awards celebrate outstanding businesses and professionals who contribute to the vitality, innovation, and growth of the local business community. Yeo & Yeo congratulates all nominees and winners and is honored to be part of such a vibrant and impactful network.

A new but temporary special depreciation allowance for qualified production property (QPP) was created by last year’s One Big Beautiful Bill Act (OBBBA). It’s available for certain manufacturing-related real property placed in service after July 4, 2025, and before January 1, 2031. Under previous law, taxpayers had to depreciate such property over a 39-year period. The OBBBA allows them to elect a deduction equal to 100% of the property’s adjusted basis in the tax year it’s placed in service — basically, it’s bonus depreciation for certain buildings and production facilities.

The IRS recently issued interim guidance (Notice 2026-16) that taxpayers generally can rely on until proposed regulations are published. It clarifies several important issues related to the deduction.

Identifying QPP

The guidance defines QPP as any portion of nonresidential real property that is:

Subject to the Modified Accelerated Cost Recovery System,
Used by the taxpayer as “an integral part” of a qualified production activity (QPA, defined below), and
Placed in service in the United States or any of its territories.

In addition, the property’s construction must begin after January 19, 2025, and before January 1, 2029. Its original use generally must begin with the taxpayer, though certain used property may qualify as QPP under special rules.

Property (or a portion of property) is used as an integral part of a QPA if the QPA takes place in the physical space of the property (or a portion of the physical space). Each unit of property (including additions and improvements) must satisfy the integral part requirement on its own, with an exception for “integrated facilities.”

Taxpayers can treat multiple properties that operate as an integrated facility on the same piece or contiguous pieces of land as a single unit of property. For example, if a manufacturer constructs a new building to store raw materials and other manufacturing inputs for activities in two factories on the same site, the three buildings constitute a single unit of property for purposes of the integral part requirement.

The guidance also includes a de minimis rule: If 95% or more of a property’s physical space satisfies the integral part requirement when the property is placed in service, the taxpayer can elect to treat the entire property as satisfying the requirement.

For purposes of determining whether property meets the integral part requirement, property used by a lessee generally isn’t considered to be used by the lessor taxpayer as part of a QPA. The guidance provides exceptions, though, for intercompany leases within consolidated groups and commonly controlled pass-through entities.

The guidance specifies several types of ineligible property, including property used for offices, administrative services, lodging, parking, sales activities, research activities, software development or engineering activities, or other functions unrelated to a QPA. Property used to store finished products is also ineligible.

Under the guidance, taxpayers may use any reasonable method to allocate a property’s unadjusted depreciable basis between eligible property and ineligible property. The use of square footage, cost segregation data, architectural or engineering plans, process diagrams, or construction invoices to allocate unadjusted depreciable basis to eligible property may be reasonable methods. Taxpayers can also use any reasonable method to allocate the basis for “dual-use infrastructure” that serves both eligible property and ineligible property (such as an HVAC or sprinkler system).

Identifying QPAs

A QPA is the manufacturing, production or refining of a qualified product that results in a “substantial transformation” of the qualified product (generally, any tangible personal property except a food or beverage prepared in the same building where it will be sold). The guidance explains that “substantial transformation” refers to the further manufacturing, production or refining of the constituent elements, raw materials, inputs or subcomponents into a final, complete and distinct item of property that’s fundamentally different from those original elements, materials, inputs or subcomponents.

The guidance interprets the term QPA somewhat broadly. It says that a QPA can include “essential activities” that are critical to the completion of the product (for example, the receiving and storage of raw materials or other inputs to be used or consumed during a QPA). A QPA also includes certain related activities, such as oversight and direction of the manufacturing, production or refining activities that result in the substantial transformation of a qualified product.

The guidance includes specific definitions for “manufacturing,” “production,” “refining” and other important terms. Notably, “production” is limited to activities in the agricultural or chemical industries.

And that’s not all

The interim guidance also includes special rules, election procedures and a safe harbor for property placed in service in 2025 — as well as information about how depreciation must be recaptured and included in ordinary income if a QPP change in use occurs within 10 years after the property is placed in service. We can help you navigate the rules and maximize this new tax break if you’re eligible.

For many organizations, the end of the month brings added pressure to finalize financial records accurately and on time. This process often requires coordination across various departments, including finance and accounting (F&A), operations, sales and payroll. When handoffs aren’t well coordinated, the risk of financial reporting delays and errors increases. The good news is that a few practical adjustments can make your month-end close far more efficient and manageable.

Create a consistent workflow

Gathering accounting data involves many moving parts throughout the organization. To reduce stress, adopt a consistent approach that follows standard operating procedures and uses detailed checklists to track responsible parties, deadlines and progress.

This minimizes the use of ad-hoc processes. It also helps ensure consistency and accuracy each month. When assigning tasks, it’s important to clearly divide responsibilities between team members to improve efficiency and ensure proper segregation of duties.

Implement effective review procedures

Too often, F&A teams spend most of their time during the close process on the mechanics. But dedicating time to review procedures is critical to maintaining effective internal controls over financial reporting. Examples of review procedures include:

Reconciling amounts in a ledger to source documents (such as invoices, contracts or bank records),
Testing a random sample of transactions for accuracy, and
Performing variance analysis by comparing monthly results to prior periods, budgeted amounts and/or external benchmarks.

Results should be accurate, complete and reasonable in light of the reviewer’s understanding of the business, the nature of underlying transactions and expected relationships among financial data.

Without adequate oversight, the probability of errors (or fraud) in the financial statements increases. Timely review procedures help identify and resolve issues early, reducing the need for more time-consuming corrections later.

Encourage ownership and adaptability

Employees who are actively involved in the month-end close are often best positioned to recognize trouble spots and bottlenecks. So, it’s important to adopt a continuous improvement mindset.

One practical approach is to hold brief post-close discussions to identify what worked well and what didn’t. From there, assign responsibility for implementing changes to individuals with clear accountability and the authority to drive change in your organization.

At the same time, many F&A departments rely heavily on certain specialized staff to complete critical tasks each month. When those individuals are unavailable, it can delay the entire timeline. Cross-training employees on key steps can help minimize frustration and delays. It may also help identify inefficiencies in the financial reporting process and improve overall team flexibility.

Leverage automation tools

Your F&A department may rely on manual processes to extract, manipulate and report data. However, these processes can be time-consuming, increase the risk of human error and make it more difficult to maintain consistent internal controls.

Fortunately, modern accounting software can now automate certain tasks, such as invoicing, accounts payable management and payroll processing. In some cases, you may need to upgrade your current accounting software to take full advantage of these efficiencies. But even modest improvements — such as automating recurring entries or bank feeds — can substantially reduce the time it takes to close your books.

Focus on efficiency

A smoother month-end close can improve the reliability and timeliness of your company’s financial reporting. By refining your procedures and making smart use of available tools, your F&A team can spend less time chasing numbers and more time interpreting them. If you’d like guidance on improving your month-end close process, we’re here to help.

A Gallup survey published in January 2026 revealed that only 30% of supervisors who responded were placed in their roles because of supervisory skills or experience. The survey also found that supervisors who received leadership education or training were 79% more likely to be engaged and 11% less likely to look for another job. The problem: Less than half of respondents had received such training in the past year.

These data points outline a long-standing challenge for many employers. That is, supervisors are often promoted because of skills and successes in areas other than leadership. Gaps in leadership skills can undermine interactions with team members and, in turn, negatively affect an organization’s financial performance.

5 key abilities

The most direct way to address the matter is to invest a reasonable amount of time and resources in carefully designed leadership training. In most cases, this involves enrolling supervisors in a series of externally provided courses or workshops that upskill their abilities to:

1. Define their style. There’s no one-size-fits-all template for being a good leader. Supervisors need to identify and develop a style that suits their distinctive personalities and strengths. Generally, leaders may be categorized as autocratic (giving orders and expecting specific results), delegative (allowing team members to work mostly independently) or participative (combining the previous two styles and soliciting feedback from the team).

2. Optimize time and priorities. Leadership quality tends to suffer when a supervisor is stretched too thin or chooses to focus on one aspect of the job more than others. For example, an organization might have a leader who’s tasked with both strategic planning and supervising employees. If that person spends 80% of the time developing operational strategies and only 20% on team building and supervision, those employees might feel largely ignored.

3. Manage team performance. Most employers, particularly larger ones, have a formal process for establishing expectations, setting goals, measuring performance and conducting reviews at least once annually. Along with doing all that, supervisors may also need to spend time directly coaching some employees or working with them on performance improvement plans. Performance management can be complex and rigorous, requiring highly skilled and patient leaders to carry it out.

4. Resolve conflicts. Conflict is an inevitable part of supervising employees. If mishandled or ignored, it can damage morale and productivity. Supervisors need to recognize potential conflicts early, resolve them proactively and follow established, legally compliant procedures — particularly when handling employee discipline or termination.

5. Interact with remote workers. The widespread use of remote work arrangements, which really took off during the pandemic, is still a relatively new leadership challenge for some employers. When employees work from home, leaders no longer have the “luxury” of seeing their team members face to face in meeting rooms and offices. So, they often need to make an extra effort to communicate and stay connected.

Make no assumptions

Internal promotions can be a great way to retain organizational knowledge, motivate staff, and save time and expense on an external hire. But excellence in other positions doesn’t automatically translate into effective leadership skills. When supervisors aren’t equipped to lead, your organization risks lower productivity, higher turnover and even legal exposure. We can help you evaluate the financial impact of leadership gaps and integrate targeted training into budgeting and workforce planning.