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When Julie is not out exploring the beautiful Pacific Northwest or creating a new dish in the kitchen, she is passionate about helping clients challenge their current process of how things have always been done. She believes that a well-thought-out process, good people, and proper technology are key to allowing a business to scale and flourish.

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Jason Chong
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When the COVID-19 pandemic first began, Jason Chong and his IT team were on the frontlines of establishing cybersecurity protocols for the firm and ensuring everyone could work from home in the new remote environment. The smoothness of the remote transition, and the IT team’s high-quality service year-round in helping our professionals handle unforeseen technical issues, resulted in them winning the Clark Nuber Values Award in 2020.

We recently sat down to talk with Jason about what the last couple years have been like for him and his team, how they worked together to overcome remote hurdles, and how he helped lead Clark Nuber through the global crisis.

You and your team are responsible for the overall cybersecurity of Clark Nuber. How has your role evolved since the pandemic began?

“I wouldn’t say our role has evolved, necessarily, but the pandemic definitely widened the scope and put a spotlight on data security, especially with a majority of users now taking their laptop and working from home. Security has always been top of mind for my team and I, but now it’s a priority outside of IT as well.

Traditionally for our firm, work-from-home was a minimal event. Now, it’s largely a requirement. So, when the pandemic began, we quickly had to analyze if any new risks were being introduced or had been elevated due to the number of users working from home. We had to worry about insecure home networks, users sharing their laptop with household members, and even kids accessing their parents’ laptops since they were now home 24/7.

I think our role has really shifted from putting the break/fix and technical support side of our jobs first, to putting security first and constantly evaluating and evolving our security practices and policies as the environment changes.”

A lot was still unknown at the start of the pandemic in terms of quarantines, office closures, etc. How did you navigate the uncertainty of the pandemic and provide clarity as a leader?

“I think it was mostly about just being open, flexible, nimble, and communicating with the other departments and our CEO to make sure we were all in alignment.

The majority of the credit goes to my team though, for being willing to do whatever was necessary. They would often check with others in the firm to see if there were any needs that we weren’t hearing about. We had an “all hands on deck, let’s power through this” mentality, and we did whatever it took to make things work.

People say I showed leadership, but I couldn’t have done it without my team. They were coming into the office whenever it was needed. They were core team players.”

As a leader did you feel pressured to have all the answers in an uncertain time?

“I never felt pressure. I mean, there was a lot that was asked of our group at the time. But it’s always been my philosophy to power through and knock big lists of tasks off. So, my team and I just did whatever was needed and requested of us when the pandemic started.”

What were those early days of COVID-19 like for you and your team? And did you foresee that we’d be transitioning to a remote-work model?

“I would say hectic, but, reflecting back, it could have been worse if Clark Nuber had not previously invested in technology and been open to improving security measures in past years.

Before COVID-19, we had already moved to deploying laptops for all our users, but this was mainly done so that they’d have flexibility if the need arose to work remotely on occasion or if they needed to bring their laptop to a meeting. Never did the thought cross my mind that a pandemic would force a closure of the office and all staff would be required to work from home for a prolonged period of time.

Ongoing investments in technology and capacity, and purchasing hardware early that allowed us to grow, was the biggest life saver. We had previously built out our backend remote infrastructure for additional capacity. Thankfully, the firm’s forward thinking paid off, and everything ran smoothly from the onset in terms of bandwidth and capacity for our remote connections.”

Tell me about the transition period to all-remote work. Was it difficult? Had you taken earlier steps that made the process easier?

I think the hardest part of the transition was making sure all our users had the technology that they needed to work from home. Our Human Resources team had previously introduced a remote worker model for a few users who lived in other states, so the foundation for what users would need was already there. But, as we found out, many users had unique requirements as well, either due to their job functions, space constraints, and sometimes even physical limitations based on where they lived.”

How did you coordinate and communicate with your team for the all-remote roll-out? I imagine there were a lot of “boxes” to check to ensure everyone in the firm was set up safe and securely.

“I wish there was a checklist, but due to the rapid move to work-from-home, the checkboxes created themselves on the fly. And my team just had to power through and figure it out and try to do the best that we could, especially since everyone’s home setup was unique, and we really had no “eyes” on the full picture of what we were supporting.

With remote support being the main method during quarantine, we had to adjust our whole traditional support structure and really figure out how to aid and advise all these users remotely in a very challenging time. Luckily, our team had adopted Microsoft Teams as our collaboration platform, so our internal communications didn’t need to change and, having been on that platform already, we had the technology in place to stay in constant communication.”

What were the largest hurdles you didn’t see coming? And how did your team handle them?

“The largest hurdle was overcoming some users’ poor at-home internet. From families all working or going to school online, and the introduction of video meetings as a core communications tool for both adults and kids during the pandemic, the strain on the Internet connection was larger than we would have imagined. Other issues involved outdated and misconfigured hardware and being in a location that didn’t have good residential internet available.

In the beginning, we took these issues on a case-by-case basis. But as we started to hear more and more about these connection issues, we had to start analyzing and developing a more sustainable plan to test the issue and help alleviate it.

Unfortunately, there may not have been solutions for every problem. But our goal was to help users try to understand their issue and find a solution if possible. From changing wireless configurations, to recommending new home network equipment, to advising users to upgrade their Internet service plans, my team did it all to get users’ connections as fast and stable as possible.”

Do you think the nature of the IT field will have changed now that remote work is so prevalent?

“Yes and no. The field of technology is always changing and that was the case even before the pandemic. The pace of change has just increased exponentially due to the pandemic, and I don’t see that stopping or slowing down. If anything, it’s just going to move faster and faster.

I think end users are now more adept than ever in finding solutions that both help streamline their work and provide them the capacity to take care of all their home and work responsibilities. As an IT team, I think the traditional control we used to like to have needs to be re-evaluated. We still need control for security reasons, but we also need to work together with all our ends users and groups to find new and novel solutions to provide the ultimate flexibility for our users.”

Were there any particularly innovative approaches that your team came up with for responding to the pandemic that you’re proud of?

“Organizationally, I think Clark Nuber was innovative with our Work-at-Home Technology Purchase Program, especially with how early we rolled it out during the onset of the pandemic. The firm provided all our staff with funds to purchase work-from-home technology that replicated their in-office workspace. The list initially included monitors, docking stations, keyboards, and mice, but it later expanded to include webcams, wireless network systems, stand-up desks, and task chairs as we settled into the long quarantine.”

Your team was recognized at last year’s all firm meeting for their exceptional work. What would you say the secret is to your success?

“My entire team is awesome. Honestly, I don’t think any of what I personally do is that important right now. They’re the ones always out there helping people, and that’s the core of what we do.

There was so much unknown during the early part of the pandemic and my whole team really stepped up and had the mindset of doing whatever was needed to get the job done. They, along with a group of others from across all our departments, were our essential workers, coming into the office when needed while many others were able to shelter-in-place at home. I don’t think they’ve said “no” to anything in the last two years.”

This article is part of the Learning, Adapting, and Growing: Leadership Perspectives series, which explores the role of leadership from a diverse array of perspectives. Each article is written by a Clark Nuber leader who shares their ideas on the unique challenges and opportunities they have experienced, and the lessons they’ve learned along the way.

© Clark Nuber PS and Leadership Perspectives, 2021. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Clark Nuber PS and Leadership Perspectives with appropriate and specific direction to the original content.

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Articles and Publications

Lawsuits Brought Against the Washington Capital Gains Tax

Last May, Clark Nuber published an overview of Washington state’s capital gains tax that takes effect on January 1, 2022. Shortly after the act was signed into law by Governor Inslee, a lawsuit was filed by the Freedom Foundation, represented by Seattle law firm Lane Powell. The lawsuit alleges the new tax violates the Washington State Constitution, as well as the Commerce Clause of the U.S. Constitution, by taxing the sale of capital held out-of-state by Washington residents. A second lawsuit was filed on May 20, 2021 by former Washington state Attorney General Rob McKenna (now with the law firm Orrick Harrington & Sutcliffe) on behalf of a coalition of farmers, business owners, investors, and the Washington State Farm Bureau. It claims the law is unconstitutional because it is in reality a graduated tax on income, not an excise tax as the law’s legislative preamble asserts. The cases were subsequently consolidated in Douglas County Superior Court. On September 10, 2021, Judge Brian Huber issued a ruling denying the state’s motion to dismiss, holding that the plaintiffs had presented a justiciable controversy and were entitled to a decision on the merits. The case is expected to be decided by the Superior Court in late 2021 or early 2022, but it is widely anticipated that the decision will be appealed and that the validity of the tax will ultimately be decided by the Washington Supreme Court. The Washington Department of Revenue has published a short outline of the capital gains tax as well as an FAQ page. Interested parties can register on that webpage to receive email or text notifications from the Department related to the tax. We will continue to provide updates on the new tax and associated litigation as significant developments occur. If you have questions regarding the capital gains tax, please reach out to a member of Clark Nuber’s State and Local Tax team. ©2021 Clark Nuber PS. All rights reserved.

2021 Compliance Supplement – A Summary of Major Changes: What Auditees Need to Know

Each year, the Office of Management and Budget (OMB) issues a 2 CFR Part 200, Appendix XI Compliance Supplement (Compliance Supplement). The Compliance Supplement provides a road map that auditors must follow when performing a Single Audit (established under the Single Audit Act of 1984), and it can be used as a tool by auditees to better understand the audit process and what the auditors will be testing. With the large number of new Federal COVID-19 programs being authorized, and the amount of new Single Audits being undertaken this year because of them, the Compliance Supplement is as important as ever.


Each year the Compliance Supplement is updated by both the OMB and the related Federal agencies that issue funds which fall under Single Audits. The 2021 Compliance Supplement was released in July 2021, but it will be followed up with what’s expected to be two Compliance Supplement Addendums covering the new American Rescue Plan (ARP) programs as detailed in Appendix VII of the Compliance Supplement. Single Audits that include programs identified as having future addendums would likely need to be delayed until the addendum is issued. The 2020 Compliance Supplement included many updates related to COVID, including new programs and advisories to auditors. The 2021 Compliance Supplement carries forward most of those advisories with updates being made for new Federal programs (primarily ARP funded) and revisions to the Uniform Guidance that became effective this past Fall. The 2021 Compliance Supplement is required to be used on Single Audits for years beginning after June 30, 2020. A summary listing of changes made to all Parts and Appendices of the 2021 OMB Compliance Supplement can be found in Appendix V to the Compliance Supplement. Appendix V and Appendix VII, described in more detail below, are always the first two sections we look to when a new Compliance Supplement is issued. An overview of the Compliance Supplement and more details on the updates follows below:

Part One:

The Compliance Supplement comprises eight parts. Part One describes the background, purpose, and applicability of the Compliance Supplement and is worth the read if this is the first time you’re looking at the Compliance Supplement.

Part Two:

Part Two covers the matrix of compliance requirements for various programs designated by the program’s Assistance Listing (AL, formerly known as CFDA) number. Each year, federal agencies must submit a matrix detailing up to six of the 12 compliance requirements that will be Subject to Audit. What this means is that, even if a grant was required to follow the Allowable Cost principles, if Part 2 has “N” in the Allowable Cost column for that particular program, the Single Audit will not be testing Allowable Costs. The 12 compliance requirements consist of:
  • activities allowed or unallowed;
  • allowable costs/cost principles;
  • cash management;
  • eligibility;
  • equipment and real property management;
  • matching, level of effort, earmarking;
  • period of performance;
  • procurement suspension and disbarment;
  • program income;
  • reporting;
  • subrecipient monitoring; and
  • special tests and provisions.
The Federal agencies submit this information for ALs that have a high level of Federal assistance issued from the agency, but it does not include all ALs that have been issued. Each year, ALs are added to this matrix, removed, and sometimes changed. Yellow highlights in the 2021 Compliance Supplement – Part Two represent changes from the 2020 Compliance Supplement.

Part Three:

Part Three of the Compliance Supplement covers the 12 previously mentioned compliance requirements, except for special tests and provisions. It details a summary overview of each compliance requirement, based on the 12 compliance requirements above; the audit objectives; and provides suggested audit procedures, such as sampling and reviewing policies. It also covers the requirement to obtain understanding and test the effectiveness of internal controls over the compliance requirement. As special tests and provisions are unique to the specific program, the Compliance Supplement does not give guidance on how to test them, only that testing must be covered. This Part only included minor updates. Changes in Part Three of the 2021 Compliance Supplement were primarily related to revisions made to the Uniform Guidance and became effective this last year. This includes revisions in the Period of Performance section with introduction of the “Budget Period” concept, as well as optional changes to the Micro-Purchase Threshold (MPT) as covered in the I. Procurement section. Additionally, this section includes OMB’s statement that audit findings should not be reported if an entity applies an increase to the MPT to Federal awards existing as of November 12, 2020. Of course, the MPT change would still need to be applied to procurements/purchases made on or after that date in order to comply.

Part Four:

Part Four covers the Federal agencies’ specific program requirements for ALs included in the Compliance Supplement. Federal agencies can include key guidance in this area for the auditors to be aware of when testing the related programs. This part is updated regularly in the Compliance Supplement with any changes in Federal programs. In the 2020 Compliance Supplement, we saw additions to Part Four for new Federal COVID programs, including the Coronavirus Relief Fund and Education Stabilization Fund. Familiarity with Part Four, when available for your Federal program(s), is important to understanding what key requirements are being communicated to your auditor and what are the compliance requirements being Subject to Audit.

Part Five:

Part Five of the Compliance Supplement covers the same areas as Part Four, but instead of individual programs, it focuses on the clusters included in the Compliance Supplement, particularly the Research and Development and Student Financial Aid clusters. In addition, the last section of Part Five formally identifies program clusters, which is information needed to know when preparing the Schedule of Expenditures of Federal Awards and ensuring that, when applicable, Federal programs are reported and subtotaled by cluster.

Part Six:

Part Six of the Compliance Supplement covers internal controls. Organizations receiving Federal assistance must maintain a system of internal controls that provides reasonable assurance of compliance with Federal requirements. Under Single Audits, the auditor must gain an understanding of these controls and audit the controls. Part Six covers an example control structure that organizations can adopt. It includes controls under the “Standards for Internal Control in the Federal Government” (Green Book) which is issued by the Government Accountability Office. It also includes the “Internal Control Integrated Framework” (COSO Framework), issued by the Committee of Sponsoring Organization of the Treadway Commission. Under 2 CFR Part 200, the Green Book and the COSO Framework are recommended internal controls structures, but not required. Part Six provides examples of controls using these structures. In previous Compliance Supplements, this part had been removed as OMB worked to incorporate changes in the Green Book and COSO Framework. Though not required to implement the example control activities outlined in Part Six, the guidance in this section is very helpful if an entity is new to Federal awards and is working to establish internal controls or, like any good grant management system, researching for examples in which existing internal controls can be strengthened.

Part Seven:

Part Seven of the Compliance Supplement guides when an AL is not included in the Compliance Supplement and how the program should be audited. Out of the entire Compliance Supplement, Part Seven contains the most technical audit jargon and may not be as helpful for auditees compared to other Parts.

Part Eight:

Part Eight of the Compliance Supplement includes the appendices to the Compliance Supplements. The appendices include:
  • Federal Programs Excluded from the A-102 Common Rule and Portions of 2 CFR Part 200 (Appendix I);
  • Federal Agency Codification of Government-wide Requirements and Guidance for Grants and Cooperative Agreements (Appendix II);
  • Federal Agency Single Audit, Key Management Liaison, and Program Contacts (Appendix III);
  • Internal Reference Tables (Appendix IV);
Appendix IV identifies, among other information, those programs deemed to be “higher risk” by the OMB. This is used by the auditor primarily when determining which Federal awards should be considered major programs and, therefore, audited. The 2021 Compliance Supplement saw the “higher risk” program listing significantly expanded and now includes all new programs created by the American Rescue Plan, as well as the following: [table id=37 /] *This program, established by the CRRSAA, will not be included in the 2021 Compliance Supplement. See Appendix VII for more information about the planned timing of subsequent follow-up Supplement issuance(s). Being included on the listing does not necessarily mean that the Federal program will be selected for audit in the Single Audit, but it is an indication there’s a high likelihood that it will be. Other appendices include:
  • List of Changes for the 2021 Compliance Supplement (Appendix V);
  • Program-Specific Audit Guides (Appendix VI);
  • Other Audit Advisories (Appendix VII);
Don’t let “Other” in the title mislead you here. This Appendix covers key audit advisories and has included, for example, guidance on identifying COVID-19 Federal programs in the SEFA, disclosure of donated Personal Protective Equipment, and how auditors should utilize Agency Guidance that has specifically been issued for many of the Federal COVID-19 programs. In addition, Appendix VII of the 2021 Compliance Supplement identifies that additional Compliance Supplement addendums are planned to be issued and posted on website for at least the following programs:
  • Treasury
    • Capital Projects Fund – AL pending
    • Homeownership Assistance Fund – AL #21.026
    • Local Assistance and Tribal Consistency Fund – AL pending
    • State and Local Fiscal Recovery Fund – AL #21.026
  • Education
    • Education Stabilization Fund – AL #84.425 [ARP funds]
Final appendices include:
  • Examinations of EBT Service Organizations (Appendix VIII); and
  • Compliance Supplement Core Team (Appendix IX).
The OMB Compliance Supplement can be a resource for auditees if you know where and what to look for. In an era of significant increases in Federal funding, it is important for auditees to be aware of resources available to them. Happy navigating! If you require help when preparing for a Single Audit, contact a Clark Nuber professional. ©2021 Clark Nuber PS. All rights reserved.

Your 2021 Audit Opinion is Getting a Makeover

If you have audited financial statements, you should anticipate significant changes to the form and content of your 2021 audit opinion. The AICPA’s Auditing Standards Board (ASB) has issued Statement on Auditing Standards (SAS) No. 134, Auditor Reporting Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, which will become effective for periods ending on or after December 15, 2021. The new SAS is meant to make it easier for users of the financial statement to understand the results of the audit and better emphasizes the auditor’s and management’s responsibilities. SAS No. 134 will also more closely align the AICPA’s auditing standard with those of the Public Company Accounting Oversight Board (PCAOB) and international auditing standards.

Changes to the Audit Report

One of the key changes is the organization of the report. The basic sections of the new audit report will be organized as follow:

Auditor’s Opinion

No more searching for the auditor’s opinion, this will now come first! However, the wording of the opinion paragraph has not changed.

Basis of Opinion

This is a new section and must include a statement that the auditor is required to be independent of the auditee to meet ethical responsibilities. It also clarifies that the auditor must adhere to other ethical professional requirements.

Responsibilities of Management for the Financial Statements

This section has been enhanced to include a new paragraph that describes management’s responsibility to evaluate going concern matters.

Auditor’s Responsibilities for the Audit of the Financial Statements

This section has been revamped and reworded, but it will make it easier to understand the auditor’s responsibilities and certain key points will be described in a bullet point list. Also included will be a paragraph regarding the auditor’s responsibilities to communicate certain matters with those charged with governance. This includes such topics as the scope and timing of the audit, significant audit findings, and certain internal control related matters.

Other Changes

SAS No. 134 also introduces the concept and framework for reporting on “Key Audit Matters” (KAMS), which an entity would have to specifically engage an auditor to report on. As reporting on KAMS inherently increases the scope of your audit, privately held companies, not-for-profits, and governmental entities will want to carefully evaluate if this is relevant to the audit, such as a third-party requirement. For most entities, this is not a required reporting requirement and will likely only be needed in limited cases. Lastly, it is worth noting that the new SAS requires enhanced reporting on going concerns, including a separate section in the auditor’s report when substantial doubt exists. Now that the new auditing standard is about to become effective, take time to evaluate its impacts on your organization and consider educating financial statement users about the new form and content of the auditor’s report. If you have questions on the new auditing standard, reach out to a Clark Nuber professional. ©2021 Clark Nuber PS. All rights reserved.

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