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Fresh Eyes, Real Output

AI isn't just another productivity tool. Learn how a team of college students led an experiment that reimagined an entire tax process from the ground up.

A Feast for the Mind

AAA Global Connect is where scholars and practitioners come together to shape the future of accounting—and CalCPA members get special access.

Storytelling, Strategy and Stronger Testimony

From emerging fraud schemes to expert testimony, check out the main takeaways from the CalCPA Forensic Services Sections Joint Sections Conference and see how forensic professionals are preparing for the next generation of challenges.

The AI-Powered CPA Firm

From Excel's Copilot to modular AI CFOs, there's a big tech shift in the profession. In his debut column for CalCPA, CPA, author and national business commentator Gene Marks takes a look at what's coming and what it will take for firms to come out ahead.

Golden State wisdom straight from the experts

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Looking for an old article or a past issue from California CPA magazine? You're in the right spot!

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CPAs: Making Sense of What Comes Next campaign

Over the past 18 months, health insurance premiums have risen at levels not seen since the early days of the Affordable Care Act (ACA). For consumers, the conclusion feels obvious: insurance companies must be driving up premiums.

But that conclusion overlooks how the system actually works.

Consumers, and often the media, see only the end result: higher premiums. Meanwhile, hospitals, physicians, and pharmaceutical manufacturers largely escape the same level of scrutiny. Health insurers, for their part, have not always been effective at communicating their role in managing these costs.

The reality is that today’s premium increases result from multiple factors converging at once, each pushing the total cost of care higher.

: Extremely expensive cases are reshaping the total cost curve. Gene therapies can exceed $2 million for a single treatment, and other breakthrough treatments come with million-dollar price tags. These innovations miraculously improve patients’ lives, but their costs ultimately flow through to premiums.

: Drug costs continue to outpace overall medical inflation. More individuals are taking medications for more conditions, and specialty drugs, particularly in oncology and rare diseases, carry annual costs in the hundreds of thousands of dollars.

GLP-1 medications, used for diabetes and weight management, are a prime example: high utilization combined with high cost is materially impacting the trend.

A decade ago, prescription drugs accounted for less than 10 percent of total health care spending. Today, that figure has doubled to around 20 percent, a shift driven not by traditional inflation, but by the rise of specialty therapies and high-cost chronic treatments. Prescription drugs, while still a minority of total spend, are now one of the fastest-growing components of overall health care costs.

While generics and biosimilars continue to provide savings in some categories, those gains are frequently offset by the introduction of newer, higher-cost therapies. GLP-1 utilization is further accelerating this trend.

: People are simply using more healthcare. Rising rates of obesity, diabetes, cardiovascular disease and autoimmune conditions are driving more physician visits, diagnostic testing, hospitalizations and prescriptions. When utilization increases, total costs, and therefore premiums, follow.

Wage and Price Pressures in Health Care: 

Health care is labor-intensive. Hospitals and physician groups are facing sustained wage pressure for nurses, physicians and skilled technicians. Many provider contracts renew on multi-year cycles, meaning recent inflation is only now being reflected in negotiated reimbursement rates.

: New state and federal mandates, while often well-intentioned, add incremental cost. Recent examples in California include expanded IVF coverage requirements and caps on insulin cost-sharing. Each mandate adds to what some refer to as the “regulatory stack,” while each mandate may be a small percentage increase to premiums, together and over time, they add a material amount. Meanwhile, legislation that would actually reduce costs rarely seems to be enacted.

Why Health Insurance Companies Look the Way They Do

Consumers and employers wanting the lowest possible premiums have shaped what health insurers look like. Many of the features consumers associate with “insurance friction” were originally designed by health insurance companies to control doctor/hospital behavior and costs; and protect patients from unnecessary or overpriced care.

Care delivered outside of PPO/HMO networks typically lacks these cost and safety controls, which is why out-of-network services are often significantly more expensive.

On the pharmacy side, Pharmacy Benefit Managers (PBMs) deploy tools such as formularies, generic substitution, step therapy and manufacturer rebates to slow the growth of drug spending. These mechanisms are often criticized, but without them, costs would be significantly higher.

Built-In Limits on Insurance Company Profits

It is also important to understand that health insurers operate under explicit profit constraints. Under federal law (ACA), medical loss ratio (MLR) requirements leave a set percentage (15 percent or 20 percent) for insurance carrier expenses, including profit. Failure to meet MLR thresholds results in premium rebates, thereby limiting carrier profits. This structure effectively caps margins and ties insurer profitability to overall health care spending. When costs rise, premiums must follow, not to increase profits, but to cover claims.

Health insurers are often the most visible part of the system, but they are not the primary drivers of cost increases. In many ways, they function as financial intermediaries, aggregating and managing the underlying costs generated elsewhere in the health care system.

California’s Health Care Affordability Council was chartered to cap premiums and health care spending, but to date, has had little measurable effect on overall costs. If the goal is to meaningfully address rising premiums, the focus must be on the drivers of health care cost: provider/hospital costs, pharmaceutical pricing and regulatory design.

The Hidden Forces Driving Premiums 

Everyone points at the insurer when premiums spike—but the real cost drivers are hiding in plain sight. CalCPA Health CEO Ron Lang breaks down what's actually pushing your rates up.

The Hidden Force Driving Premiums

For many state and local government finance professionals, the arrival of a new Governmental Accounting Standards Board (GASB) statement often signals months of additional work, extensive analysis, and increased pressure during audit season. But what if some of that work isn’t actually necessary?

GASB Statement Implementation and Materiality Considerations

, argues that many governments can significantly reduce the time and effort associated with implementing GASB standards by more effectively applying one of accounting’s most fundamental concepts: materiality.

Developed by CalCPA, the California Society of Municipal Finance Officers (CSMFO), the Government Finance Officers Association (GFOA), the League of California Cities and finance professionals from local governments across the country, the white paper provides a practical framework for evaluating new accounting standards while focusing resources where they matter most, as well as shows how materiality decisions, such as adjusting capitalization thresholds, can improve efficiency without sacrificing audit or reporting quality.  

The central premise of the report is straightforward: governments may be spending valuable staff time evaluating, reporting and disclosing items that have little or no impact on financial statement users.

The authors note that GASB has long included a “materiality box” in many of its standards, including major pronouncements such as GASB Statement No. 87 (Leases) and GASB Statement No. 96 (Subscription-Based Information Technology Arrangements, or SBITAs). The guidance states that provisions of a statement need not be applied to immaterial items.

Yet many governments either underutilize or overlook this provision altogether.

According to the white paper, failing to apply materiality consistently can result in unnecessary work, more complicated financial reports and increased strain on already limited resources. Instead, governments should evaluate whether information is truly significant enough to influence the decisions of financial statement users before dedicating extensive effort to implementation.

One of the report’s key findings is that materiality should never be viewed solely through a quantitative lens.

The authors emphasize that materiality is both quantitative and qualitative. While governments often establish thresholds based on percentages of assets, revenues or fund balances, other considerations are equally important. Factors such as legal compliance, fraud risk, political sensitivity and stakeholder interest can all make an item material regardless of its dollar value.

The white paper encourages governments to establish formal materiality thresholds and to document the rationale behind those decisions. Just as capitalization thresholds are commonly used to determine whether assets should be capitalized, agencies can develop similar approaches for evaluating leases, SBITAs, compensated absences and other accounting requirements.

The result is a more disciplined and efficient implementation process that remains compliant while avoiding unnecessary work.

Another important message throughout the report is that responsibility for implementing accounting standards belongs to management—not auditors.

The authors caution governments against waiting for auditors to determine the impact of a new GASB statement. Instead, finance teams should evaluate standards early, often one to three years before the effective date, develop their own conclusions and then engage auditors in informed discussions.

This approach offers several advantages, including reducing the risk of late audit adjustments; improving communication with auditors; demonstrating organizational competence; providing more time to gather data and resources; and supporting smoother implementation and compliance.

The report stresses that auditors validate management’s conclusions; they do not make those decisions on management’s behalf.

The Newport Beach Case Study: Materiality in Action

One of the most compelling sections of the white paper examines how the City of Newport Beach applied materiality concepts to its lease portfolio under GASB 87.

The city maintained 141 leases with a combined value of approximately $268 million. Upon analyzing the portfolio, officials discovered a classic Pareto distribution: just 46 leases valued at more than $1 million accounted for more than 90 percent of the total lease value.

By evaluating lease concentrations and working closely with auditors, Newport Beach determined that adopting a $200,000 threshold would allow the city to eliminate monitoring requirements for 51 leases while still capturing the majority of lease value.

The result? An estimated savings of 40 to 50 staff hours during year-end close without compromising the integrity of the financial statements. And that’s time that can be redirected toward higher-value work.

The case study demonstrates how thoughtful materiality analysis can produce meaningful operational efficiencies while maintaining transparency and audit quality.

The report repeatedly underscores the importance of training, calling it a critical internal control rather than an optional activity.

Whether a government is large or small, staff must understand new standards well enough to evaluate applicability, document decisions and defend conclusions. The white paper points readers to resources available through GFOA, GASB, CalCPA, AICPA, state finance associations and peer networks.

Documentation is equally important. Even when a government concludes that a statement has no material impact, the analysis and reasoning should be documented. According to the authors, a statement is considered implemented once it has been evaluated and appropriately applied—even if the conclusion is that no financial statement changes are required.

A Practical Roadmap for Future Implementations

Beyond theory, the white paper includes a detailed implementation checklist, communication guidance for elected officials and leadership teams, practical FAQs, and additional resources for developing sustainable implementation processes.

Ultimately, the report challenges government finance professionals to rethink how they approach new accounting standards. Rather than treating every requirement as equally significant, the authors encourage agencies to focus on decision-useful information and leverage materiality as a tool for efficiency.

Are You Doing More GASB Work Than Necessary?

CalCPA joined leading government finance organizations to develop a white paper that helps governments use materiality to streamline GASB implementation while maintaining compliance and audit quality.

When I built a firm, my edge was never technology; it was process and client service. After I sold it, I assumed I understood how a well-run practice worked. Then AI came into the picture, and something felt unsolved and worth figuring out. That curiosity became Project Junto, an experiment with four students, a tax pipeline and an outcome that surprised me.

Where Most of Us Start and Why That’s Fine

If you’re using AI in your practice, you’re likely prompting. You ask a question, AI answers. You draft a client email faster, summarize documents or look something up. AI is bolted onto your existing processes, which is a legitimate place to start. But there’s a lot more runway. 

Rather than ask where AI can help in existing processes, we asked what does a process look like if you design it around what AI can do, and then figure out where humans belong in it?

Cal Poly San Luis Obispo freshmen Kaya Paz (information systems) and Gabrielle Georgieva (economics, with an accounting concentration), and sophomores Merrick Wiessner (economics, with an accounting concentration) and John Olsen (finance) joined this project through my financial accounting class. None of them had prepared a tax return. Some of them had never written a line of code or used AI. 

Describing her mindset going in, Georgieva said, “Before starting, I had minimal experience with AI and prompt engineering, and I had never worked with platforms like Intuit ProConnect before. At first, the process felt intimidating.”

The project name, by the way, came from Paz, who discovered that “junto” means a small group working together on an intelligent idea. We went with it immediately.

Our goal was specific: Take a document from client drop-off to a tax-ready return with no human intervention, inside a standard firm environment, with structured review levels built in at each stage. We used Google Workspace, though the same architecture works in Microsoft 365. The pattern is what transfers, not the specific tools.

Google Drive handled document storage and routing. Google Document AI classified incoming files and extracted field data. Gemini ran the extraction and verification logic, though Claude, GPT or other models work equally well. We primarily used Claude to write code, running everything within a standard Google Workspace business account. Google Sheets served as the structured workpaper where every extracted value got checked. And Intuit ProConnect offers a sandbox environment where we handled entry testing using dummy client data throughout. 

Real tax forms and tax returns were used, but no real client information was included. The sandbox allowed us to run fully realistic end-to-end workflows in a completely isolated environment.

The Work That Happens Before You Touch Any AI

Before writing a single line of code, we wrote out every step a human takes when processing a tax document. Not a summary. Every micro-decision.

When you do this, the complexity is surprising even to experienced preparers. This highlighted the judgment calls that are layered into what feels like routine handling: Recognizing document type from a quick scan; knowing which fields matter and which are noise; knowing when a number looks wrong in context. The complexity is surprising even to experienced preparers, and none of it is obvious until you try to make it explicit. 

That’s why you can’t simply tell AI to “review the return” for the same reason you can’t say that to someone on their first day. The instruction assumes knowledge that has to be written down before it can be transferred.

Doing that work turned out to be valuable independent of anything that followed, as the firm had its own process fully documented. Once it was written down, we had a spec, a training document and an audit trail all at once.

We organized the team into three pods named (naturally, given the audience) FIFO, Weighted Average and LIFO. Each represented a distinct stage of the pipeline: the eyes, the brain and the hands.

Paz led FIFO: document intake, classification and extraction. His job was to take whatever a client dropped off (clean PDFs, low-quality scans or multi-page Gusto exports with three copies of the same W-2) and produce standardized, structured output with a confidence rating attached. Not perfect output, but standardized output. That distinction matters.

Olsen led Weighted Average: the verification and review layer. His job was to take Paz’s extraction and ask, “Is it right?” He built logic gates for the easy checks (FICA calculations, Medicare withholding math) and structured the AI review notes to flag anomalies in plain language a human could act on. During one of our sessions, his verifier caught that a wage figure was calculating 12.4 percent higher on the Social Security line than it should have, which correctly identified a wrongly transposed number before it ever reached entry. The system flagged it, showed its work and waited for the human.

Wiessner and Georgieva led LIFO: getting verified data from the workpaper into ProConnect. Wiessner’s framing for what they were trying to build became the team’s north star: “I want this to be as easy as email. I see it, I do it.” That’s a deceptively hard target. It requires thinking about whether the data gets entered correctly and the human workflow around it. How does someone know what needs to be done, in what order and with what confidence before they start? 

 “When we set smart deadlines, we were able to work closer as a team because we had a better idea of what each member was working on,” Wiessner said. “Having a clear direction and endpoint allowed me to know where I want to be by the end of the week and challenge myself to go a bit further.”

The teams also created agreements defining exactly what each pod would receive and what it would hand off. That allowed the teams to work simultaneously and nobody was waiting for anyone else to finish before they could start designing their piece. And because the handoff contracts were clean, you could swap out tooling in one pod without breaking the others.

A document arrives in our client’s upload folder. It gets classified and split. Fields are extracted and written into a structured Google Sheet workpaper. Verification checks run automatically: arithmetic gates, confidence thresholds and cross-references against other documents in the file. Items that pass move toward entry staging in ProConnect. Items that don’t surface for human review with full context, such as what was extracted, what triggered the flag and what needs a second look.

The workpaper is the trust layer: A structured checkpoint at every stage. A reviewer can see exactly what the system saw, what it extracted and where it had confidence versus where it didn’t. 

The hardest part of this project wasn’t technical.

Georgieva progressed from having minimal AI experience and never touching ProConnect to updating JSON files, reviewing them for correctness and iterating on prompts to improve extraction outputs.

Olsen rebuilt his entire verification script midway through after realizing it was incompatible with the rest of the pipeline. 

He described it this way: “When working on an individual task from a large project, it’s easy to focus entirely on the task at hand and forget that each one is a component of the final machine. What this taught me is to be careful not to get tunnel vision by always remaining cognizant of the overall purpose of the project.”

“Instead of needing to be together to brainstorm, we shared ideas over text when we were available, completed our individual tasks and came back together the next week aligned and ready to move forward,” Paz reflected. “Everyone took accountability for themselves.”

What they needed wasn’t expertise. It was protected hours to think carefully about the process without competing demands. If you’re a practitioner trying to build something like this while running a full client load, that tension doesn’t resolve on its own. Find someone who can focus on it. 

We proved in a few weeks what we set out to: you can go from client document drop-off to a tax-ready return with no human intervention, using tools already available in a standard firm environment, with review levels built in at every stage.

The final step into ProConnect did require a copy-paste handoff before the AI could complete the entry. The limitation, though, wasn’t the pipeline. It was the tax software itself. That’s a barrier that will get removed. And in the meantime, it’s a good example of what the whole project felt like: a series of small hurdles you solve one at a time.

Our experiment brought together accounting expertise and workflow design thinking in a way most of us weren’t trained to do. These students walked in without assumptions about how tax work was supposed to be structured. They asked why at every step, which turned out to be exactly the right starting point.

And while we focused on tax returns because the complexity made it a worthwhile proving ground, none of this is specific to tax. Anywhere in your firm where the same process runs on repeat is a candidate for the same approach.

The tools are ready. The architecture is proven. The first step is deciding to think about your own process differently: Rather than inserting AI into your processes, what would your processes look like if you designed them around what AI does well—and then figure out where you need a human in the loop.

I am inviting you to a feast—one that will stimulate, amaze, entertain and enlighten you. And it’s a feast for the good of our CPA profession.

This year, CalCPA and the American Accounting Association are offering a special opportunity for CalCPA members to attend AAA’s annual conference Aug. 3-5 in Las Vegas and step into the scholarly heart of our profession.

Why Practitioners and Academics Need Each Other

The AAA is the academic and scholarly backbone of the CPA profession. Over time, practitioners and academics have become less connected than they should be, yet both sides have much to learn from each other. 

Scholars help us understand what works and why. Practitioners bring the real-world experience that makes research meaningful and relevant. And the profession is made stronger when it happens.

The AICPA-AAA Pathways Commission recognized this back in 2012, calling on the profession to: “… build a learned profession for the future by purposeful integration of accounting research, education, and practice for students, accounting practitioners, and educators.”

I’m a CPA generalist with 50 years of experience in accounting, auditing and tax. Throughout my years attending AAA events, I’ve found that practitioners’ perspectives are genuinely welcomed and valued. My own understanding of accounting, audit and tax has grown through these programs. I want that for you, too.

Special Access for CalCPA Members This Year

Through our collaboration with the AAA, CalCPA members can attend all three days or choose day passes without requiring AAA membership. You can find 

 at the AAA website, where you can also view the event’s agenda.

For first-time attendees, CalCPA and AAA are also planning a special networking and orientation gathering before conference sessions begin. This informal event will help you meet fellow practitioners and connect with AAA leaders.

AAA Global Connect offers an enormous scope and diversity. You’ll find keynote speeches from leading scholars and professionals, and of special value to me are the smaller moments: panel discussions, professors presenting their current research and sessions with Ph.D. students wrestling with the big questions in our field.

You’ll also have the chance to reconnect with professors who shaped your education, meet current graduate students from the schools you attended, and engage with scholars at every career stage about the emerging research and ideas shaping the future of our profession.

To give you a sense of the quality and range of conference topics, here are a few highlights from 2025:

•	“New Perspectives on Accounting for Business Combinations:” A stimulating discussion featuring FASB member Christine Botosan and Columbia accounting professor Stephen Penman.

•	“Navigating the Future of Accounting and CPA Licensure: AICPA Insights.”

The AAA’s sections span both the well-known and the niche, and cover every corner of the profession. Major sections include American Taxation Association; Auditing; Financial Accounting and Reporting; and Management Accounting.

Specialized sections include Academy of Accounting Historians; Accounting, Behavior and Organizations; Forensic Accounting; Public Interest; International Accounting; Strategic and Emerging Technologies; and Government and Nonprofit (the section I belong to and actively participate in).

 and partake in the feast with me. And even more, by showing up, you will contribute to our learned profession; strengthen the connection between accounting practice, education and research; and expand your own professional perspective in ways that are hard to find anywhere else.

 recently gathered at Loyola Marymount University for the Joint Sections Conference that brought together experts from across the profession for practical technical education, meaningful collaboration and conversations about what it takes to be an effective forensic expert in today's evolving legal environment.

The conference featured two concurrent learning tracks designed to serve the diverse specialties within the Section. Sessions covered emerging fraud schemes, white collar criminal defense, trust litigation, business valuation, family law, private equity, fraud prevention and the effective use of forensic data in litigation. Attendees also explored how forensic accountants, attorneys and investigators can work together to uncover financial evidence, strengthen expert analysis, and deliver more compelling testimony.

, challenged attendees to think beyond technical expertise and embrace storytelling as a professional advantage. His presentation, Storytelling as a Superpower, explored how professionals can build influence by communicating their expertise with authenticity and purpose.

The conference concluded with an engaging session from 

 of Vox Vera, Stanford Law School and UC Berkeley Law, who shared practical techniques for developing executive presence, communicating with confidence, and delivering expert testimony that resonates with judges, juries and clients alike. The session reinforced an important takeaway from the day: exceptional forensic professionals are distinguished not only by what they know, but by how effectively they communicate it.

Throughout the conference, attendees had opportunities to reconnect with colleagues, meet professionals from across California and strengthen the relationships that make the Forensic Services Section one of CalCPA's most collaborative communities.

Thank you to our speakers, volunteers, section leaders and attendees for making this year's Joint Sections Conference another outstanding success. We look forward to seeing you at upcoming Forensic Services Section programs throughout the year. 