Not too long ago, the Association of Certified Fraud Examiners (ACFE) released their Report to the Nations, a publication on worldwide occupational fraud based on real life fraud cases and it was certainly a telling study in fraud. As an auditor for private companies, it hit very close to home to learn that the median loss experienced by companies with fewer than 100 employees was $200,000! And nearly half of these fraud cases were the result of a lack of internal controls. (more…)
Non-Employees Stock Compensation Accounting Aligned with Employee Rules
The recent changes in stock compensation for non-employees will reduce complexity and should also smooth volatility in recognizing associated compensation costs in the income statement. These changes were issued in June 2018 and are first effective for private companies with calendar year 2020, although early adoption is permitted. (more…)
Tax Reform…. Not in California
Taxpayers are beginning to work on their 2018 business entity income tax returns and are discovering the impacts and opportunities created by the Tax Cuts and Jobs Act (TCJA), as most of the Act’s provisions are first effective in 2018 (here’s a summary: Tax Reform Has Wide Ranging Impact). Since California is a rather independent state it should not be surprising to know that California has conformed to essentially none of the federal tax law changes created by TCJA. This will create many tax preparation and planning challenges. Currently, conformity is not a major issue to our governor or state legislature so nonconformity will likely be with us for a while. (more…)
ASC 842 - Leases, the OTHER New ASC
By Patrick Ngai, CPA, Audit Manager
ASL Technology Group
When ASC 842 – Leases (“ASC 842”) was first published in 2016, the effective date for non-public entities was scheduled for 2020. The date seemed so far away that most people took the, “we will cross that bridge when we come to it” approach. To be fair, most people were too concerned about the new revenue recognition standard (ASC 606) to worry about anything else. (more…)
On the Sunny Side – FINALLY – The Ultimate VIE Accounting Relief!
Way, way back in 2002, the FASB responded to the Enron debacle by issuing the infamous accounting standard referred to as FIN46. While the noble goal was to curtail the ability of companies to keep potential liabilities off their balance sheets (off-balance sheet risks), the pronouncement probably created more angst than any other standard for nonpublic companies. In addition, the requirement to consolidate commonly owned entities that met the definition of a “Variable Interest Entity” with the primary operating entity financial statements often convoluted the financial reporting for users, both internal and third-party. (more…)
Meals & Entertainment Deduction Changes
With all of the changes to the meals and entertainment deduction under the new tax law, we thought we would summarize the rules in this handy table. Please reach out to us if you have questions. (more…)
Year-End Tax Planning Ideas
Now is the time to think about tax saving strategies that can be implemented before the end of the year. The Tax Cuts and Jobs Act passed by Congress in December 2017 will significantly impact year-end tax planning for 2018. Several traditional tax saving ideas are no longer effective and many new opportunities are available. Some our favorite ideas are discussed below. (more…)
Cloud Computing – Customer Accounting for Implementation Costs
“Clean up” of accounting guidance is always needed to adapt to changing times. Businesses enter into transactions, both on the initiation and the receiving end, not envisioned decades ago. Computer hosting arrangements (“cloud computing”) is one such example. This post deals with only the customer end of a cloud computing arrangement. (more…)
New Going Concern Rules – First Year Observations
About two years ago, my post, FASB Shines a Light on “Going Concern”, summarized new disclosure rules that, for the first time, placed GAAP disclosure requirements on company management when preparing financial statements, based on their required consideration of the entity’s ability to continue as a going concern. The earlier post summarizes those new requirements. Since then, existing independent auditor/accountant reporting requirements were updated to respond to the changes required of management. Without reconsidering these changes here, I wondered whether any interesting observations could be made based on management’s and auditor’s responses to these new rules, which were first effective for calendar year 2016 and fiscal year 2017 financial statements. (more…)