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19 posts from March 2014

Before Your Clients Run to the Cloud, Remember SOC

Service-organization-control-markYou keep hearing about “the cloud.” You have read articles and attended conference sessions encouraging the use of cloud services. It is clear that the cloud is increasingly becoming a part of our business processes and solutions. Your clients are starting to clue in. This is for good reason. The cloud may enable them to reduce costs, better use their resources and perform more efficiently.

As your clients seek cloud services, how are you advising them?

Your clients should understand the importance of Service Organization Control reports. It is essential that they have trust in their cloud service providers and are assured that their information is being protected by the necessary security, availability, processing integrity, confidentiality, privacy controls and/or internal controls over financial reporting.

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A Look Inside the Business of American Indian Gaming

Roulette-wheelAmerican Indian gaming generates an estimated $26.2 billion in annual gaming revenues within the United States. The industry has seen a vast expansion over that last two decades encompassing 237 tribes in 28 states. The economic impact of American Indian gaming has given tribal nations the opportunity to rebuild their infrastructure and strengthen their culture after decades of destructive federal policies.

As an enrolled member of the Prairie Band Potawatomi Nation and chief financial officer/director of finance at Prairie Band Casino & Resort, I know first-hand that tribal nations have been limited with the economic development opportunities that reside within defined reservation boundaries. Therefore, the advent of Class II and Class III gaming operations on reservations presented a real opportunity for tribes to raise capital and strengthen their communities. The Indian Gaming Regulatory Act of 1988 stipulates that a tribal nation must have land in trust status prior to 1988, and complete a state compact with the state that they reside in to conduct Class III Gaming. Further, the state must already be involved in gaming, and in this case any major lottery qualifies a state.

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Data Analysis Expressions: PowerPivot’s Secret Weapon

PowerPivotIn my last blog post, I expounded on the value of Excel 2013’s new feature: PowerPivot. However, this new feature has a secret weapon that makes PowerPivot even more valuable for the power Excel user. DAX is easily the best feature of PowerPivot. DAX stands for Data Analysis Expressions. DAX formulas are created in the PowerPivot window using the xVelocity in-memory analytical engine, which executes DAX code. DAX enables the Excel user to create formulas that consist of more advanced calculations that work on data stored in multiple tables. The use of DAX formulas also supports the creation of self-service business intelligence solutions in Excel.

There are two types of DAX formulas: calculated column and calculated fields (also known as measures). In order to understand DAX formulas and their capabilities you have to understand the term evaluation context. In any DAX formula, the evaluation context is applied first in the formula and then the aggregation takes place on the evaluated context. Context is what makes it possible to perform dynamic analysis with DAX formulas.

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Depletion Deductions for Landowners Receiving Gas Royalties

Natural-gasIt is filing season and landowners receiving natural gas royalty payments may be shocked by their tax liability if they have not been planning with their CPAs. Landowners who sign a lease with a gas company own a royalty interest. When royalty income is received, the landowner is entitled to depletion. Similar to depreciation, depletion is the cost recovery of a natural resource and, in the case of royalty owners, natural gas. It is provided for by IRC §611 and the rules governing it are IRC § 613 and 613A.

The Internal Revenue Service provides for two methods:

  1. Cost depletion - allows the taxpayer a deduction based on the ratio of units sold to the number of units available at the end of the year plus the units sold during the year. 
  2. Percentage depletion - allows the taxpayer a deduction based on the gross income of the gas producing property.

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Working Late? Think Twice Before You Order Dinner

Healthy-eatingIt is no secret that CPAs have been working longer hours since busy season started. Moreover, you will probably continue to do so for a few more weeks. In order to keep up the pace, you should take time to refuel, both mentally and physically. Unfortunately, skipping meals or opting for delivery often becomes the norm.

According to a recent Seamless Brain Food Survey, the first quarter of every year is a peak time for corporate food orders at accounting firms where 4 p.m. orders are 4.5 times higher than in the second and third quarters. Office food orders are on the rise as well – suggesting that CPAs are working longer hours due to increased client demands and increased complexity of tax laws and regulations. . In fact, food orders at accounting firms in 2014 are already 17 times higher than normal. 

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In the News: AICPA Survey Finds Businesses Increasing Hiring and Spending in Coming Year

EOS 1 14The AICPA recently released the results of the first quarter Economic Outlook Survey, which found business executives reporting a more favorable view on hiring and business expansion in the coming year. One of the motivating factors of this is an increased optimism about the U.S. economy as a whole.

Fox Business coverage of the survey, which polls CEOs, CFOs, controllers and other CPAs who hold executive and senior management accounting roles in U.S. companies, noted that just under half of respondents (49 percent) are feeling optimistic or very optimistic about the U.S. economy. Only 38 percent of executives felt equally positive last quarter.

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Value of Mentorship Realized in New CFF Program

MentorshipA wise man once said to seek the advice of people that have been there before you. When employment numbers among forensic accountants are projected to expand at an average rate of 9.6% per year through 2018, the need for CPAs experienced in forensics has never been greater. The AICPA has launched the CFF® Mentor Program to meet the demand of CPAs looking for a formal mentoring program to continue their growth and expand their knowledge within forensic accounting. 

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Trumping the Patent Trolls

Patent-stampEver found yourself wondering why all the fuss over patent trolls? Aren’t patent holders entitled to invention protection and the right to license their discovery to others who manufacture and sell it? Of course. But, in a disturbing trend, many patent assertion entities – better known as patent trolls – are using litigation to wrongfully target end-users of such products. 

If, for example, your office has a copier with a “scan to email” function, your company or employer could be at risk. As holders of vague patents, some PAEs have sent letters to small businesses, demanding approximately $1,000 per employee for the use of such scanners. The demand letter’s message: settle or be sued. Most choose to settle, primarily because of concerns about the cost of a defense.

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Re-envisioning the CFO as the Chief Future Officer

Chief-future-officerAre you ready to be the chief future officer? That is what I imagine to be the ultimate role of today’s CFO, someone who offers the kind of multifaceted, high-end skills that organizations can use to achieve their strategic financial goals and drive innovation.

The role of the CFO is already undergoing rapid change. In fact, 66% of global CFOs don’t believe the current definition of that title adequately captures the diversity of their position, according to an Ernst & Young study. Finding the skills needed to move an organization forward is going to be an ongoing challenge, however. In an Accenture survey, 40% of decision makers in Europe believed that the future success of their organizations depended on high-end analytical skills, but only 15% said they had these skills. So-called soft skills are also vital. IBM research has found that CEOs believe the critical skills for future success are being collaborative, communicative and creative.

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How Can You Impact the Future of Global Finance?

That’s a question I am constantly asking myself and my staff. Management accounting is more relevant than ever. Forward-looking and externally-facing, it brings structured solutions to unstructured problems.

The AICPA and CIMA believe there is an unmet need for a set of global principles to help organizations gain an integrated view of the business environment. That is why we have developed the Global Management Accounting Principles©, which are open for public consultation until May 10, 2014.

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March Money Madness

Pig - BasketballWhile many CPAs are in the depths of tax season right now, sports fans are entering the height of the college basketball season: March Madness. Even the most lackadaisical college basketball fan can’t help but get into the spirit. It also can be a prime time for overspending, whether buying rounds of drinks while watching the game at the bar or participating in the office pool. Although the NCAA tournament may be a one-and-done system, CPAs know all too well that this is not the case with personal finances.

The commonsense financial approach to events like March Madness are usually your typical stick to a budget, think before you spend, etc. But often no matter how many “tips to save money” you put out there, consumers are still drawn in by the pressures of friends, family and the media. While the individual consumer may know all the tips and tricks and understand the impact their decisions will make, that doesn’t mean it’s easy, and it doesn’t mean they’ll do it. So how do we, as professionals in the finance community, combat this? How do we change the thinking of Americans to one be focused on financial wellbeing?

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Happy St. Patrick’s Day – The Luck of the Beer Tax Continues

LeprechaunIt should surprise no one that the amount of Guinness consumed worldwide on St. Patrick’s Day more than doubles, to approximately 13 million pints. Celebrations are held far and wide from Australia to Russia to the International Space Station, where astronauts like Catherine Coleman play Irish music in space.

As a Maloney and a Fitzpatrick, I love the idea of a global Irish celebration - makes the world feel a wee bit friendlier (even if the saint being honored is technically Scottish).

The U.S. accounts for much of the increase in St. Patrick’s Day Guinness consumption. But while the enthusiasm may be spread out across the  country, the excise tax on beer collected by each state varies considerably.

The map created by the Tax Foundation shows an interesting pattern - a low-tax band across the middle of the country, with a few Western states collecting the least, while southern states charge the most, with Tennessee coming in first at $1.17 per gallon. The Mid-Atlantic area defies categorization – my state of Virginia is in the middle but neighboring Maryland ranks much higher.

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The Urge to Merge Continues

With 2013 in our rear view mirror, many want to know what the merger and acquisition marketplace will look like in 2014. I have been involved in anywhere from 75 to 100 M&A deals a year over the last 4-5 years, and over 1000 deals since 1990. My firm’s involvement may include deals which we develop ourselves, or deals in which we are brought in to consult upon.

What we’re seeing is a very steady M&A market with potential for growth in the future. With baby boomers gearing up for retirement, the M&A market among CPA firms could certainly heat up and my firm is fielding a number of calls from practitioners looking for guidance.

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Capturing Online Sales and Use Tax: The Battle Continues

EcommerceHave you purchased something online this past year, month or day?  You probably looked at the cost of the item purchased, but did you pay attention to whether you paid taxes on your purchases?  Sorry to tell you this, but just because a sales tax was not charged does not mean you don’t owe a tax on the transaction.

All states that impose sales taxes also require purchasers to remit use tax on any taxable purchases if sales tax is not paid. Many, if not most, consumers are unaware of the use tax and, therefore, do not comply.  It is almost impossible for state taxing authorities to enforce these laws with respect to individual consumers (but businesses often are audited for use tax). 

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PowerPivot: A Game Changer for Excel Pivot Table Users

PowerPivotAs a CPA and a power Excel user, my goal in Excel has always been to create useful reports and analysis for audit documentation as well as to meet my client’s need for information and reports. I quickly discovered that the best tool in Excel to meet my goals was to learn and master the capabilities of pivot tables. Learning pivot tables has increased my efficiency in almost every project that I have worked on and has been the tool I most often turn to in order to complete projects in a timely manner.

As great as pivot tables are they do have limitations, for example pivot tables do not work with data sets larger than one million rows. Pivot tables also can only work on one data set at a time. If I want to create a single report from multiple data sets, I must use V-Lookup formulas. If I want to perform calculations in my pivot table, I must use Calculated Items and Calculated Fields, which are cumbersome to work with and are not well supported by the Microsoft team.

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Is Your Nonpublic Bank (or Credit Union) Considered a Public Entity?

Public-privateMany nonpublic companies have looked to the Financial Accounting Standards Board – through the creation of the Private Company Council – to examine the existing accounting standards and make recommendations for alternative approaches to financial reporting. 

Based on the PCC recommendations, the FASB has now issued two Accounting Standards Updates, one standard provides simplified accounting alternatives for accounting for goodwill, the other for applying hedge accounting to certain plain vanilla interest rate swaps (which is explicitly not available to financial institutions) and have others in the pipeline for release. Financial institutions may want to proceed cautiously before moving forward with adoption of any of the PCC alternatives. 

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Staying Mentally and Physically Motivated during Winter Tax Season

Businessman-yogaHow do we stay motivated to continue to get a full night’s sleep, hydrate and enforce good habits when the pressures of work and the reality of deadlines, client demands and day-to-day fire drills become overwhelming? Long hours of winter busy season don’t allow for extra time to take care of our physical well being. Our daily workouts are replaced with early morning or late night staff meetings. Saturday afternoon pickup basketball games at the YMCA are just a fond memory. The only thing worse than going to work in the dark and coming home in the dark is dealing with the bitter winter weather in between.

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Managing the Risk of Emerging Technologies

Emerging-technologiesIt is likely that we have all been told to get our heads out of the clouds at one point in our lives. However, emerging technologies are now forcing us to get our heads into the “cloud” and our hands on our mobile data.

Mobile computing, remote computing, social media, big data and cloud computing have enabled CPAs and others to access, use and manage information most anywhere, at any time.  

While these technologies are expected to drive 90% of the growth of the IT market from 2013 through 2020, determining out how to best leverage them is a hot issue for the accounting profession. In fact, the issue of leveraging emerging technologies ranked among the top ten technology initiatives in both the U.S. and Canada according to the AICPA's 2013 North America Top Technology Initiatives Survey results. 

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Second Screen Gold: #Sochi2014

Olympics-sochiSocial media has the power to connect people across the globe who are interested in a common topic. Over the past few weeks, millions of users flocked to social media to share insights about the 2014 Winter Olympics in Sochi. 

As with other high-profile televised events, using social media gave viewers the opportunity to create a very interesting ‘second screen’ experience during the Olympic Games.  According to Mashable, the term ‘second screen’ refers to “…the use of an additional monitor (e.g. tablet, smartphone) while watching television. It allows the audience to interact with what they’re consuming whether it’s a TV show, video game or movie.”

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