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10 posts from July 2014

Finding Plain English Answers on Employee Benefit Plan Audits

If you are a CPA who audits employee benefit plans, you understand how complex they can be. You know how critical it is to make certain that you and your staff have all of the knowledge and resources you need to perform quality audits in this area. Luckily, the AICPA has several resources available to assist members in performing EBP audits.

One such resource is the Center for Plain English Accounting. I am the director of the newly launched CPEA, the AICPA’s national A&A resource center for Private Companies Practice Section member firms. Members can submit written questions to the CPEA and receive written responses and gain access to reports, alerts and webinars on A&A topics including EBP, revenue recognition and Private Company Council accounting alternatives. Watch the video below for more information on CPEA.

 

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Every month, the CPEA receives many types of A&A inquiries. However, in the summer, we receive a higher number of EBP audit related queries because many companies receive tax extensions that delay the deadline for companies’ Form 5500 and audited financials for EBP until October 15.

Each query—and the CPEA’s response to that query—is unique in itself, because plans vary from organization to organization. Therefore, it is not a one-size-fits-all area. That is why it is so important for practitioners performing EBP audits to know where to go to find the right answers.

For example, we recently received the following query from a CPEA member:

For an employee benefit plan where there are no uncertain tax positions, would the plan be required to disclose, by year, each year that remains subject to examination by major tax jurisdictions? Alternatively, could we go with a more general note disclosure?

We suggested a more detailed disclosure, which might say something like “The Plan is subject to audits by the IRS; however, there are currently no audits for any tax periods in progress. The Plan’s management believes it is no longer subject to income tax examinations for years prior to 20X0.”

Even though the entity does not have any tax audits in process, it is helpful for users to understand which years might still be subject to examination by the Internal Revenue Service. Many times these disclosures can be overlooked where an entity has not been subject to IRS audits in the past or does not hold any uncertain tax positions.

Another question we are asked:

Does a successor auditor in a limited scope audit have to comply with the requirements in AU-C section 510 of the professional standards related to obtaining information from the predecessor auditor?

Our answer? Yes. An auditor still needs to comply with AU-C section 510.

Simply put, EBP is not an area to enter into lightly. I cannot stress enough the importance of tapping into the right resources that specifically address EBP so you can provide quality services to your clients. The AICPA has a number of resources that provide key assistance for EBP auditors. Here are three additional ones you should know about and keep on hand, if needed:

  1. The AICPA’s EBP Audit Quality Center. EBPAQC membership connects you to a community of peers through a membership center with tools and resources, regular e-alerts, a dedicated website with a robust member forum that keeps you abreast of the latest Department of Labor, accounting and auditing developments affecting your EBP audit clients.
  2. AICPA EBP Publications. The Employee Benefit Plans: Audit & Accounting Guide and the Accounting Trends & Techniques: Employee Benefit Plans are targeted toward practitioners auditing in this area.
  3. The AICPA’s Accounting and Auditing Technical Hotline. This free resource provides AICPA members with technical assistance by phone.

Conducting EBP audits can be a growth area for CPA firms. However, these specialized audits involve a level of knowledge and experience that requires dedication and diligence.   

If you’re just getting your feet wet in the EBP audit world, I encourage you to avail yourself of the additional assistance and resources offered by the AICPA.

Robert Durak, CPA, CGMA, Director, Center for Plain English Accounting, American Institute of CPAs. Bob is the AICPA’s lead staff person on accounting and attest matters affecting private companies. Prior to joining the CPEA, Bob led the AICPA's development of the Financial Reporting Framework for Small- and Medium-sized Entities and speaks frequently across the country about private company financial reporting.

5 Advantages of Completing the National MAP Survey

Survey-groupI often meet CPAs who are committed to enhancing their practices but are missing crucial intelligence that would allow them to benchmark their results against those of similar firms. If you could use thorough and meaningful data on how you compare with the competition, but you’re not sure how to get it, the AICPA PCPS/TSCPA National MAP Survey is your answer. The profession’s premier benchmarking study, which remains in the field until July 31, the National MAP Survey, offers participating CPAs a comprehensive platform to perform a personalized diagnostic review of their firm every two years, deriving important takeaways. The new dynamic reporting options make it easy to download reports in a variety of modes, including Excel, PowerPoint and PDF files, based on each firm’s needs.

Here are five reasons to participate:

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In the News: Role of Finance Function Expands as Business Complexity Increases

CGMA Logo The role of finance teams is expanding well      beyond traditional accounting and financial  reporting to encompass areas such as IT  development, cyber security and strategic  business planning. That’s according to a recent survey of CEOs, CFOs and other senior level Chartered Global Management Accountant designation holders. In addition to growth in the role of accounting and finance, the survey - conducted by the AICPA - found that business complexity has been increasing significantly, a trend that is expected to continue in the coming years. 

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How the IRS Revamped Tax-Exempt Applications

One-way-new-wayWith a new leadership team in place, the Internal Revenue Service Exempt Organizations Division has swiftly come together to introduce a shorter and easier application form (Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code) for organizations seeking section 501(c)(3) tax-exempt status. The IRS estimates up to 70% of all applicants will qualify to use the new streamlined approach.

Prior to the form’s July release, Tamera Ripperda, IRS Exempt Organizations Division’s newly appointed director, shared insights with CPAs at the AICPA Not-For-Profit Industry Conference and explained the significant role the simplified form will play in the new IRS transition process her team has internally dubbed: “Moving Exempt Organizations Forward.” 

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7 Keys to a Successful Blog

TypingWe’re halfway through the year and while there are many areas you can focus on to further develop your CPA practice, now is a great time to think about how you’re marketing your firm. It’s natural to think that effective marketing requires a commitment of extensive resources, but that isn’t necessarily true. A corporate blog is a marketing vehicle that can be managed by your existing staff.

A blog offers many opportunities: it allows you to demonstrate the expertise of you and your staff; it lets you showcase your values as a firm and convey your firm’s personality so you can attract the “right” clients; it allows you to answer frequently- asked questions and introduce potential clients to your staff. Another big advantage of blogging is that it can help your firm rank higher in search engine results.

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Bitcoin: Mystery Currency or Real Money?

Bitcoin Wallpaper (2560x1600)

No matter what you might have heard about the risks and long-term value of bitcoin, chances are good that your clients and employers will want to know more about how the adoption and use of digital currencies as a means of commerce may affect the way they do business.

Although bitcoin is still very much in its infancy, its impact should not be underestimated or ignored just because it is new and somewhat mysterious. Described by bitcoin.org as “a consensus network that enables a new payment system and a completely digital money,” bitcoin is not the only digital currency in today’s market. In fact, according to Coinmarketcap.com, there are 303 digital currencies in at least 637 markets, with trendy names such as “Litecoin,” and “Darkcoin.”

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Walk the Talk and Break the Desk-bound Habit

Wood-bridgeChocolate is actually good for us? A glass of red wine per the doctor’s orders? These are just a few examples of seemingly incompatible matches that come together to deliver the most unexpected benefits. Balancing work commitments and a lifestyle that builds a healthy mind and body can be surprisingly symbiotic.  

There’s no shortage of research reports and studies advising us of the need to exercise regularly.  On the other hand, job responsibilities continue to broaden due to higher performance standards and greater unpredictability in the marketplace.

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Staying Ahead of the ATRA and NIIT Curve

Financial-planning-consultationDue to the American Taxpayer Relief Act of 2012 and the net investment income tax, many clients have no doubt experienced the impact of the new multi-layered tax environment. According to a panel of leading CPA financial planners, clients ranging from those with high net worth to those with middle income were shocked to be hit with the NIIT and higher tax rates this tax season, and have been receptive to proactive planning to mitigate in future years.

Consequently, 2014 is the year to sit down with your clients and provide proactive guidance, education, planning and expertise. Here are a few helpful tips from our panel of experts to help you do that.

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5 Scenarios Where Proper Workplace Decorum is Essential

WorkingWhile workplaces have become increasingly less formal and more business transactions are taking place outside traditional office settings, the line that separates business from personal can blur. It is important to maintain a certain level of workplace decorum, whether you are in the office or out at an office mixer. Be sure to observe the following pointers, which address a variety of scenarios:

  • In-person meetings. How you conduct yourself during an in-person meeting will leave a lasting impression on your boss and colleagues.
    • Be considerate of others’ time and communicate the purpose, duration and the items for discussion in advance. Thank attendees for their participation, and demonstrate your appreciation by promptly circulating a recap or minutes that document their contribution.
    • Don’t monopolize the conversation. Ensure that everyone has had a chance to speak their mind before ending the meeting.
    • Never assign an action item to someone not present until you have had an opportunity to negotiate it with them.
    • If you are attending another person's meeting, be respectful and resist the urge to multi-task. If you are waiting for an important phone call, turn your phone to vibrate or silent, and excuse yourself before answering. Otherwise, turn your devices off.

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Time to Clean House with Asset Retirement

TimeRegardless of the size of your business, somebody should be responsible for maintaining your company's fixed asset or depreciation schedule. Since in most cases this is not a full-time job, it may be neglected. Updating accounting records is unavoidable for most of us. However, many of us are incredibly busy. Who has time to pull out a fixed asset list - just to make an addition? If your company is large enough to employ an asset manager, you may be up to speed with fixed assets. If not, who is responsible for managing this schedule and do they have the information they need? New tax regulations that went into effect Jan. 1 allow organizations to go back and write off those assets on the books that are long gone. The regulations even allow for partial dispositions of "units of property" that previously were not permitted.

Continue reading "Time to Clean House with Asset Retirement" »

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