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14 posts from January 2018

Busy season cheat sheet: 8 considerations to make it easier

Busy season finish lineTime is always a precious commodity during tax season, but especially so this year. On top of starting to prepare 2017 tax year returns, CPAs are working to figure out exactly how the tax reform law affects clients.

Before you start pulling your hair out, take a deep breath and remember the wise words of Eleanor Roosevelt: “This too shall pass.” Then, check out the AICPA resources that not only make preparation a bit more convenient, but will also help you impress your clients by answering their questions before they even ask them.

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Take a timeout: 9 do’s and don’ts for a good work break

Take a breakYour neck and back ache from hunching over your desk. Your eyes burn from staring at a monitor. You don’t want to stop because the clock is not your friend today. Yet stopping can, in fact, make the clock your friend. 

Taking a break on the busiest of days (and, of course, this is the busiest of seasons for tax CPAs) can be hard to do. I get it – while working on a deadline, I hyper focus and hate to put myself on pause. But I make myself do it because I know from experience that it will ultimately lead to greater productivity.

You don’t have to take my word for it, science says the same thing. Consultants monitored people’s productivity using an application called DeskTime and found that the best performers worked for 52 consecutive minutes followed by a 17-minute break. Not too surprising, considering that scientists have learned that our brains are better at solving complex problems when given a chance to relax. Think of that “aha” moment that comes to you when you’re in the shower or picking up dry cleaning. 

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5 items you need in your firm’s owners’ agreement

OwnershipWhat’s in your owners’ agreement? I recommend creating these critical documents when the firm is first formed and updating them as needed. An effective agreement can enhance decision-making and productivity, and it’s also the foundation for a successful changeover to new internal ownership. Even in a merger or acquisition, the decisions set forth in an owners’ agreement can set the stage for a smoother and more rewarding transition. Here are some significant issues that should be addressed in any agreement.

Firm governance. When you establish policies on who will run the organization and how it will be run, it can enhance efficiency and profitability. No matter how independently each partner may handle his or her work, there are many advantages to having common agreement on some key issues, such as:

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Government shutdown: What you really don't want to see during busy season

Government shutdown

The primary function of the government is - and here I am quoting directly from the U.S. Constitution - 'to spew out paper.'

-Dave Barry

Humorist Dave Barry can be quite silly, but it’s not so funny when faced with a government shutdown like the one that took place October 1-17, 2013. That was the last one before the shutdown that took place Friday at midnight. In 2013, government operations resumed after a continuing resolution, or CR, was signed into law.  And sometimes, well, we just “need that paper.”

Since accountants like to talk numbers, the 2013 16-day shutdown was the third-longest government shutdown in U.S. history. It trails behind an 18-day shutdown in 1978 and a 21-day shutdown 1995-96.

Monday, Congress voted to approve a temporary funding bill – the fourth since September – effectively reopening the government. But it’s a stopgap measure. And it’s possible we’ll see another shutdown on February 8. This is a critical time for CPAs who’ll be in the midst of filing season.

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5 things I wish I knew when selecting an ERP system

ERPAccounting professionals in the not-for-profit sector wear many hats. We often have the blessing and curse of selecting and implementing enterprise resource planning (ERP) systems. If you have undertaken this herculean effort before, you’ll probably never forget the education you gained throughout the experience. If you haven’t had the opportunity yet, there are some things you should consider to help your not-for-profit or your not-for-profit clients avoid mistakes. Here are five key lessons I learned when selecting an ERP system for my organization.

  1. You get what you ask for. It’s important to be specific about what you want to do and how you want to do it so you can find out if vendors can accommodate your needs. If the business requirements you specify are too generic, you may be surprised to discover significant gaps in the system’s capabilities too late in the game. For example, saying you need the ability to make electronic payments may be too generic. Instead, indicate that you need the ability to automate batches of electronic payments via EFT and wire. In this example, the added clarity ensures the system can not only make electronic payments but also process them via EFT, and that payments may be initiated through automatic batches rather than manually, one by one.

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Reflecting MLK’s work in the fabric of the profession

MLKToday is the federal holiday when we commemorate Dr. Martin Luther King Jr.’s life and extraordinary work.

Just shy of fifty years since his assassination, we have undoubtedly made progress. However, we still face an unsettling reality where disrespectful language, aggressive rhetoric and harassing behavior continues in some corners of our society.

To advance successfully together, we must face these facts with courage and uphold Dr. King’s legacy to support respect and inclusion. Of the voices carrying his mantle, Dr. King would be proudest to know that ordinary people are increasingly empowered to echo his original messages of equality and justice. In 2017, we heard from a diverse chorus of voices in entertainment, sports, business and politics as well as our neighbors and friends.

The AICPA is committed to inclusion in the accounting profession as well as within our organization. We rely on each individual (member and employee) and their unique views of the world to make the profession stronger and better prepared for the future. We also rely on respect and equality to bolster us against any negative pressure we face as citizens in our communities.  

We thank the members of the our National Commission on Diversity and Inclusion for their dedication and leadership in guiding the profession through our journey of inclusion. And we salute the many accountants and students across the world who are advocates of inclusion.

May you take this day an opportunity to not only celebrate the legacy of Dr. King, but to begin to create legacies of your own so that in 50 years you too are celebrating standing up for change.

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Today’s most binge-worthy TV, brought to you by inclusion

BlackishHopefully you were able to slow down long enough over the holidays to catch up on some of today’s most popular shows. If you’re like me, you want to see interesting shows representing a wide spectrum of perspectives and experiences. With the growth of cable networks and streaming services, you can find shows featuring a range of ethnicities, races, sexuality, and abilities, making for much more engaging and enlightening content.

But inclusion in entertainment didn’t happen overnight. Digital entertainment companies like Amazon, Netflix, Hulu and HBO (just to name a few) have been challenging the network television status quo for nearly a decade by assembling writers, producers and actors from various backgrounds to create fresh content. The networks are answering and keeping themselves relevant with their own solid offerings. Today’s improved TV proves that business’ most innovative offerings are spurred on by inclusion as well as competition.

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3 things more important than tax reform in 2018

Your phone’s already ringing. Clients want to know how the new tax law will impact them. This is understandable, but don’t Small firm prioritiesworry if you aren’t ready to answer their questions just yet It’s a big law and the IRS has yet to provide even the most basic guidance. For most businesses, taxes aren’t the first thing to look at in 2018—in fact, taxes probably shouldn’t be your clients’ second or even third priority. During your client meetings consider tackling these other issues that haven’t made the 6 o’clock news.

  1. Everybody needs to fully reevaluate their accounting.

To start with, after two years of delays, US GAAP is undergoing its biggest changes in decades with implementation of FASB’s new revenue recognition and lease accounting standards. Aside from the high-profile changes for software providers, virtually every business in America that reports under US GAAP will see significant changes to their accounting for revenue recognition. Most of these businesses have leases to look at too.

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Selling your practice? Don’t forget to cover your tail

Tail insuranceDon’t let this be you: You sell your practice and all is going well. You are enjoying retired life— when all of the sudden you get a call from your practice’s new owner. A previous client is suing you and you aren’t covered. Yes, this sounds like a nightmare, but luckily it doesn’t have to be your reality. Before selling your firm, protect yourself by considering the following.  

  1. Be Aware of the Danger

When you sell or merge your practice, the potential liability claims don’t go away. Instead, they could move forward into the new firm, ready to erupt when you least expect it. Even if you simply shut down your firm, the possible claims don’t disappear. They can follow you into retirement.

  1. Understand the Limitations

The professional liability insurance you buy is typically issued on a “claims-made and reported” basis. In other words, it is good for claims that are made only while the policy is active. For example, let’s say you sell your practice to Sue’s firm as of January 1, 2018. Early in 2019, an old client makes a claim against services you performed in 2017. The claim may not be covered under Sue’s current professional liability policy, and your policy expired when you sold the firm. You and Sue may be now potentially faced with a claim that is not covered by insurance.

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What’s the price tag on your college football team?

FootballThe stage is set. Who will be crowned the 2018 College Football National Champion tonight? Georgia and Alabama, the teams left standing in the playoffs, will face off to decide. The game is expected to draw a huge viewing audience. Last year’s title game between Clemson and Alabama – the Crimson Tide is back for a third straight year – pulled in more than 26 million viewers.

It’s no secret college football is big business. There’s been a long-time debate about whether student-athletes should get some of the profits (this blog post won’t go down that road). But how do you put a price tag on a team?

Having fans throughout the country focused on top-ranked teams during the season can really boost a university’s brand. A winning football program can lead to a university’s higher student enrollment, better alumni engagement, more scholarships, high-profile donors and increased visitor spending in the community on gamedays.

So, which college football program has the highest net worth? According to a 2017 analysis, Ohio State. The program has a $1.5 billion value, a 50% jump just from the previous year. The increase perhaps because of the Buckeyes’ 2015 national championship win. Texas and Oklahoma trail Ohio State valued at $1.2 and $1 billion, respectively.

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7 proposed changes to the auditor’s report

Auditor's reportAn auditor’s report gives lenders confidence that financial statements are free of material misstatement. But does the auditor’s report really tell the story of what the auditor did to gain assurance about the financial statements? Thanks to proposed changes to the auditor’s report, readers will gain a better understanding of what the auditor did and observed.

The AICPA Auditing Standards Board (ASB) has released a set of exposure drafts  aimed at enhancing the relevance and usefulness of the auditor’s report.

  1. Proposed Statements on Auditing Standards: Auditor Reporting and Proposed Amendments―Addressing Disclosures in the Audit of Financial Statements
  2. Proposed Statement on Auditing Standards: The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports
  3. Proposed Statement on Auditing Standards: Omnibus Statement on Auditing Standards—2018

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Next step for tax reform: Busy season

Tax reformTax reform is now law.

A few weeks ago, Congress passed H.R.1, a tax reform bill known as the Tax Cuts and Jobs Act. Its full title is “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.” On Dec. 22, President Trump signed the bill into law.

As busy season approaches, it’s important that CPAs are aware of how this bill affects their clients. Some provisions apply retroactively, including reducing the threshold for deduction of medical expenses from 10% to 7.5% of adjusted gross income (AGI) for a two-year period beginning in 2017. This means some clients may be able to deduct more from their 2017 taxes or qualify for the deduction for the first time.

Individual tax rates changed, effective 2018-2025 tax years. These are now set at 10%, 12%, 22%, 24%, 32%, 35% and 37%. The IRS will issue guidance soon, meaning we could see changes to paychecks as early as next month. Business clients could also see their tax rate lower with the new flat 21% corporate tax rate. Previously the corporate rates ranged from 15% to 38% and were graduated based on taxable income.

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AICPA announces 2018 CPA Exam score release dates

The 2018 score release dates are posted to the Score Release Timeline page of the AICPA’s CPA Examination page. For complete information regarding scoring, please visit the Examination Scoring and Scoring FAQ pages.

The National Association of State Boards of Accountancy will release scores to boards of accountancy based upon the target score release dates listed in the tables below. Some boards may require at least one day beyond the published target release date in the table to process and release scores.

Note: There are score holds for the 2018 Q2, Q3 and Q4 testing windows. For more information about these score holds, please read the specific Scoring FAQs.

2018 Q1

*The Exam data files the AICPA receives after March 11 will be included in the final target score release date.

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Why you shouldn’t make a New Year’s resolution

ResolutionsEach year, millions of Americans lose an average of 20 pounds and learn a new language within a few months of making their New Year’s resolutions.

Wait, what? That’s not actually true. I can tell you what really happens: Every January 2, a slew of people show up at my gym and hog the treadmills. It is rather frustrating. Luckily, I know they’ll be gone in a few weeks. That’s because they are part of the 80% of Americans who abandon their resolutions by the second week of February.

There has to be a better way. What if instead, we set goals throughout the year, rather than all at once when the clock strikes midnight? We would be less likely to feel overwhelmed by our commitment to training for a marathon and writing a novel, so we’d have a better chance of getting something done. After doing some research, I found a few other tips to achieve those goals you set.

Be specific. Begin by writing down exactly what you want. We’d all like to be more successful or more fulfilled, but what exactly does that mean to you? Let’s say you’d like to raise your professional visibility. There are a number of ways you can do it, including getting further training that can make you more valuable to clients or your employers or becoming more involved in professional or community organizations. And remember this isn’t a once-a-year activity, since it’s good to set new goals as circumstances change and new opportunities pop up.

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