Practical Applications in Unimpeachable Neutrality Expert witnesses in the fields of forensic accounting, matrimonial litigation, and business valuation must possess a thorough understanding of the applicable standards, case law, evidentiary rules, and regulations specific to each engagement to effectively help the court understand the facts and evidence. The already daunting task of interpreting these rules becomes increasingly fleeting when those parameters act as moving targets whose relevance or obsolescence may be subject to change in an instant based upon legal decisions, newly promulgated standards, or pronouncements. This third article from the unimpeachable neutrality series, discusses 10 time tested and unimpeachable…
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Which Measure is Best for Normalization? Analysts face a potentially major issue when using EBT as the starting point for normalizing future earnings using traditional business valuation fundamentals. An issue arises when assumptions used in forecasting key expenses for normalized earnings differ from the way those expenses were calculated in the historical EBT. Key expenses that can have a large impact on ultimate value include non-cash items and related capital expenditures as well as interest expense and debt assumptions. This overview points out the reasons why traditional methods may not be viable for every situation. For a more detailed discussion…
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The future of the fiduciary rule is up for grabs, again, and clients, advisers, and firms are jumping in to make their voices heard at a crucial moment. Via a public commentary board, the Department of Labor is hearing feedback on whether it should make changes to the fiduciary rule and delay the regulation’s second stage of implementation. Scroll through to see some of the most passionate and insightful comments filed thus far. To read the full article in FinancialPlanning, click: Fiduciary Rule Final Stand: ‘Please Rethink This’.
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Understanding the fractions rule can enable tax-exempt organizations to invest in partnerships that hold interests in debt-financed real property without being subject to the tax on unrelated business income under Section 512. Michael Hoffman, CPA, Washington, explains. To read the full article in The Tax Advisor, click: What Proposed Regulations on the Fractions Rule Mean for Tax-Exempt Organizations.
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Questions for a Retirement-Preparedness Gut Check Pre-retirees should examine whether they direct too much money to goals other than retirement savings, take advantage of employer matching, and structure savings so enough pretax income is set aside. Jonathan Clements states that other important considerations include how retirees will spend time once they stop working and whether there is a danger of outliving savings. To read the full article in HumbleDollar, click: Retirement: 10 Questions to Ask.
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A Unique Assessment of Commercial Damages Business interruption is a form of commercial damages that may include both breach of contract and torts. While it is not common for financial experts to be hired in business interruption situations, some claims require their expertise. Unlike a traditional lost profit analysis, business interruption calculations are unique. Any expert asked to make such an analysis should consider lost profits (projected revenue for the loss period less saved expenses), non-saved expenses that are ongoing during the interruption, and extra or expedited expenses the business has to incur to reopen. This article addresses the work…
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When Calculating the Exemplary Damages Cap In a recent Texas Court of Appeals case, the jury awarded plaintiff $15,000,000 in exemplary damages; the Court reduced this amount citing section 41.008(b)(1) of the Texas Civil Practice & Remedies Code, which caps exemplary damages at two times the amount of “economic damages,” plus up to $750,000 in non-economic damages. The question on appeal was whether the jury’s finding of “pecuniary loss” was the same as “economic damages” for purposes of Chapter 41. The Court emphasized the word “actual” in the statutory definition of “economic damages”. The decision features a dissent from Justice…
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In Mercer Capital’s most recent issue of Portfolio Valuation: Private Equity and Venture Capital Marks and Trends, they provide a brief digest and commentary of some of the most relevant market trends influencing the fair value of private equity and venture capital portfolio investments. Key highlights are covered in their Third Quarter 2017 newsletter. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Trends Influencing the Fair Value of Private Equity and Venture Capital Portfolio Investments. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To subscribe to the blog, visit:…
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The FASB is conducting early stage research about developing an accounting standard for digital currency and the technology that underpins it. With the use of digital currency increasing, proponents say inconsistent accounting practices are becoming a problem. To read the full article in Thomson Reuters, click: Bitcoin Seeks Recognition from U.S. GAAP.
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CFOs are eager to make the finance function more efficient and useful. Samantha White, CGMA Magazine senior editor, explains what leading finance functions have in common. To read the full article in CGMA Magazine, click: Six Traits of Leading Finance Functions.
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in Light of LIBOR’s End Appraisal and litigation support professionals consider various rates to use as part of a financial model, including LIBOR. Near the end of July 2017, British banking regulators made waves in the business world by announcing the end of the London Interbank Offered Rate, or LIBOR, by the end of 2021. LIBOR’s end will mean the loss of a financial benchmark that is not only ubiquitous in commerce, but a valuable tool in creating discount rates in financial litigation. Fortunately, the Alternative Reference Rates Committee (ARRC), organized by the Federal Reserve, has already identified alternative benchmarks,…
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Understanding Another Person’s Point of View—A Fundamental Tool of Communication Empathy, when used appropriately is truly amazing. It strengthens and enriches our understanding of others, and enhances our ability to motivate them. Though there is no scientific way to measure the power of empathy, you can feel it when you use it, especially during mediation-type proceedings, when the opposing parties are frozen in their positions on opposite sides of the dispute. In this article, Judge Caprathe shares techniques used to show empathy and how these have helped him mediate conflicts.
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It is difficult to deliver bad news or discuss mistakes, but honesty plays an important part in the development of a workplace that is effective and productive. Eddie Huffman states that, hard truths, delivered well, are necessary for health and growth. To read the full article in CPA Insider, click: How to Encourage Candor in Your Office.
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SEC Official Suggests IPO Paperwork Could Include Arbitration Clauses Michael Piwowar, a Republican member of the Securities and Exchange Commission, has suggested that companies be allowed to include mandatory arbitration clauses in paperwork for initial public offerings. To read the full article in Reuters, click: U.S. SEC’s Piwowar Urges Companies to Pursue Mandatory Arbitration Clauses.
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Microsoft Could Provide Early Test of New Lease Accounting Rules Microsoft had said it would adopt new lease accounting rules July 1 instead of waiting for 2019, when the rules take effect. Microsoft’s status as a large, high-profile company means other businesses will study its example. To read the full article in Bloomberg, click: Microsoft Among First to Give Fuller Picture of Lease Situation.
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NACVA Member Survey Findings on Employee Recruitment and Retention Hinge Marketing recently completed a NACVA member survey. In this survey, Dr. Frederiksen learned that NACVA members sought to improve recruiting and retention in their firms. These were the two highest. In addition, gathering insights about how firms approach these challenges, we also asked employee-candidates how they search for and evaluate potential career opportunities. In this article, Dr. Frederiksen provides seven branding tips for aspiring experts.
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The Value of a Business is Not Always What it Seems (Part II of II) Personal goodwill is taxed at the individual capital gains tax rate, not the higher corporate income tax rate. Therefore, a credible personal goodwill calculation can amount to significant tax savings. One that is not adequately defensible invites risk of an audit. Every personal goodwill calculation is unique to each business, and the management interview is crucial. In this second part of the article, the author discusses issues that arise valuing identifiable intangible assets if goodwill is derived by first valuing personal goodwill, questions to ask…
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Was it a bargain purchase or not? The SEC has reached a $6.2 million settlement with a Big 4 audit firm relating to auditing failures associated with Miller Energy Resources. This post will examine the particulars of the case and provide some observations on fair value accounting that can be gleaned from the SEC settlement order. To read the full article in Mercer Capital’s Financial Reporting Blog, click: $475 Million Bargain Purchase Leads to an SEC Settlement. This article is republished from Mercer Capital’s Financial Reporting Blog. It is reprinted with permission. To subscribe to the blog, visit: http://mercercapital.com/category/financialreportingblog/.
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With the second quarter of 2017 in the books, we ran the numbers and sifted through the data to recap all the key info on global PE activity during 2Q. Powered by the PitchBook Platform, our quarter-end datagraphic looks at fundraising (which had a huge quarter), deal and exit activity, top investors and more. To read the full article in PitchBook, click: A Visual Recap of Global PE Activity in 2Q 2017.
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Determining the proper tax treatment of expenditures for tangible property can be difficult—and for taxpayers with a large number of expenditures, statistical sampling can be the only practical way to review and document these expenses. Here are examples of how sampling can help taxpayers determine the proper depreciation amount for fixed assets. To read the full article in The Tax Adviser, click: Statistical Sampling and Resulting Allocations Under Fixed-Asset Studies.