Overview—Putting it on the Balance Sheet In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). The existing standard has been criticized because its bright line classification criteria enabled entities to structure leases in such a way as to avoid putting them on the balance sheet. The new standard aims to improve and simplify the financial reporting for leases and create a model that provides for faithful representation of leasing transactions for both lessees and lessors. This article summarizes the change.
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Since enacting the Securities Exchange Act in 1934, Congress has repeatedly expanded the arsenal of the SEC to protect investors through enforcement actions. As a result, the SEC has steadily increased the number of enforcement actions. The author’s analysis of 1,563 accounting and auditing enforcement cases from 2008 to 2014 shows the most frequent securities law violations adjudicated by the SEC, the penalties rendered, and the person most often at the center of a case during this period. By studying and understanding the findings, accountants can learn where standard accounting practices failed or were subverted and how to best deter,…
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With the fiduciary rule in question, a prominent industry association is calling on the SEC to issue guidance on the use of the term “advisor” when offering advice to retail investors. The CFA Institute has drafted a letter asking the SEC to take steps–ahead of the full regulatory initiative it is contemplating–to clarify the way financial pros describe themselves and their services. To read the full article in FinancialPlanning, click: SEC Should Define “Advisor,” Says CFA Institute.
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I have a number of elderly clients. It’s difficult for them to come in and sign documents, and if I overnight it to them, they often come back signed in the wrong place or otherwise incorrectly filled out. To make life easier for my clients I’ve had them sign blank forms, and then I’ll fill them in as needed. I’ve never used those forms improperly, but I’ve heard that if my firm finds out I can be in big trouble. I’m doing this to help my clients. Why would this be a problem? To read the full article in FinancialPlanning,…
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Adherence to Development and Reporting Standards in Family Law Litigation When applied correctly, the Market Approach can link value to market evidence and help support a thorough and well-reasoned valuation. However, valuation analysts often struggle with a variety of challenges when applying the Market Approach that include locating and selecting good comparable companies, selecting or calculating various valuation multiples from reported data, and weighting or selecting indications of value derived from various applied multiples. Recently published research from Doron Nissim at the Columbia Business School at Columbia University NY may shed some light on the best measure of operating performance…
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Delay at Your Peril In this article, the author, a business broker, shares his views on how the coming retirement of business owners will impact business owners themselves and what business owners should consider when meeting with a prospective business broker.
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Financial advisors face a slew of new regulatory issues in 2018, and when it comes to compliance, they are “better off changing the oil regularly than waiting for the engine to blow up.” That vivid warning comes from Todd Cipperman, founder of Cipperman Compliance Services, a consulting firm specializing in regulatory compliance. To find out what to expect next year according to Cipperman, as well as Bao Nguyen of Kaufman Rossin’s risk advisory services practice, please click through our slideshow. To read the full article in FinancialPlanning, click: Sixteen Compliance Trends to Watch in the New Year.
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The implementation effort surrounding FASB’s new revenue recognition standard is nearing an end for many companies; the deadline for compliance for public companies is the beginning of 2018. Despite the years of preparation, certain aspects of compliance, particularly the complex disclosure requirements, are being left to the final hours. Some companies are playing catch-up, scrambling to have their disclosures in place as the deadline approaches. To read the full article in the Journal of Accountancy, click: Last-Minute Revenue Recognition Implementation Tips.
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The dominoes keep falling—allegations of sexual harassment are rampant. Who is next? The wounds are open, and it is time to start healing. Before we can do that, though, we have to wonder why we have not seen more reports out of the wealth management industry recently. In part, I believe it is because our male-heavy finance culture went through a slew of sexual harassment cases in the 90’s, including the egregious “boom boom room” case at Smith Barney. To read the full article in FinancialPlanning, click: How Small Financial Advisories can Prevent Sexual Harassment.
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Provides Independent Validation of Indicated Values Newly-minted valuation analysts may question the reasonableness of their conclusion of value. That is natural. In this article, the author introduces readers to the Hypothetical Willing Buyer-Willing Seller Sanity Check Model. This is a model developed by the author in connection with valuation of a 100% controlling interest.
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Issues Using Transactional Databases and whether there is a Florida Effect that Biases the Transaction Multiplies In this article, the author discusses issues that impact the transaction multiples. He warns appraisers that it is dangerous to assume that the data offered by the transactional databases is consistent from transaction to transaction and, therefore, can be combined into a single sample and then compared to the subject of the valuation. In the article, he discusses three issues. Those are: 1) the vast differences in selling prices reported by the transactional databases; 2) the distorting effect of Florida comparables; and 3) the…
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Wealth management firms of all sizes are trying to streamline their operations to benefit clients, and mobile is a prime example, according to the recent Financial Planning Tech Survey. Forty percent of respondents cited mobile apps as a potential difference maker for the industry. This article will cite which technologies offer the most promise to advisors, and which could fall by the wayside. To read the full article in Financial Planning, click: Tech Trends to Watch in 2018.
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Members of the accounting profession are being challenged to gain a deep understanding of how ledger technology and digital currencies work. As the use cases for blockchain multiply, accountants and auditors need to consider how the existing accounting and auditing rules relate to distributed ledger technology. To read the full article in the Journal of Accountancy, click: Blockchain Considerations for Management and Auditors.
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A financial planner who admitted to defrauding his client out of nearly $1 million through a signature-forging scheme received a prison sentence of four-and-a-half years. William P. Carlson Jr. pleaded guilty to mail fraud in the U.S. District Court in Chicago and agreed to pay restitution of $911,000 in connection with the five-year scam. To read the full article in FinancialPlanning, click: Advisor Gets Prison Time After Pleading Guilty to Bilking Client for $911K.
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Research Says “No” In any business sector, one of the biggest challenges is to differentiate oneself. For a variety of reasons, this is especially difficult in the accounting and valuation and appraisal field, where many firms struggle to find ways to stand out. In fact, most firms end up making essentially the same claims about what makes them different. In this article, Dr. Frederiksen discusses his findings and suggests ways to differentiate the services and land clients.
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Opportunities for Valuation Pros The widespread destruction left in the path of Hurricanes Harvey, Irma, and Maria provides ample ground and opportunities for CVA professionals to assist the public. In this article, the author, a CVA, details those opportunities.
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Accounting Standards Update 2016-01 has generally flown under the radar since it was released almost two years ago. However, this accounting update has the potential to significantly affect financial reporting by public and private companies with minority equity investments—including corporate entities with a portfolio of venture capital investments. This whitepaper provides an overview of the accounting standards changes as they pertain to companies with equity investments and a few best practice considerations for firms with exposure to these changes. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Corporate Venture Capital and ASU 2016-01: Best Practices for…
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Retirees with multiple retirement accounts are advised to have a tax-efficient way of tapping into these accounts to minimize the tax bite, writes Morningstar’s Christine Benz. Retirees who have reached the age of 70 1/2 should take required minimum distributions from tax-deferred accounts, while those who are younger should draw from their taxable accounts, selling assets with the highest cost basis first, writes the expert. “Finally, tap company retirement-plan accounts and IRAs. Save Roth IRA assets for last.” To read the full article in FinancialPlanning, click: Get a Tax-Smart Plan for In-Retirement Withdrawals: Retirement Scan.
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Is there an inexpensive, easy-to-use, third-party add-on solution for achieving drillable financial statements when your small business accounting system does not offer that functionality? To read the full article in the Journal of Accountancy, click: Accounting and ERP Systems: A Look Inside Drillable Financial Statements.
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Enterprises, Assets, and Services With the emergence of value-based reimbursement, such as accountable care organizations (ACOs), clinically integrated networks (CINs), and bundled payment models, which rely on achieving the “Triple Aim” of healthcare at lower cost, U.S. hospitals are increasingly looking to change how services are being delivered by seeking more collaborative relationships with physicians, including vertical integration strategies such as the acquisition of healthcare-related enterprises, assets, and services (e.g., physician practices), direct employment, co-management, and joint venture arrangements with physicians and other providers. This abridged article was the first in a series of articles that appear in The Value…