FASB is considering making changes to the U.S. GAAP financial reporting taxonomy that would be intended to improve the taxonomy’s usability and the processes that support taxonomy-related activities. Ken Tysiac, JofA editorial director, explains. To read the full article in the Journal of Accountancy, click: FASB Assessing Efficiency, Effectiveness of GAAP Taxonomy.
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Context Matters This is the second of a two-part article. The first part, which addresses the efficient market hypothesis, is titled Proponents of the Efficient Market Hypothesis Always Want More Cowbell. Although many valuation practitioners are generally indifferent to context when valuing a business or asset, in litigation, as well as other areas that require valuation services, context matters. In this article, the author discusses how context and the market efficiency hypothesis shape contested valuations in various types of valuation-related disputes.
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Time to Evaluate Your Marketing Plans to Address Those Avoidable Mistakes In this article, Dr. Frederiksen describes five mistakes to avoid marketing a professional service organization.
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How do you get buyers and sellers to execute an M&A transaction when the prospects of an industry are extremely uncertain? Part of the answer may be to structure the deal in a way that defers payment of a (significant) portion of the purchase price in the form of contingent consideration. In this blog post, Sujan Rajbhandary, vice president, interviews Travis Harms, who leads Mercer’s valuation for financial reporting practice, to get his thoughts on the new valuation guidance. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Q&A: New Guidance on Valuation of Contingent Consideration (Earnouts).…
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How to Form a Sound College-Savings Plan Early preparation is key for handling children’s college expenses. This article offers three pieces of advice for families, regardless of where they are in the savings process. Kelli Grant, personal finance and consumer spending reporter, offers some wise and helpful tips. To read the full article in CNBC, click: 3 Tricks to Crush College Planning and Save Big.
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Practices usually associated with startups have helped these seven employers of CPAs establish welcoming cultures and retain employees. From virtual workplaces to vacation stipends to having employees set their own hours, these innovative practices are helping employers drive productivity. Lea Hart, AICPA associate editor, explains. To read the full article in the Journal of Accountancy, click: Innovation Showcase: CPA Employers on the Cutting Edge.
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Ascertaining the Financial Status of a Business in a Few Quick Glances The 60-Second Method is a system of ascertaining the financial status of a business or other entity in a few quick glances. It is a training tool that can be used to demonstrate how financial analysis works, or instruct decision-makers beginning to read and understand financial statement content.
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New rules from the FASB regarding how entities will have to measure certain equity investments may lead to increased earnings volatility and additional fair value complexities. Lucas Parris, senior member of Mercer Capital’s Financial Reporting Valuation Group, discusses five things to know about the new rules and some questions to consider. To read the full article in Mercer Capital’s Financial Reporting Blog, click: 5 Things to Know about Fair Value and Equity Investments. 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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An unfamiliar number, an unnatural pause after you say hello…another day, another irritating robocall. If it feels as if your cellphone has increasingly been flooded with them, you’re right. Christopher Mele explains. To read the full article in The New York Times, click: Robocalls Flooding Your Cellphone? Here’s How to Stop Them.
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Learn the formulas, functions, and techniques that enable efficient Benford analysis of data sets. J. Carlton Collins, Journal of Accountancy contributing editor, looks into this issue and provides some very useful tips and insights. To read the full article in JofA, click: Using Excel and Benford’s Law to Detect Fraud.
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The Objective and Subjective Tests Used to Determine Foreseeability To recover lost profits in a commercial damages case, three standards must be met. They are proximate cause, foreseeability, and reasonable certainty. Of these three, foreseeability is the lost profits standard in which a financial expert will have the least involvement. But this does not mean the expert’s work would not benefit the trier-of-fact in assessing foreseeability. This article will review the foreseeability standard and discuss how financial experts may be able to assist the trier-of-fact in considering this standard through their work addressing proximate cause and reasonable certainty.
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Always Want More Cowbell The More Cowbell skit can be repurposed to explain debates over the efficient market hypothesis. Many proponents of the efficient market hypothesis may initially find it annoying that nonbelievers do not share their view. However, believers’ faith in the efficient market hypothesis is dependent on nonbelievers continuing to try, but inevitably failing, to ‘beat the market.’ The efficient market hypothesis only works when investors can be ‘free riders’ that enjoy the fruits of nonbelievers’ labor, which make the market efficient. Thus, believers in the efficient market hypothesis should always want “more cowbell,” which in this context…
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Views Developed by an Appraiser Working with Business Brokers to Assess FMV Business appraisers typically assume that Price/Revenue, Price/SDE, Price/EBITDA and Price/EBIT, etc., are independent valuation methods. But, are they independent? This article shares my views on this subject matter and why they will lead to different conclusions of value.
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It seems like it was just last year when we mused if non-GAAP earnings measurements were becoming a permanent fixture of the market. How quickly the times change. Samantha Albert, senior financial analyst with Mercer Capital, explains. To read the full article in Mercer Capital’s Financial Reporting Blog, click: Compensating for Something: Facebook’s GAAP Change. 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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The statute of limitation defines the time within which the IRS may initiate an audit of a tax return. According to Sec. 6501(a), the statute of limitation for income tax returns is three years from the filing date of the return or the due date if the return is filed early. Marilyn Young discusses the issue. To read the full article in The Tax Adviser, click: The Statute of Limitation for Net Operating Losses.
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First things first: Get out of bed. Once you’ve accomplished this, you’re ready for five more tips that can help you minimize interruptions, maximize your time, and make the most of working from home. To read the full article in AICPA Insights, click: 5 Tips to Make Working from Home Successful.
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Unsystematic Risk Premia in Privately Held Companies How does a valuation professional quantify and defend the unsystematic risk premia (URP)? Is the latter a factor that helps explain why CAPM is less frequently used valuing a privately held company? As for Total Beta, is that any better than the use of Beta? In this article, the author suggests if one accepts that imperfect diversification (ID) explains the risk premia, he suspects that the risk level is a function of the buyer pool or market participant pool and that characteristic will validate whether the base URP should be adjusted up or…
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of Accounting and Financial Services Firms In this article, Dr. Frederiksen discusses five key findings derived from a Hinge Marketing Survey of accounting and financial services firms. The findings provide actionable steps and an opportunity for firms serving in the industry to grow.
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Market sentiment seems to oscillate between a preference for growth and a desire for profitability now. Travis Harms, Mercer Capital’s Financial Reporting Valuation Group lead, discusses the challenges of managing and investing in early-stage companies. To read the full article in Mercer Capital’s Financial Reporting Blog, click: If it was Easy, We’d all be Rich. 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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We mentally deposit money in buckets of current income, current assets, and future income. This instinctive categorization explains the popularity of so-called bucketing strategies for retirement income, whether segmented by time or type of spending. Michael Kitces, contributing writer for Financial Planning, explains how advisers can help overcome their irrational expectations. To read the full article in Financial Planning, click: Kitces: A New Hierarchy of Retirement Needs.