The Annual Audit Does not Identify Operational and Financial Risks According to the Association of Certified Fraud Examiners’ (ACFE) 2014 Report to the Nations on Occupational Fraud and Abuse, an estimated 5% of revenues each year are lost to fraud. What processes can management put in place to identify financial and operational risks? In this article, the author shares his experience and thoughts on that question.
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Benefit or Boondoggle? Is the S corporation premium defensible? In this article, the author shares her views on this matter by answering the following questions: Should there be a premium applied to the S corporation whose value has been determined relative to the publicly traded C data by which it has been valued?” Are the assumptions we use to compare S and C attributes reasonable? Do they make sense? If not, what might we use instead?
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Auto enrollment vs. signing up for a 401(k) plan on your own. What’s the difference and can it be detrimental to your retirement saving goals? Kelley Holland, Special Journalist to CNBC, shares some interesting, if not eye-opening, information on how employee 401(k) plans affect your future and what you should do about it. Find out more on the CNBC article, click: The downside of automatic 401(k) enrollment.
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Some very interesting implications can be noted comparing two different companies using EBITDA. Z. Christopher Mercer, Founder and CEO of Mercer Capital, looks at how relying on EBITDA as a measure of cash flow can impact the valuation analysis conclusion if other measures are not considered. Read more about the results of this report in the Mercer Capital’s Financial Reporting article, Public Market Views of EBITDA: Exxon Mobil and Apple. 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 global nature of today’s economy makes the process of recovering the assets of fraud and other business crimes all the more difficult. The legal benefits provided by different jurisdictions are often used illegitimately by individuals to hide the proceeds of fraudulent activities, making it more difficult for the victims of fraud to recover their assets. In this article, Eric Rein discusses the strategies and procedural challenges to asset discovery and recovery.
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Dispute Defensible Best Practices, Part 3 of a three-part series In this third part, the last of a three part series, the author stresses that in order for a policy “review” or annual statement to rise to the level of a true “audit”, it needs to incorporate all elements of the above criteria. It needs to do this in a format providing actionable information. Without actionable information, a “review” cannot be meaningful in a dispute. The audit will include a rate class assessment, sustainability review and gathering of policy data. The audit report will include an Executive Summary, an Action…
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Key performance metrics for BDCs can help provide insight to the upcoming valuation marks. Travis Harms, leading Mercer Capital’s Financial Reporting Valuation Group, looks at fair value measurement in relation to credit spreads and what may be expected in the upcoming portfolio marks. Read more about the results of this report in the Mercer Capital’s Financial Reporting article, Portfolio Marks: 2Q15 Outlook. 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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How can your firm effectively convey its value to clients? Carl Peterson, CPA, proposes three ways firms can enhance their competitive advantage for you, your firm, your clients, and your prospects. Find out more in the American Institute of CPAs® article, Three Steps to Enhancing Your Competitive Advantage.
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The Growing Importance of Social Media and Marketing Expertise Referrals are an old standard—perhaps the old standard—for growing your practice. For the better part of the last century, firms have worked under a simple assumption: do good work for your clients, network with referral sources such as attorneys and CPAs, and you will win new business through referrals. In this article, the author discusses the viability of this and emerging models.
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Moral Victory: Plaintiff Wins the Battle (Causation) But Loses the War (Damages) AIG collapsed in the wake of Lehman’s bankruptcy filing and required a government bailout in order to avoid the same fate as Lehman. The plaintiff (AIG’s shareholders) contended that they were harmed by the relatively harsh bailout terms that were imposed on AIG but no other bailout recipients. The defendant (U.S. government) countered that AIG’s bailout terms were: (1) legal, and (2) benefitted the plaintiff because a bailout under relatively harsh terms was better than no bailout at all. This article explains why the court held that: (a)…
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What is the effect of goodwill impairment charges when comparing large cap stocks versus small cap stocks? Robert Richardson, a financial analyst with Mercer Capital, examines if higher equity markets have rendered impairment a thing of the past. Find out more in the Mercer Capital’s Financial Reporting article, Small Cap Goodwill Impairments on the Rise. 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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Imagine, building your firms profits while also increasing client satisfaction. There may be some psychology to this. Consultant Ron Baker explains to Chris Baysden (for the AICPA) how offering different pricing options can help firms do just that in this Q&A. Find out more in the Journal of Accountancy® article, Q&A: To boost revenue, try offering these pricing options.
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The theme of NACVA and the CTI’s 2015 Annual Consultants’ Conference was: Cultivate, Venture, and Achieve. It did not disappoint. On June 21, 2015, NACVA released its updated professional standards. Mark Hanson, Mark Kucik, and Carl Sheeler unveiled the updated standards, which become effective August 1, 2015. The new standards include: Articles VI, Business Valuation Review, and Article VII, Review Engagement Development Standards. Kucik notes that these standards will apply to reviews done by credentialed IRS (Service) members holding the CVA accreditation. In his presentation, The Strategy of Hope: A Poor Choice for Business Development, the keynote speaker, Sam Allred,…
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If It’s Ready Scott Bulloch, an exit planning professional and advisor, shares his views on why now companies with EBITDA of $1,000,000 or more are attractive to private equity. While there are companies that will meet the minimal thresholds, not all are ready. Is your company or that of your client’s ready for private equity?
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Avoiding Surprises Confidentiality is a cornerstone of mediation. But, how “confidential” is mediation? In this article, Nancy Yeend, a nationally recognized mediator, discusses the impact of the Uniform Mediation Act (UMA) and the various exceptions and levels of protection afforded to mediators and parties to a mediation.
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In 2014, a study by Chicago United documented a lack of diversity in leadership roles within American companies noting that more than 75 percent of executives are white. This fact should be of concern to big businesses because diversity in leadership roles has real benefits including better customer relationships, increased employee creativity, and improved quality of work. In this article, by Peter Gomez and Susan Medina for Talent Management Magazine, they discuss six ways companies can attract more diverse employees. Read how to diversify your company at Diversity Executive online.
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A recent survey of investment professionals in the CFA Institute reports investor concerns about the use of different accounting standards and rules for SMEs under IFRS and private companies under GAAP. Karolina Grabowicz, a financial analyst with Mercer Capital, reports how the use of different standards adds complexity and costs to financial reporting. Issues also arise over the loss of information due to private company accounting standards that could lead to lower valuations. Read more about the results of this report in the Mercer Capital’s Financial Reporting article, Lower Valuations for Private Companies? This article is republished from Mercer Capital’s…
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Disputes Defensible Best Practices (Part 2 in a 3-Part Series) In this second part of a three part series, the author looks at examples of how potential catastrophes have been avoided or reversed by employing a comprehensive policy audit. He then focuses on what is needed to make a policy audit dispute defensible.
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Practice Pointers from the Field How can a credentialed valuation analyst compete with a low-cost provider of valuation services performed by a professional lacking a business valuation credential? In this article, the author shares how he has succeeded conveying the value of using a credentialed and qualified business appraiser.
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Investors, analysts, and pundits remain highly optimistic on the Financial Technology (“FinTech”) sector driven by factors such as technology advancement and evolution, evolving consumer behavior and expectations for digital delivery of financial services, and regulatory response to the financial crisis. Mercer Capital examines valuation multiples within the FinTech industry over time to see whether public markets are reflecting these trends as well. They report that a FinTech bubble is emerging or starting to form as margins are generally down across various FinTech niches while valuation multiples have expanded. Find out more in the Mercer Capital’s Financial Reporting article, Is a…