Author: FFC

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It’s Just Hitting and Catching (and 1040s and W2s and 1099s and 1095s)

Post author By FFC
Post date January 13, 2016

It’s Just Hitting and Catching (and 1040s and W2s and 1099s and 1095s)

Baseball offseason: the time roughly between Halloween and Valentine’s Day when Major League Baseball teams take a break from hitting, catching and fielding. While there may be not peanuts, hot dogs, cracker jacks, or $12 beers being peddled at baseball stadiums across North America, it does not mean the teams are idle. In fact, in the days lead up to February 18, 2016 (when pitchers and catchers report!), teams are busy preparing for the coming season, the same way tax professionals are gearing up for the impending busy season.

This work behind the scenes is what ultimately lays the groundwork for a successful tax (or baseball) season. Without adequate preparation, both baseball and accounting organizations would find themselves struggling mightily to keep up with the demands of their professions.

Shore Up Talent

Before the final champagne cork has been popped after the conclusion of the World Series, front office staff across the league are assessing their teams and wheeling and dealing to address their talent deficits and fill in the gaps. Some needs may be temporary: a replacement for a pitcher recovering from surgery at the beginning of the season, while some may be long-term: their second baseman is retiring. Accounting organizations similarly need to ensure they have appropriate seasonal staff as well as a solid group of full-time employees to handle the demands of the busy season.

Learn from Years Past

What went right last year? What needs improvement? Both Major League Baseball teams and accounting organizations can build upon the outcomes of the previous year. Where did you struggle last season? What resources can be used to address those issues and make this year’s busy season go more smoothly? Was it a talent issue? A systems issue? A technical problem? Addressing struggles can only help improve this season, whether you’re the New York Yankees or an accounting firm.

Establish Workflow Processes

No team or organization can be successful unless there are clear cut processes for conducting business, addressing issues, solving problems and working toward a common goal. It is essential that staff—whether they are accountants, baseball players, equipment managers, or administration–know the priorities, practices and culture of the organization in order to be successful.

Keep the Fans Happy

Whether your audience is season ticket holders at Fenway, the casual baseball fan or individual or corporate clients, you want to keep them happy and motivated.. The best way to do that? Get them excited. Play up what you have to offer, stress how your offseason moves will help bolster your team or services, and how all of this is being done in the name of fan and client satisfaction. This will keep them coming back for more.

Keep Stakeholders Happy

If you’re a Major League Baseball team, this might mean cultivating good relationships with the reporters on your beat, keeping them abreast of your moves and giving them access to new players, and information. If you’re an accounting organization, you can use media or social media to help advertise your services to new potential clients. This may mean monitoring feedback, addressing client concerns that appear in the press or in reviews, and working to ensure you are portrayed in the best light possible.

While Major League Baseball vets and rookies alike are gearing up to take the field in a few short weeks, so too are the nation’s CPAs. While they might not be doing wind sprints or playing catch, they’re shoring up systems, brushing up on their knowledge of the tax code, and getting their spreadsheets ready to make the upcoming busy season a winning one.

Lauren Sternberg, Communications Manager-American Institute of CPAs.

Baseball courtesy of Shutterstock.

Three Reasons to Learn More about Audit Analytics

Post author By FFC
Post date January 12, 2016

Three Reasons to Learn More about Audit Analytics

In every audit, there are many transactions and accounts that need to be checked, whether they appear especially risky or not. And whether you’re an internal or external auditor, data analytics will help you identify and analyze those audit areas with the same effectiveness as methods auditors have used for decades—maybe even greater effectiveness. Sounds pretty good, right?

So what are the drawbacks preventing further integration of data analytics into the financial statement audit? Most significantly, there’s a need for additional guidance on how to harness the power of audit analytics. Additionally, the profession would benefit from independent research to support the effectiveness of new audit analytics in conducting an audit and meeting audit objectives.

The recently announced Rutgers AICPA Data Analytics Research (RADAR) Initiative seeks to study and find evidence of the effectiveness of automated techniques and data analytics applied in the context of the financial statement audit. This collaborative research effort, which will be hosted by Rutgers University, will explore the application of foundational approaches that can be applied by audit firms of all sizes.

The RADAR Initiative will test theory and methods in a tool-agnostic fashion, and complement efforts of the AICPA Assurance Services Executive Committee (ASEC) and Auditing Standards Board (ASB) to develop an audit analytics guide for profession-wide reference.

Three primary developments will contribute to the increasing use of data analytics in financial statement audits conducted by firms of all sizes:

Increased recognition of the usefulness of analytics in the context of the audit. Analytics won’t shorten your journey but might improve your itinerary. Many firms from small to large are already incorporating data analytics into their audits. The RADAR initiative aims to support firms’ use by studying how audit objectives that typically require manual processes or sampling (in lieu of looking at 100% of a population), can be achieved more effectively by leveraging technology and integrating data analytics into everyday practice. This will allow you to focus more of your time performing meaningful, risk-based analysis.

Authoritative guidance. You might experiment with your golf swing or your recipes, but when it comes to applying a new analytical method in an audit, you want to be sure you get it right. As mentioned above, the ASEC and ASB are collaborating on the development of a new Audit Guide on audit analytics to be released in 2017. This new guide will update and expand upon the content of the current AICPA Analytical Procedures Audit Guide, and will be written to be relevant for application by firms of all sizes.

A research community. Sometimes it’s fun to play solitaire, but you learn more when you play with a group. The RADAR Initiative will be conducted through a collaboration of the AICPA, CPA Canada, contributing CPA firms, Rutgers University, and representatives from other academic institutions who specialize in the subject matter of the research projects being undertaken. To learn more about the RADAR Initiative, please visit rutgers.edu/radar for details.

Amy Pawlicki, Director – Business Reporting, Assurance and Advisory Services and XBRL, American Institute of CPAs.

Audit analytics courtesy of Shutterstock.

5 Tips for Developing a Successful Enterprise Risk Management Program

Post author By FFC
Post date January 11, 2016

5 Tips for Developing a Successful Enterprise Risk Management Program

Imagine being able to use real time data and analytical tools to help identify and track potential risks that could impact your organization. At IBM, analytics is the next big frontier of risk management, as technology sophistication, coupled with an abundance of data, continues to provide insight into actions.

Effective enterprise risk management programs continually capture, evaluate, analyze and respond to risks arising from changing internal operations such as systems failure or turnover; shifting external markets resulting from political turmoil, a recession or natural disasters; or changing regulations. Risk management requires an organization to align its assets, people, activities and goals, thereby leading to good organizational governance.

IBM has been weaving solid risk management practices into the fabric of our business for nearly a decade. Our program focuses on creating business value and competitive advantage through enhanced risk identification. We embed risk management into the day-to-day operations of our business units and instill a culture that promotes accountability and provides processes and mechanisms for reporting risks.

Is your organization looking to enhance its enterprise risk management program? Following is some advice to help you get started.

Gain buy-in from upper management and ensure that the board backs the initiative. When it comes to risk management, the tone from the top is very important, especially at the onset. When IBM started its program back in 2006, our CEO, Sam Palmisano, was fully supportive and we met regularly with the appropriate Committee of the Board and periodically with the full Board of Directors.

Identify risk owners. Each of our enterprise risks is owned by a senior executive who is responsible for managing the risk across the company. This helps prevent “silo” mentalities from getting in the way.

Build a risk-aware culture across the organization. At IBM, we offer education, forums and tools to build risk awareness and cultivate a risk-savvy culture. This is in addition to the annual business conduct guideline training and affirmation process that are mandatory for all employees and sub-contractors.

Prepare teams across the organization, not just the core team. Successful enterprise risk management programs require the participation of all staff. It is not possible to detect and evaluate risks if all teams are operating in silos. For this reason, our ERM program closely collaborates with corporate internal audit, business controls, compliance and others operating within and across our global business units. Instituting a governance forum is an additional way of ensuring a cross-enterprise perspective.

Understand that enterprise risk management is an ongoing process. It is not enough to jot down your organization’s risks once and say you’re finished until the next time. An effective enterprise risk management program utilizes continuous data collection and monitoring to illustrate the big picture. Because a successful program is not “one and done,” it is important to allocate resources appropriately.

The future of enterprise risk management remains bright. At IBM, our program’s journey began with enhancements to our governance and practices and has since evolved to focus on leveraging risk analytics, which will improve decision making going forward. The best analytics are simple and fully integrated as part of the management system. Analytics have the potential to describe what happened, what might happen, the best action to take based on that knowledge and lastly what the best course of action is. Analytics will allow us to make data-driven business decisions that will lead to improved outcomes. While the evolution of cognitive computing, big data applications and related tools continues to drive value to IBM and the customers we serve, we recognize that information has become the world’s most precious technical resource and, therefore, we are making strides to exploit technical innovations for our own use and that of our customers.

For more information on risk management tools and technologies, read The Use of Information Technology in Risk Management white paper. When it comes to enterprise risk management, CPAs can also play an important role in providing independent evaluations of the effectiveness of an entity’s enterprise risk management program. Enterprise Risk Management: Guidance for Practical Implementation and Assessment offers additional information on implementing or evaluation existing ERM programs.

Tom Patterson, CPA, Associate Partner, IBM Global Business Services.

ERM image courtesy of Shutterstock

Dreaming of the Jackpot: 8 Tips to Help You Manage Your Money If You Win Big

Post author By FFC
Post date January 8, 2016

Dreaming of the Jackpot: 8 Tips to Help You Manage Your Money If You Win Big

Your own private island. A villa in Tuscany. A sprawling mansion in Malibu. A ticket around the world. Oh, the things you could do with $800 million in lottery winnings. But before you get carried away, consider those past lottery winners who mismanaged vast fortunes, losing everything. Don’t fall victim to the same fate.

Live life as usual, until you develop a plan for how you will handle your winnings. You’re excited. Who wouldn’t be? But it would not be financially wise to buy a house, boat or luxury car the day after winning big. You will want to consult both a CPA and a tax attorney who have experience dealing with unexpected windfalls. These professionals can help you determine if you should take the lump-sum or annuity payment option, and help you develop a plan for how to use your new-found fortune.

How much money will you actually walk away with? Just because the jackpot was advertised as $700 million does not mean that is the amount that will wind up in your bank account. Winnings of more than $5,000 are subject to a 25% federal withholding tax. The actual federal tax rate is likely to be higher — possibly as much as 39.6%, depending upon other factors such as income, deductions and residence. Additionally, depending upon where you live, your winnings may be subject to state and local income taxes. Of course, if the jackpot sum is enormous, this likely will not make a huge difference. However, it is important to keep in mind.

Pay off your debt. First things first. Pay off any debt that you have acquired over the years. Say “so long” to student loan debt, car payments, credit card debt or remaining mortgage payments.

Plan to Save. A major lottery win doesn’t have to be a one-time blessing. Consider this: even at historically low interest rates, a $10 million deposit into your savings account would net you up to $100,000 annually. Move into more complex investments such as CDs, mutual funds or bonds, and the percentages increase. Roll your dividends back into your investment, and in no time you enjoy the power of compounding interest. Many low-risk investments currently offer returns of 5% or more, which would give you over $6 million above your initial investment of $10 million after 10 years. With smart planning, part of your lottery win can be put to work for you, earning many times the average annual salary, just for parking that portion and leaving it alone.

Think about your family’s future. Have you always longed to be a homeowner, buy a vacation home, have a second car, or be able to set aside substantial college savings funds for your children or grandchildren? If so, you will want to incorporate these items into your plan. And remember to keep in mind that just because you won the lottery does not mean that you should buy a mansion with 25 bedrooms or a $200,000 car.

Try to keep it quiet. Although you will be extremely excited to broadcast the news of your winnings to everyone you know, it would be wise not to post this information on your social media networks or scream it at the mall. As you can imagine, people who you haven’t spoken to in several years may approach you asking for a portion of your earnings, and who wants to deal with that? Additionally, advertising your newfound mega-wealth might make you an appealing target for hackers.

Support charitable organizations. Wouldn’t it be nice to give back to an educational or religious institution, or a charity that you care about? You can be generous without giving everything away. Consult your financial advisor to determine an appropriate gift. Don’t forget: these contributions are tax deductible!

Don’t stop working entirely. It is important to have a purpose when you wake up in the morning. Whether you decide to keep the job you had prior to winning the lottery or not is up to you. You may decide that you would prefer to volunteer at your child’s school or local community center instead. Perhaps you have a time-consuming and expensive hobby that you haven’t been able to devote time to. Or maybe you’ve always wanted to continue your education. Now might be a good time to find ways to immerse yourself in your hobby or go back to school. Or perhaps you wish you’d chosen a different career but were never able to explore it because you were unable to sustain the resultant financial hit. If you are no longer reliant on your paycheck, you can try just about anything. The important thing is to find things that fulfill you, even if that involves sitting on a beach for 365 days with a fully loaded Kindle, deciding what that next move will be.

Good luck!

Alexis Rothberg, Communications Specialist, American Institute of CPAs.

Lauren Sternberg, Communications Manager, American Institute of CPAs.

Jackpot image courtesy of Shutterstock

In the News: CPAs Pessimistic on Economy in 2016

Post author By FFC
Post date January 8, 2016

In the News: CPAs Pessimistic on Economy in 2016

With the stock market dropping sharply to begin the new year, Americans are increasingly focused on the health of the economy. CPAs who hold leadership positions in U.S. companies, such as CEOs, CFOs and controllers, are pessimistic on the U.S. economy for the coming year. That’s according to the AICPA’s 4^th quarter Economic Outlook Survey.

The survey found that overall expectations for revenue growth had declined to 2.9 percent, down from 3.3 percent in the previous quarter and 4.7 percent in the fourth quarter of 2014. In addition, profit growth expectations slid from 2.6 percent in the third quarter of 2015 to 2 percent last quarter.

The diminished expectations contributed to an overall decline in sentiment about their own organization’s anticipated performance for the coming year, with 53 percent of respondents expressing optimism. That’s down from 59 percent the prior quarter and 67 percent the previous year.

“You have optimism declining,” Valerie Rainey, chair of AICPA’s Business & Industry Executive Committee, told the Wall Street Journal, which reported that executives are worried about China and Europe, regulation, and political gridlock.

Low inflation also helped to ease concerns. Only 23 percent of those surveyed said they worried about inflation, two percentage points lower than in the third quarter.

“We’ve been operating in an environment of low inflation for quite some time at this point,” Rainey said. There is “no indication,” of high inflation going forward, she said.

CFO.com quoted Arleen Thomas, AICPA’s senior vice president of management accounting and global markets, on the challenges the economy faces.

“We’re seeing rising concern about U.S. economic conditions and domestic competition,” she said. “Those factors, coupled with a potential slowdown in the global economy, have contributed to a perception that growth opportunities are going to be more challenging in the near-term.”

On a positive note, the survey found CPAs were more bullish on hiring.

CFO.com reported that roughly 18 percent of the respondents said their companies are looking to hire immediately, the same as last quarter. There was a slight drop in the percentage of respondents who said they had too few employees but were hesitant to hire (20 percent in the third quarter, compared with 17 percent in the fourth quarter). Overall, 53 percent of respondents said their companies had the right amount of staffing.

The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months. As a point of comparison, the U.S. Department of Labor’s November employment report, scheduled to be released tomorrow, looks back on the previous month’s hiring trends.

The CPA Outlook Index—a comprehensive gauge of executive sentiment within the AICPA survey— fell two points in the fourth quarter to 69, the fourth consecutive drop from a post-recession high of 78 in the fourth quarter of 2014. The index is a composite of nine, equally weighted survey measures set on a scale of 0 to 100, with 50 considered neutral and greater numbers signifying positive sentiment.

Other key findings of the survey:

The percentage of companies that expect their business to expand dropped three percentage points over the past quarter to 57 percent. It was at 71 percent in the fourth quarter of 2014.

Growth in IT investments led planned spending categories again, but dropped two-tenths of a percentage point from the previous quarter to 2.8 percent.

Professional services topped all categories for expected headcount growth in the coming year at 2.7 percent. The mining and natural resources sector swung from a positive to a negative growth projection for headcount in the quarter.

For industry sectors, optimism about retail trade, wholesale trade, manufacturing, real estate, finance and insurance, health care provider, and health care other dipped below the 50 percent mark in the quarter. In general, optimism was down across all sectors.

–James Schiavone, Senior Manager – Public Relations, American Institute of CPAs.

Life Planning: The Conversation of a Lifetime

Post author By FFC
Post date January 7, 2016

Life Planning: The Conversation of a Lifetime

It’s just not enough to give your clients the tools they need for long-term financial planning; to really connect with them, it is good practice to humanize your approach by integrating life goals with financial goals. This is “Life Planning.”

When I started my CPA practice, about 50% of my clients were psychologists, psychiatrists and other mental health professionals. After I began attending their workshops and learned more about human psychology, I started thinking about my own business relationships. To truly be a benefit to my clients, I needed to find a way to develop an authentic relationship they would value.

How Life Planning Differs from Traditional Planning

Life Planning is about discovering a client’s deepest and most profound goals, and inspiring clients to pursue their aspirations. The process really is different than traditional planning and uses a variety of tools:

The Seven Stages methodology enables advisers to help their clients find freedom and financial security by developing clarity and ease around their relationship to money. A client’s unexamined beliefs about money can disrupt the advisory process with things like self-sabotaging behavior, inappropriate risk-taking, lack of interest in executing a plan and goal confusion. Using the Seven Stages methodology gives the adviser a philosophical and psychological framework to understand client behavior and enhance coaching skills; this greatly improves the ability of the adviser to inspire the client to action toward their personal and financial goals.

Because listening is so important to truly grasp what a client desires, Life Planners are taught listening skills, including how to listen respectfully, with no judgment. This is probably why many people have confused this process with “money therapy.” Life Planners are by no means therapists; we just express interest in our clients’ goals and listen to their concerns and fears regarding money.

To find a client’s true passion and life goals, we use a process we call the EVOKE® Life Planning Process. The purpose of this process, delivered in one long or a series of meetings, is to explore the vision for the client’s life, identify obstacles preventing those things from happening and develop a plan.

The Benefit of Being a Life Planner

There is a profound difference between the value propositions of Life Planners and other traditional roles in the financial planning industry:

Investment Managers – Beat the market and grow the client’s portfolio. Life goal conversations with clients may not enter into the equation.

Financial Planners – Create a comprehensive financial plan for their clients to achieve a specific amount. Life goals are considered, but the goals may be in the background.

Financial Life Planners – Help clients develop a meaningful plan to create the life they want. Life goals are integrated into all financial decisions.

Traditional financial planning questionnaires may provide you with organized goals, but they may not reveal your clients’ passions and what they want to accomplish in life. With the Life Planning process, the client has already thought about what excites them about life. As a result, that passion is then directed at figuring out, with the planner, what needs to be done financially to meet the client’s goals.

The Most Important Life Lesson

The most common response clients give after leaving a Life Planning session is, “that was the conversation of a lifetime.”

Let me give you an example. After working with our firm, Martin discovered he really wanted to spend more time with his wife and child, despite his demanding career. He worked 55-60 hours a week, so we asked him, “what if you had an extra 15 hours a week?” We suggested that he negotiate with his employer to work fewer hours so he could spend time with his family. This strategy was successful and, in fact, Martin’s employer found his productivity was the same or higher working fewer hours. Other clients talk about writing a book, traveling, purchasing a lake house or even becoming part-time jazz musicians. When you understand what you want to do with your life, you can make financial choices that reflect your values.

The Life Planning process helps identify what the client wants and, of course, money aids in the delivery. However, the joy of being a Life Planner is that we have the financial knowledge to help deliver what the client truly desires. That’s the most important life lesson of all.

For additional information on this process, join George Kinder’s keynote presentation at the AICPA Advanced Personal Finance Planning Conference, January 18-20, 2016, in Las Vegas, Nevada. He will also offer a two-day workshop on the Seven Stages of Money Maturity® preceding the conference, on January 16-17. If you want more information about Life Planning, the EVOKE process and the Seven Stages of Money Maturity, download and listen to George Kinder’s recent AICPA Webcast, The Life Planning Perspective: An Interview with George Kinder.

George Kinder, Kinder Institute. George Kinder is the founder of the Life Planning movement and the author of four books, including Seven Stages of Money Maturity, Lighting the Torch and Transforming Suffering into Wisdom. He also recently co-authored with Mary Rowland Life Planning for You: How to Design & Deliver the Life of Your Dreams. George also recently launched a free companion website to this book, LifePlanningforYou.com, that allows consumers to complete a self-guided version of the EVOKE Life Planning process. A second site, LifePlanningforYou.com/adviser enables advisers to work virtually with clients, assigning exercises and managing the EVOKE process. He has been a practicing financial Life Planner and tax adviser for more than 30 years.

Life planning courtesy of Shutterstock.

10 Steps to Finding a Career Development Mentor

Post author By FFC
Post date January 6, 2016

10 Steps to Finding a Career Development Mentor

Quick–what comes to mind when you hear the word “mentor”? Did you envision a well-connected senior leader who is older, wiser and much more experienced than you are? While it’s true that most mentors once fit that description, the current thinking around mentors and mentorship has expanded. Today, we recognize that age, experience or a person’s profession doesn’t necessarily mean they will be an effective mentor. The main requirement is that a mentor is someone you highly respect, who can offer feedback, and is interested in helping you develop professionally and holistically.

Professional development experts have been reassessing other aspects of mentorship as well, including the notion of time. In the past, mentoring relationships were often expected to happen over the course of years, or even without any clear end date. Today, however, professional development experts advocate for mentoring relationships that are for a specific timeframe–ideally, six to 12 months.

Additionally, in previous years, mentoring frequently occurred in planned “sessions” that focused on specific topics. These days, a less formal structure is often more effective. Mentoring relationships may be short- or long-term, formal or informal. The important thing is to identify the mentor that best fits your personal and professional development goals.

Here are 10 steps that will help you take charge, find a mentor and develop your career:

Identify your goals. What do you want to achieve? Are you looking to advance in your current career? Are you thinking about moving into a new area or industry?

Decide how your mentor could help you most. Here’s a rule of thumb: if you can find the information you need in a book or online, you shouldn’t be asking your mentor. Mentors are best at assisting with things such as helping you gain new perspectives and offering insights; directing you towards resources that can be most helpful to you; and helping you establish new contacts.

Think of the people you admire most. Who do you admire most for their openness, honesty, character and leadership, versus their job title? These individuals are potential mentors. Try to come up with three candidates in case your first choice is unavailable.

Consider someone other than your boss. Your roles are already clearly defined, and your boss must be focused on immediate business goals, which makes it challenging to offer recommendations on your personal career development.

If you can’t find a mentor right away, consider other resources. Consider connecting with an executive search firm, even if you are not looking for a new position. Find out what they look for in candidates, particularly for the roles you aspire to.

Remember, the mentor also benefits. Approach your potential mentor with confidence. Most people want to help and inspire others, and in mentoring you, they are leaving a legacy.

Approach it as fun! Decide for yourself, and let your mentor know, that the goal is not to engage in heavy or challenging conversations, but instead to enjoy the process while learning new skills and gaining fresh insights.

Decide how often you’d like to meet and for how long. If geographically possible, I suggest the first meeting be in-person. After that, one-hour monthly phone calls or Skype sessions can work well. You may also want to see if your mentor is open to brief phone calls or emails from time to time, if you have a specific question and don’t feel you can wait until your next session.

Own the mentoring process. Let your mentor know you will be responsible for scheduling the meetings and will come prepared—such as writing down specific questions in advance of a mentoring session and creating an agenda you send in advance.

Stay focused on career development. Finally, be very clear that you are looking for feedback and professional insights that can help you develop in your career.

For More Information

If you want to learn more about mentoring, see the AICPA’s Mentoring Overview and Share. Learn. Grow. Mentor. guide. Or, contact me at dsalter@aicpa.org or 1-919-402-4097.

Donna W. Salter, Senior Manager – Young Member Initiatives, American Institute of CPAs.

Key to mentoring courtesy of Shutterstock.

New Version of Bank On It Teaches Financial Literacy Skills

Post author By FFC
Post date January 5, 2016

New Version of Bank On It Teaches Financial Literacy Skills

CPAs have an innate calling to educate the public about their finances. The need for this education has never been greater. A recent online survey conducted by Harris Poll on behalf of the AICPA showed that a staggering 75% of college students acknowledged that their student loan debt would require some sacrifices in their lives after graduation. So how can we help students develop a better understanding of their financial situations prior to attending college, while also setting them on a path to financial success?

To help solve this problem, AICPA’s Start Here, Go Places.^® and 360 Degrees of Financial Literacy programs teamed up to launch a new financial literacy version of the Bank On It^® game for high school students. Bank On It is a free, online game located at www.bankonitgame.com. The financial literacy version covers topics students need to master to be money-savvy in the real world, such as balancing a checkbook, understanding credit scores and student loans, and even investing in a cool startup company. With game questions reviewed by CPAs across the country, we’ve provided students the opportunity to learn financial management skills in an engaging and positive way.

If you’re a parent of a high school student and searching for new ways to teach financial literacy skills, Bank On It’s financial literacy version is the perfect tool. Have a long car trip coming up and need to entertain your child for hours? This game is just what you need. Your kids can even learn more about the accounting world by playing the original version of the game, reinforcing new and existing accounting fundamentals paired with real, working-world scenarios.

Visit www.bankonitgame.com and sign up to start playing today! With the help of CPAs across the country, we can help students everywhere have a bright financial future.

The 360 Degrees of Financial Literacy is a national volunteer effort of the nation’s CPAs to help Americans understand their personal finances and develop money management skills. It focuses on financial education as a lifelong endeavor. Start Here, Go Places.’ mission is to attract, inspire and engage a diverse pipeline of current and future CPAs by providing supplemental resources to assist educators and engage students in the subject of accounting.

Samantha Delgado, Manager-Communications and Consumer Education, American Institute of CPAs.

Tips to Make Your Not-for-Profit Clients’ Next Audit a Success

Post author By FFC
Post date January 4, 2016

Tips to Make Your Not-for-Profit Clients’ Next Audit a Success

Times have changed significantly from when I started performing audits over 20 years ago. U.S. Generally Accepted Auditing Standards have evolved, and now emphasize the auditee’s responsibility for financial reporting. Today, not-for-profits are in charge of identifying and recording the adjustments necessary to close their books, gathering the financial statements and designing control systems needed to prevent, detect and correct errors that may occur. As a result, the cost and efficiency of the audit is directly impacted by how well your clients prepare. Here are some best practice tips to help them prepare:

Create a detailed timeline. It is a good idea to meet with clients at least three months prior to the start of the audit to identify key dates and milestones, such as when the client-prepared information will be completed, when the audit will start, when draft financial statements will be provided to management, and when meetings with the audit or finance committee and board of directors will take place. If your firm is also providing tax services, the timeline should include the expected completion date of the client-prepared tax schedules, as well as the delivery date for the IRS Form 990. All parties should agree to, and receive a copy of the schedule containing these items. This will define each party’s responsibility in meeting the final deadline.

Involve those charged with governance in the planning process. US Generally Accepted Auditing Standards clearly state that it is the responsibility of management, and those charged with governance, to develop a system of internal control capable of detecting and mitigating fraud risk. As a result, the not-for-profit’s audit committee (or a similarly functioning governance team) should be involved in audit planning. Take the opportunity to advise the audit committee about best practices. Inquire about the process in place to train new audit committee members and to educate them about risks, internal controls and other risk response strategies. Also, take the time to discuss the organization’s Audit Committee Charter and compliance with its provisions. An engaged audit committee will lead to a lower-risk audit—and, hopefully, a more efficient one.

Encourage clients to honor their commitment. I recommend asking for client-prepared schedules at least one week prior to the start of field work. This ensures that the not-for-profit is ready for its audit, and allows the auditor to perform a preliminary review of the prepared schedules. Once you’ve received your client’s information, you can verify that schedules have been prepared in the format needed, that they tie to the trial balance and that the trial balance rolls forward from the prior year. You can also identify potential issues that will need to be addressed during the audit.

Explain that the audit is a team effort. Once the audit has started, you will still need assistance from your clients. They will be able to supply any additional documentation you need, and answer any questions you might have. Your client should plan to have its accounting staff available to answer questions, pull additional documentation needed and assist the auditors in keeping the audit on schedule. If you and your clients work together to plan the audit and adhere to the established timeline, the result will be a more efficient and cost effective audit for your firm and your client.

My Experience

The first time I tried this with my client, I was nervous about how it would be received. After all, the process places a higher expectation on the client. To my surprise, 95% of the clients really liked it, because our expectations regarding field work timing and performance were much more clearly defined. Additionally, the client was more clearly able to visualize the process from start to finish. Now, clients ask me when we can start working on the timeline. The result: increased efficiencies and increased client satisfaction. It’s a win/win.

The AICPA Not-for-Profit Section offers auditing and accounting resources, including illustrative financial statements, account work papers in Excel and a checklist of required auditor communications. As an added benefit, Section members can download a complimentary Audit Committee Toolkit, which includes a sample audit committee charter and other resources for not-for-profit audit committee members. To learn more, visit the AICPA’s Not-for-Profit Section’s Resource Library.

Jeff Barbacci, CPA, Shareholder, Assurance Services at Thomas Howell Ferguson P.A. Jeff has over 20 years of experience specializing in government and not-for-profit consulting and auditing. Jeff is a member of the AICPA Governing Council and is the immediate Past Chairman of the Board of Governors for the Florida Institute of CPAs.

Homeless shelter image courtesy of Shutterstock

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