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All I want for Christmas is…a rabbit onesie?

All I want for Christmas is…a rabbit onesie?

Leg lampLet’s be honest: at some point in our lives we have all felt like Ralphie from A Christmas Story. We wanted the latest and greatest toy and instead received … a rabbit onesie from our Aunt Clara. Even though Ralphie wound up receiving his dream present after all, some of us here at the Association were not so lucky.  

To bring a laugh to you this holiday season, and as a reminder that not all gifts have to be expensive to leave a lasting impression, we asked our staff to share the weirdest gifts they’ve ever received. Here’s what they had to say:

 “Last year I was invited to a white elephant gift swap and I got a pair of cashmere socks. Nice, right? But they were missing a tag and when I took a sniff they had definitely been worn recently.” – Alexis Rothberg, Communications Manager

“When I was in the third grade we went on a family beach trip, and my grandparents decided to host a little get together while we were there. They invited a friend, a retired dentist, to join us. A few hours in, I proudly told him my front tooth was loose (not because it really was, but because I thought he might be impressed). He said, “come here and let me see it.” Like a lamb being led to slaughter, I went. He wrapped his slightly-intoxicated arm around my little head, grabbed my tooth with his other hand and started twisting. The sounds of the roots popping stopped the whole party – like a record scratch.

Fast forward 20 years to Christmas Eve. I’m sitting on my grandmother’s couch about to open her gift. I open the neatly wrapped box and inside, and under a mound of homemade confetti, is that dentist’s obituary cut out of the newspaper. That’s the weirdest (and best) gift I ever received.” – Stacie Saunders, Associate Director—Communications & Member Engagement

“At my fourth-grade gift exchange, I watched everyone open fun, age-appropriate toys. Then it was finally my turn to open my little box:  Yahtzee score cards. I remember looking at them in disbelief…and humiliation. My teacher told me how fun they’d be when I got the game. Then my best friend, seeing me upset, gave me her jump rope. All was good in the end.” – Angela Viera, Senior Manager—Accounts & Client Solutions

“My book club has a white elephant gift exchange done Yankee-swap style. One year I ended up with light up slippers and another year it was a cellphone-shaped flask.” – Jennifer Gardner, Manager—Communications & Social Strategies

 “One year when I was a kid…maybe about 14 or 15…all I got was a big jar of pickles…even though – by most accounts – I was a pretty good child.” – Brock Faucette, Manager—Corporate Communications  

What’s the most memorable or crazy gift you’ve ever received?

Samantha Delgado, Manager – Communications, PR & Corporate Responsibility, Association of International Certified Professional Accountants

Leg lamp courtesy of Shutterstock.


     

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4 tips for not-for-profit accounting staff

4 tips for not-for-profit accounting staff

We know the feeling. You already have a lot on your plate. And now there are significant changes coming down the pike in the form of Financial Accounting Standards Board (FASB) accounting standards updates and tax reform. If you find yourself hoping the nonprofit accounting environment will settle down in 2018, you’re not alone. But alas, we’re here to help. Consider these tips:

Start at the top.

Having a well-run not-for-profit board is important for making sure strategic objectives are met even as changes occur. If you have open seats, be sure you select new board members carefully. Identify a diverse range of skills and experience that you’re looking for when recruiting board members. These may include finance, information technology, human resources, marketing, fundraising or law. For more advice, check out these governance and management FAQs and this blog post on 5 tips for an effective not-for-profit board.

Break big projects down into manageable tasks, and start now.

 FASB’s new not-for-profit standard will bring significant changes to your organization’s financial statements. Don’t get overwhelmed by diving in sooner rather than later. If you’re looking for a good place to start, consider your chart of accounts. The new financial statement presentation standard will impact your chart of accounts in five areas: liquidity, net assets, investment return, statement of cash flows and expense reporting. To read more about these areas viewed through the lens of your chart of accounts, take a look at our blog post series, part I and part II.

Don’t let your audit sneak up on you.

Preparing for an annual audit can be overwhelming even when all is calm on the technical front. With the pending changes to accounting standards, regular communication with your external auditor throughout the year will be critical. Ask questions now about standards that will be effective for the coming year(s), so you can determine the extent of impacts to your organization and prepare accordingly. Also ask questions about accounting for any unusual or infrequent transactions you may have. Read this article for more tips on auditor communications and audit preparation.

Commit to getting tax compliance right.

With the IRS’s data-driven audit methodology, they’re casting a wider net for audits. This means it’s important to focus on the accuracy and completeness of your Form 990 and try to minimize reporting of any red flags. If you need help understanding or preparing the Form 990 and its accompanying schedules, the AICPA Not-for-Profit Section’s tax resource library can help.

Regardless if you’re new on the job or are a seasoned veteran, accounting and finance staff at not-for-profits can benefit from resources to help address questions that may arise on any given day. The AICPA Not-for-Profit Section’s resource library has a vast array of articles, FAQs and toolkits to guide its members.

NFP firehose 1NFP firehose 2

NFP firehose 3
NFP firehose 4

Lana Richards, Manager- Not-for-Profit Content Development, Association of International Certified Professional Accountants


     

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Bitcoin may burst. You still need to learn about it.

Bitcoin may burst. You still need to learn about it.

Bitcoin 2On December 19, 2017, Bitcoin was trading at just over $17,700 – an increase of more than 34,000,000% over its 2011 price of $0.05. Almost all this exponential growth has been in 2017, which has people asking if Bitcoin is a bubble.

My opinion? Yes. It has many of the classic signs.

Bitcoin’s value has increased dramatically in a short time, attracting novice investors. Its valuation is extremely difficult since it’s not backed by anything tangible like gold or silver. Lastly, as an investment, Bitcoin doesn’t pay interest or dividends. To make money, investors will have to sell their Bitcoins. For these reasons, I think the Bitcoin bubble will burst eventually. I’m just not sure what the triggering event will be or when it will happen, but it will happen.

Even if you’re not one of the lucky (or brilliant) few who bought low and will sell high, riding the bitcoin wave into early retirement, you still need to know about cryptocurrencies. Here are just a few reasons why:

Here in the US, the IRS released a notice in 2014 stating that “for federal tax purposes, virtual [crypto] currency is treated as property.” As Bitcoin adoption and use has spread, the AICPA has asked the IRS to update this guidance. While I doubt U.S. regulatory agencies will embrace national Bitcoin use anytime soon, if Japan successfully implements Bitcoin as money, other counties could follow suit. This would bring widespread adoption of cryptocurrency closer to home.

  • The possibility of commodity-backed cryptocurrency: Bitcoin may account for most of the $200 billion cryptocurrency market, but it is certainly not alone. There are currently more than 1,300 cryptocurrencies, each with unique features and applications. Some, like Bitcoin, strive to become a mainstream currency. Others are developed as an innovative means of raising capital in the form of value tokens or utility tokens that are sold in Initial Coin Offerings (stayed tuned for more on ICOs in a future blog!).

These types of cryptocurrencies are being created by individuals, corporations, and even governments.  Earlier this month, Venezuela announced plans to create a cryptocurrency backed by the country’s oil reserves. If Venezuela can pull this off – or even get close to proving the concept – the criticism that cryptocurrencies aren’t backed by tangible assets would no longer be valid.

  • The evolution of money: The ancient bartering system using animal skins and weapons has been extinct for centuries, having given way to coins and paper money. Technology advanced us to credit and debit cards, then quickly took the exchange of traditional currency to a new level with mobile payment services like ApplePay and Square Cash. Cryptocurrency’s use of cryptography and transparent distributed ledgers combat some issues with traditional fiat currency systems, such as counterfeiting, vulnerability to fraud, and long and costly settlement periods.

While the Bitcoin bubble will burst sooner or later, it will not be the fall of cryptocurrencies. This is just the beginning, and Bitcoin has laid the groundwork for other cryptocurrencies to follow. Now is the time to learn more about cryptocurrency concepts and prepare for further disruption of global currency systems. 

Amanda Wilkie has a computer science background, but she’s not your average geek. With two decades of technology experience, Amanda has spent 14 years driving change and process improvement through innovative technology solutions, working across firms of varying sizes in the public accounting profession. She has held strategic leadership positions in firms ranging from Top 50 to Top 10 including her most recent role as CIO of a Top 30 firm.  Amanda is a recognized expert in the profession who regularly speaks and writes on blockchain and cryptocurrency and their impact on the profession.  To learn more about Amanda, connect with her on LinkedIn.

Bitcoin bubble courtesy of Shutterstock.


     

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5 cookie recipes for the best holiday ever

5 cookie recipes for the best holiday ever

Happy Bake Cookies Day! Yes, there is an entire day dedicated to baking cookies, and it conveniently happens to fall close to the winter holidays. So, if you’d like to celebrate what is, in my humble opinion, the best holiday ever, or if you’re just looking for a way to fill your time away from the office, warm your heart (and your oven) with one of these cookie recipes crowdsourced from Association employees.

  1. Hungarian Butter Cookies

Hungarian butter cookies

This one is a family recipe from Communications Manager Alexis Rothberg. I can confirm that Alexis’s dessert skills are top notch, so this one is bound to be a winner.

Ingredients

2 sticks unsalted butter, softened

1/2 cup sugar

½ teaspoon salt

2 teaspoons vanilla extract

1 egg, separated

2 cups all-purpose flour

Raspberry jam (optional)

Directions

  1. Preheat the oven to 325 degrees F. Grease two baking sheets and set them aside.
  2. Combine butter, sugar, salt and vanilla in a medium bowl. Mix until smooth (about 1 minute). Add in the egg yolk and stir to combine. Add the flour and mix until just incorporated.
  3. Form a ball of the dough in the bowl and cover with plastic wrap. Chill in the refrigerator for 15 minutes.
  4. Using a teaspoon-sized cookie scoop, measure the dough and roll it in your hand to make a little round ball. Place it on the baking sheet and, using your thumb, make an imprint in the center of the cookie. Place a small amount of jam in the center of the cookie, if using.
  5. Beat the remaining egg white in a bowl and using a brush, paint the top of each cookie.
  6. Bake 12-15 minutes or until the bottoms are golden brown.
  1. Award-Winning Soft Chocolate Chip Cookies

Soft chocolate chip cookies

Image via Allrecipes

Carl Mayes, CPA, Senior Manager–Special Projects, is a fan of this recipe from Allrecipes. They may seem like your ordinary, run-of-the-mill chocolate chip cookies, but the secret ingredient—instant vanilla pudding mix—takes these treats to a whole new level. Carl said his family bakes around 60 of these cookies every year and they’re gone pretty much immediately. You’ve been warned.

Ingredients

4 ½ cups all-purpose flour

2 teaspoons baking soda

2 cups butter, softened

1 ½ cups packed brown sugar

½ cup white sugar

2 3.4-oz packages instant vanilla pudding mix

4 eggs

2 teaspoons vanilla extract

4 cups semisweet chocolate chips

2 cups chopped walnuts (optional)

Directions

  1. Preheat oven to 350 degrees F. Sift together the flour and baking soda; set aside.
  2. In a large bowl, cream together the butter, brown sugar and white sugar. Beat in the instant pudding mix until blended. Stir in the eggs and vanilla. Blend in the flour mixture. Finally, stir in the chocolate chips and nuts. Drop cookies by rounded spoonfuls onto ungreased cookie sheets.
  3. Bake for 10 to 12 minutes in the preheated oven. Edges should be golden brown.
  1. Christmas Crack

Christmas crackImage via Simply Recipes

If you’ve never thought about combining chocolate, caramel and Saltine crackers before, it’s time to start. This recipe from Simply Recipes comes highly recommended “for the non-baker” by Chrissy Jones, Manager—Communications and Member Engagement (and thoroughly seconded by Heather O’Connor, Senior Manager—Communications).

Ingredients

28 to 35 saltine crackers (about one sleeve, enough to line your tray)

1 cup packed dark brown sugar

1 cup (2 sticks) unsalted butter

1/4 teaspoon kosher salt

1 teaspoon vanilla extract

2 cups (10 to 12 ounces) chopped dark chocolate

OPTIONAL: ½ cup chopped nuts, coconut flakes or crunchy sea salt (to top the cookies with once you’ve poured the melted chocolate)

Directions

  1. Preheat the oven to 400 degrees F. Line a 10×15-inch jelly roll pan with nonstick aluminum foil (preferred) or regular heavy-duty foil, making sure that the foil completely covers the bottom and sides of the pan. If using regular foil, spray lightly with baking spray. Line the saltine crackers in a single layer on the bottom.
  2. Make the caramel sauce: Place the brown sugar, butter and salt in a medium-sized saucepan. Cook on medium heat, stirring frequently, until the butter melts. Continue to cook, stirring occasionally, for another 3 to 5 minutes, just until the mixture comes to a boil and starts to darken. Remove from heat and stir in the vanilla extract.

(Note: You’re not actually making true caramel here, so you don’t need to be as precise or worry about the temperature of the caramel. Just make sure it comes to a boil and wait for it to darken slightly, then continue.)

  1. Pour the hot brown sugar mixture over the saltine crackers. Spread to evenly coat the crackers.
  2. Move the pan to the oven and bake for 5 minutes. The caramel will be hot and bubbly.
  3. Place the chocolate in a microwave-safe bowl. Cook it in the microwave in 30-second intervals at full power, stirring between each cook time, until the chocolate has melted.
  4. Once the crackers are done baking, remove from oven and allow to cool for 1 minute, until the caramel is no longer bubbling. Then pour the melted chocolate over the crackers. Use a spatula to spread the chocolate evenly over the top.
  5. Let the crackers cool to room temperature then move to the refrigerator and cool overnight.
  6. The crackers will form a single sheet once cool. Remove from pan and gently peel the foil away, being careful not to tear the foil. If any bits of foil tear and get stuck in the caramel, break those bits away and discard. Cut the candy into snack-sized pieces using a chef’s knife (you can use your hands, too, but it may be easier with a knife).
  7. Store in an airtight container in the refrigerator for about a week.
  1. Salty Oatmeal Chocolate Chip Cookies

Salty oatmeal chocolate chip cookiesImage via Barefoot Contessa

Alexis also suggested this recipe, which she adapted from Ina Garten’s Make It Ahead cookbook (original recipe here). If you’re a fan of a good sweet-and-salty combo, you’re going to love these cookies.

Ingredients

1/2 pound (2 sticks) softened unsalted butter

3/4 cup light brown sugar, lightly packed

3/4 cup granulated sugar

2 teaspoons pure vanilla extract

2 extra-large eggs, at room temperature

1¾ cups all-purpose flour

1 teaspoon baking soda

1 teaspoon kosher salt

1¼ cups old-fashioned oats, such as Quaker

10 ounces bittersweet chocolate chips

Fleur de sel

Directions

  1. Preheat the oven to 375 degrees F. Line 3 sheet pans with parchment paper.
  2. In an electric mixer fitted with the paddle attachment, beat the butter, brown sugar and granulated sugar on medium-high speed for 3 minutes, until light and fluffy. Scrape down the bowl with a rubber spatula. On low speed, add the vanilla, then the eggs, one at a time. Scrape down the bowl again.
  3. Meanwhile, sift the flour, baking soda and salt into a medium bowl. Mix in the oats. With the mixer on low, slowly add the flour mixture to the butter-sugar mixture. Don’t overbeat it! With a rubber spatula, stir in the chocolate until the dough is well mixed. With a 1¾-inch ice cream scoop (or two spoons), scoop round balls of dough onto the prepared sheet pans. Sprinkle lightly with fleur de sel. Bake for 10 to 12 minutes, until nicely browned. Serve warm or at room temperature.
  1. Eggnog Macarons

Eggnog macaronsFair warning: Macarons take some practice, and they probably won’t look perfect on your first try (unless you’re one of those crazy-talented kids from MasterChef Junior). But if you’re up for a challenge and you’ve got some time on your hands, baking these little French cookies can be a rewarding (and delicious) endeavor. I adapted this recipe from Les Petits Macarons by Kathryn Gordon and Anne E. McBride and a recipe from The Gunny Sack.

Note: These troubleshooting tips from Not So Humble Pie are helpful for first-time macaron bakers as well as the pros.

Ingredients for the shells

1 ¼ packed cups (165 grams) almond flour

¾ packed cup (165 grams) powdered sugar

Pinch fine sea salt

1 tablespoon (5 grams) powdered egg white (I found this on Amazon)

¾ cup (150 grams) granulated sugar

½ cup (115 grams) egg whites (from 4 eggs)

½ teaspoon (3 grams) cream of tartar

Gel food coloring (optional)

Directions for the shells (adapted from Les Petits Macarons)

  1. Line baking sheets with a silicone mat or parchment paper.
  2. Place the almond flour, powdered sugar and salt in the bowl of a food processor and pulse 4 times for 3 seconds each to combine them. Scrape the sides of the bowl in between pulses with a spatula.
  3. Sift the flour and sugar into a clean bowl with a fine-mesh strainer. If large lumps remain, you can either break them up with the food processor and sift them again or discard them.
  4. With a hand whisk, whisk together the powdered egg whites and granulated sugar in the bowl of an electric mixer. Whisk in the egg whites and cream of tartar until the mixture is homogenous.
  5. Set the bowl and whisk attachment on the mixer and whisk on medium speed until the meringue is glossy and forms stiff peaks, about 11 minutes.
  6. With a spatula, fold the sifted dry ingredients into the meringue using a J-folding technique: Draw the spatula down the center of the bowl and scrape it up toward the left-side quarter of the bowl (9 o’clock), forming the letter “J.” Scrape down the side of the bowl as you rotate it by 90 degrees and repeat.*
  7. If using food coloring, stop when the batter appears to be 90 percent incorporated, scrape the sides of the bowl and fold in the food coloring.
  8. The batter will be complete when it flows like lava. To test the viscosity of the batter, pick some of it up with the spatula and try to pour a ribbon of batter back into the bowl in a continuous figure 8 pattern. If it breaks, fold the batter a few more times and try again. Be careful to stop RIGHT when you can make the continuous figure 8; it’s better to slightly undermix the batter than overmix it.
  9. Spoon the batter in a pastry bag fitted with a ½-inch round tip. Fill the bag halfway, leaving the rest of the batter in the bowl while piping; cover it with plastic wrap until you need to pipe it. Twist the top of the pastry bag to close.
  10. Pipe the meringue on the silicone mat or parchment-lined baking sheet into quarter-size mounds, 1 ½ inches apart from one another. To pipe circles, hold the tip of the bag at a 90-degree angle ¼ inch above the baking sheet and firmly squeeze it until the batter reaches the desired size (it will spread slightly after piping) and is about ¼ inch high. Do not move the bag while squeezing out the batter. If you need help piping circles, you can print a template and place it under your silicone mat or parchment paper to guide you; just make sure to remove it before you put the baking sheets in the oven.
  11. Firmly slam the baking sheet down on the counter to remove excess air, lifting the sheet about 6 inches above the table, about 6 times. Don’t be afraid to really slam them; this will remove air bubbles that lead to hollow shells.
  12. Preheat oven to 300 degrees F.**
  13. Leave the baking sheet with the piped batter out on the counter until the macarons dry out and form a skin; they will be ready to bake once the surface of the macarons become dull and you can lightly touch the tops without any of the batter transferring to your fingers. This could take anywhere from 15 minutes to an hour, depending on how humid your baking environment is (that’s why baking these on a rainy or humid day isn’t recommended). Be patient; this step is key to avoiding cracked shells and developing the signature macaron “feet.”
  14. Bake the shells just until the foot and edge of the shells feel firm and they just come off the parchment paper or silicone mat, about 17 minutes.** Let the shells cool completely before assembling and filling the macarons.
  15. If you’d like to decorate the shells, you can draw patterns with edible markers or pipe colorful royal icing on top.

*This step actually has a name—“macaronage”—and can be pretty tricky. I’ve found watching YouTube videos of this step to be helpful.

**You may need to experiment with temperatures and times to find what works best for your oven. Everyone’s oven is slightly different, and even a five-degree temperature difference can affect macarons.

Ingredients for the eggnog buttercream filling

1/2 cup butter, softened

1/2 cup shortening

1 tsp vanilla

1/2 tsp nutmeg

1/8 tsp cinnamon

4 cups powdered sugar

2 tbsp eggnog

Directions for the filling (from The Gunny Sack)

  1. Beat butter and shortening until creamy and light in color.
  2. Mix in the vanilla, nutmeg and cinnamon.
  3. Add powdered sugar, one cup at a time, with the mixer on low speed. After the second cup, add one tablespoon of eggnog. Then, add the last two cups of powdered sugar and finally the last tablespoon of eggnog. Beat until light and fluffy.
  4. Arrange the macaron shells on a cooling rack and pair up shells that are similar in size. Turn one of each pair over so their flat side faces you.
  5. Spoon the eggnog buttercream in a pastry bag fitted with a ½-inch round tip. Fill it halfway, leaving the rest of the buttercream in the bowl while piping. Twist the top of the bag to close.
  6. Similarly to how you piped the macaron shells, pipe dollops of buttercream on the flipped shells of each pair, making mounds about ½ inch high, leaving ¼ inch to the edges. Gently twist to sandwich the shells together securely.
  7. Store the macarons in an airtight container in the refrigerator. For best results, let the macarons wait at least 24 hours (preferably 48) in the fridge before eating them. While in the fridge, some of the filling will seep into the shells, making them softer and fluffy. They’ll still taste good if you eat them right away, but they will be pretty crunchy.

Michelle Lewis, Lead Manager, Communications—Quality Initiatives, Association of International Certified Professional Accountants


     

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Your five-step guide for using data analytics in an audit

Your five-step guide for using data analytics in an audit

Data analyticsYour clients have a lot of information. And you, being the forward-thinking CPA that you are, want to use new technologies and techniques to get the most out of that data. So where do you begin?

Audit data analytics (ADAs) is a great place to start. Using tools you already have – Excel, for example – you can analyze entire populations, find anomalies and identify patterns. To help you on your way, we’ve outlined five basic steps for planning, performing and evaluating the results of an ADA used to perform an audit procedure.

  1. Plan the ADA.

The first step is to develop a solid plan. Figure out what information you’ll be reviewing and what you want to get out of it. Are you performing a risk assessment procedure, substantive analytical procedure, or test of details? Or are you seeking to form an overall conclusion from the audit? Once you know your objective, then think about the population of data you have available. Give preliminary consideration to how available, relevant and reliable it is (you’ll consider this in more detail in step 3). Finally, identify which specific ADA procedures, techniques and tools you’ll use.

  1. Access and prepare the data for purposes of the ADA.

Once you obtain your data set, check that your data is in a usable format.

  1. Consider the relevance and reliability of the data used.

Make sure you fully consider the appropriateness of the data you plan to use. Is it internal or external? How was it obtained? What process was used to produce it? For example, although exceptions may exist, information is generally more reliable when it:

  • Comes from an independent source outside the entity being audited;
  • Is obtained directly by the auditor through observation or similar means;
  • Is provided in documentation form, rather than orally; and
  • Is an original document, rather than a copy.
  1. Perform the ADA.

    Your initial results could identify items that may warrant further consideration. If you think this is the case, first consider if your ADA was designed and performed appropriately. If not, make changes as necessary and perform the ADA again. Then, plan and perform additional procedures on those notable items so that you can achieve the objective you identified in step 1.
  1. Evaluate the results and conclude whether the purpose and specific objectives of performing the ADA have been achieved.

Did you achieve your objective? If not, you’ll need to plan and perform different procedures. If so, congratulations! You’ve successfully planned and implemented the use of ADAs in your audit.

Throughout each of these steps, confirm you’re documenting your work in accordance with Generally Accepted Auditing Standards. The AICPA has free tools and resources to help you.

Want even more? Check out the AICPA’s brand-new Guide to Audit Data Analytics, from which the above steps were extracted. The guide:

  • Provides in-depth information and includes illustrative examples showing how to apply the above process step by step;
  • Includes specific items and examples to consider when dealing with the reliability of data; and
  • Offers a process for dealing with and filtering through a large population of notable items or items that may warrant further analysis.

You can also learn more by watching a live webcast on ADAs on Dec. 18, or by visiting the ADA resources webpage.

Lindsay Patterson, CAE – Senior Manager, Communications and Public Relations, Association of International Certified Professional Accountants

Data analytics courtesy of Shutterstock


     

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Credit losses: A new scope

Credit losses: A new scope

BB8Note: To read this intro as a Star Wars-style title crawl, click here.

If you have put off reviewing the Financial Accounting Standards Board’s (FASB) new Credit Loss standard since its effective date is “in a galaxy far, far away,” you are not alone.

This is the largest accounting standard change affecting depository institutions (and other industries) within the last 40 years, so it can be intimidating for management to get started. Plus, the amount of flexibility and professional judgement allowed within the standard itself has caused confusion and fear, making it hard even to begin.

Do not give into your fear. “Fear is the path to the Dark Side.” Instead, read below to digest the new standard piecemeal, and to understand what it does and doesn’t say. Then you will have the tools needed to take the steps to implement it. 

*Cue the Star Wars theme song*

How did we even get here?

The “Current Expected” Credit Loss Standard (CECL) was developed by the FASB in direct response to the financial crisis. The goal was to address weaknesses in the application of the current Credit Loss Standard. The most important weakness identified was a delay in recognition of credit losses by management for losses they wanted to take upfront but couldn’t. This was because the current standard requires a high-level threshold in order to book a loss (known as “probable”). The new standard eliminates this threshold and allows for more forward-looking information to be considered when developing a best estimate. Ultimately, the standard allows for an increase in management’s professional judgement when considering a wide-variety of factors.

To help you implement the new standard, we have created a new Current Expected Credit Loss webpage containing up-to-date information and resources. Check the page often as it will be updated as more materials become available.

What’s changing?  

The new CECL model applies to financial assets at amortized cost, including loans, reinsurance and trade receivables, held-to-maturity (HTM) debt securities, impairment model for available-for-sale debt securities, net investment in leases, and certain off-balance sheet credit exposures, such as loan commitments.

When do I need to implement?  

For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Thus, for a calendar-year company, it would be effective January 1, 2020.

For public business entities that are not SEC filers, the standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

For all other organizations, the standard is effective for fiscal years beginning after December 15, 2020, and for interim periods within fiscal years beginning after December 15, 2021.

Not really so far, far away.

What’s my first assignment?

Your first assignment takes patience and is not for the faint of heart.

You must actually sit down and read the standard. As Yoda once said, “Do or do not, there is no try.”

I know, I know. Your first response is most likely, “I don’t have time to read a 285-page standard.” I have good news for you. You don’t have to read the entire standard. I recommend focusing on about 50-65 specific pages to help hone in on the key points in the standard.

Here’s a suggestion for how to read the standard:

  1. Read the Summary: This will help you familiarize yourself with the standard a bit further. (6 pages)
  2. Background and Basis for Conclusions: This will explain the “Why” behind the decisions that were made. (13 pages)
  3. Topical Guidance: This will explain the “What” that is involved (Scope, Glossary, Measurement, Presentation and Disclosure). (22 pages)
  4. Implementation Guidance & Illustrations: This will explain “How” to implement. (25 pages)

Even if you plan to outsource…

Even if you plan to outsource to a third party provider, I highly recommend you take the time to read the standard. Here are three reasons why:

  1. The standard requires a significant level of management’s professional judgement. Even though you plan to outsource, you must still understand the fundamentals in this significant management estimate.
  2. Outside parties might misinterpret the standard by trying to sell you on over-complicated techniques that are incorrect and potentially costly and unnecessary. (You don’t want to be that Stormtrooper. Or any, really.) There are key nuances within the standard itself that allow for flexibility and require appropriate judgments that management needs to consider.
  3. Outside parties could use inappropriate risk factors, portfolio segments, reversion techniques, and so forth that do not correctly align with the risks associated with your portfolio. Remember, no one knows your portfolio better than you do.

I’ve completed my detailed review of the standard. What’s next?

Once you have reviewed the standard in detail, the next step is to share that knowledge with your board members and management. In my next blog post, I will include details on techniques to make sure you cover.

 Until then, rest up. There is much more training to be had!

Jason Brodmerkel, Senior Technical Manager- Accounting Standards, Association of International Certified Professional

BB8 courtesy of Crystal Eye Studio/Shutterstock.


     

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Procrastinators beware, the nonprofit audit is not the place to drag your feet 

Procrastinators beware, the nonprofit audit is not the place to drag your feet 

NFP cartoon 1


NFP cartoon 2

NFP cartoon 3 NFP cartoon 4

 

Can you prepare for your upcoming audit and still enjoy a relaxing lunch with colleagues? Yes, yes you can. If you want to learn how, join us and take the audit prep challenge. Just follow these four steps leading up to your next audit and see for yourself how it makes a difference. We’re sure you’ll feel better prepared and more balanced. Sound good? Let’s get started:

  1. Don’t procrastinate. Start preparing for your audit well before your year-end rolls around. Set up meetings with key internal stakeholders and external auditors well in advance and commit to updating schedules and reconciliations throughout the year. In many not-for-profit organizations, a lot of the audit prep work falls on one staff member. If that’s you, working ahead will make crunch time less hectic.
  2. Stay ahead of the curve. Keep up with accounting standards updates. Though not all updates will have the pervasive effects of ASU 2014-09 (revenue recognition) or ASU 2016-14 (not-for-profit financial statement presentation), you’ll still want to check them out. Read each standard and consider how it could impact your financial reporting. Discuss new standards with your external auditor to learn about potential effects on your upcoming audit. You may have to rethink your chart of accounts, gather new data, or draft new disclosures to comply with new standards. The sooner you identify these to-dos, the better.
  3. Get organized. What workpapers has your auditor requested? Who needs to complete them? When does your auditor need them? Most auditors will send you a workpaper list well in advance. If yours doesn’t—ask. Figure out the logistics sooner rather than later and tackle the complex and time-consuming ones first to give yourself a cushion. The AICPA Not-for-Profit Section provides account workpaper templates to help not-for-profits meet specific reporting requirements.
  4. Reflect on past audits. Get in the habit of taking detailed notes after each audit. Then, bring all the key players together and discuss what went well and what could be improved the next time around.

If you take these steps, you’re sure to be better prepared and less stressed going into your next audit. For a list of additional tips to a successful audit, check out this article from the AICPA Not-for-Profit Section and visit www.aicpa.org/nfp to see all that the AICPA Not-for-Profit Section has to offer. Join the Not-for-Profit Section today!

Lana Richards, Manager- Not-for-Profit Content Development, Association of International Certified Professional Accountants

 


     

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Santa baby, all I want is a robot

Santa baby, all I want is a robot

Robot 2An artificial intelligence holiday wishlist

Everywhere I turn, there are articles about artificial intelligence (AI) and automation, the rise of robots and what it means for employees in all types of businesses. (Note: As you may have read in some of our previous blog posts, we think the accounting profession will fare a-ok.) Driverless cars and trucks are already a reality and have had both their first accidents and delivered their first kegs of beer. Not at the same time. While it is still a little difficult for me to wrap my head around the fact my son and daughter may do minimal driving as adults, I am more than ready for robots to lend a hand in a few other departments. Because isn’t the point of these things to take on tasks that consume too much time allowing me to focus on what really matters?

  1. Holiday shopping. Every year, I spend hours hunting for the perfect gifts for my husband, who just wants Adidas to start making his favorite wind pants from 1997 again. (Note to Adidas: please don’t.) He wants nothing else and is generally horrible to shop for. I would gladly outsource this job to a robot. Who can then wrap the presents.
  2. Clean my house. Where is Rosie (the Jetsons robot maid) when I need her? I know I could buy a Roomba, but a Roomba can’t dust, or change the diaper pail, or scrub the shower or toilet, or do my laundry.
  3. Make repairs. Since my husband and I bought our house a year and a half ago, a tree fell through our fence, our garage roof needed to be replaced, our entire plumbing system got clogged and our upstairs toilet intermittently starts running for no reason. A fix-it robot would come in handy.
  • Cook. I love to cook. But the current state of my life—working mom with working husband and two kids ages 3 and 11 months—means there’s very little time to find joy in getting a meal on the table once I get home from work.
  • Schedule appointments. I am notoriously awful at doing anything that involves calling people on the phone—whether it is making appointments or ordering food, I avoid phone-related tasks until it is no longer possible to do so.
  • Organize my stuff. From piles of paper to music and electronic photos, I never seem to have the time to make sense of it all. I have empty picture frames in my den, paintings without frames in my basement, a mirror that has needed to be hung for more than a year. And don’t even get me started on my futile attempts to organize, store and purge my children’s old clothes, not to mention organizing my own summer and winter stuff in a less haphazard manner.
  • Inventory my pantry and closets. How many times have I discovered at the last minute that I have four cans of diced tomatoes but no cans of tomato sauce? Or I’ve run out of a spice. Or my kid doesn’t have any more toothpaste.
  • Teach me how to do things. This year I considered building a hot cocoa stand to use as a prop for my kids’ holiday card photos. But I have no idea how to build such a thing, and even with directions, I think some assistance from a friendly robot would make all the difference in my success.

While the prospect of robots becoming a regular part of society may cause concern for some, the ways they can improve our lives is endless. When my kids are older, I want them to remember the time they spent with me, the things we did, the fun we had rather than me trying (and failing) to keep the house organized. So, Santa, if you could hurry up and deliver a jack-of-all-trades robot to help me out, I’ll leave your favorite kind of cookies next to the tree.

Lauren J. Sternberg, Communications Manager, Association of International Certified Professional Accountants

Robot gift courtesy of Shutterstock.


     

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7 key steps to master revenue recognition implementation

7 key steps to master revenue recognition implementation

Deadline loomingStandard setters have made game-changing revisions to revenue recognition standards, and the effective date for implementation is fast-approaching. The new standard replaces the existing transaction- and industry-specific revenue approach with a principles-based approach. Is your organization ready for this shift?

The new standard was originally issued by the Financial Accounting Standards Board as Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (the International Accounting Standards Board has also issued guidance with the same name), and several clarifying amendments have since been issued. The guidance affects all entities—public, private and not-for-profit—that have contracts with customers. The standard’s original effective date was postponed because of the complexity involved.

  • Public companies, certain not-for-profits and employee benefit plans will apply the guidance for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period.
  • All other entities will apply the guidance for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019.

Early application is permitted in specific cases. Some items—such as leases accounted for under FASB ASC 840, Leases; insurance contracts accounted for under FASB ASC 944, Financial Services—Insurance; most financial instruments, and guarantees other than product or service warranties—are not included.

With those dates looming, how can organizations make sure they are ready on time? We recommend following these seven steps:

  1. Create a team of experts. Identify individuals and set up a working group tasked with developing an implementation plan and actually implementing the standard. Be sure to consider the impact on accounting, financial reporting, tax, internal audit, sales operations, IT, legal and human resources.
  2. Assess the changes. Determine how the new rules will affect how the organization accounts for existing revenue streams and reports them in the company’s financial statements. The standard may also impact operational and performance metrics, company contracts, compensation plans, accounting policies, internal controls and tax matters. It is also important to work with the organization’s auditor to ensure your implementation approach, and any changes in accounting for revenue recognition, are documented completely and accurately.
  3. Review retrospective adoption. Organizations should determine how to undertake retrospective adoption. Full retrospective adoption and modified retrospective application is permitted. If the organization selects one of these options, they will need to track the accounting differences for periods that require restatement. If they choose a modified retrospective application, they will need to make any additional disclosures that are required.
  4. Make IT adjustments. It may be necessary to make changes to IT systems or software applications to capture the required information, especially relating to retrospective adoption and additional qualitative and quantitative disclosures.
  5. Address interim disclosures. Issuers are required to make interim disclosures even before the revenue recognition standard becomes effective to disclose potential impacts of application of the new standard. Issuers can turn to SEC Staff Accounting Bulletin (SAB) No. 74 (Topic 11:M), Disclosure of the Impact that Recently Issued Accounting Standards Will Have on the Financial Statements of the Registrant When Adopted in a Future Period, for help in deciding which interim disclosures to make before adopting the standard.
  6. Develop an ongoing plan. The steps you will have to take and the input you need will evolve as you move forward with implementation. With that in mind, be prepared to revisit your implementation plan regularly to update it as needed. That will include determining what training your staff will need to work with the new guidance.
  7. Educate key stakeholders. The audit committee, board of directors and investors should be informed about the changes that you expect to see in your company’s financial statements.

Time is now of the essence. Organizations that haven’t already done so should begin to tackle implementation issues immediately.

These seven steps should help put your company on the right track. To make them easier to fulfill, organizations can turn to a wealth of related AICPA resources, including a learning and implementation plan, as well as a road map to implementation, web events, information on industry-specific potential implementation concerns, guides and alerts. These and other tools can all be found on the AICPA revenue recognition webpage.

Kim Kushmerick, CPA, Associate Director- Accounting Standards, Association of International Certified Professional Accountants

Rev rec implementation deadline looms courtesy of Shutterstock.


     

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5 easy strategies to help your candidates pass the CPA Exam

5 easy strategies to help your candidates pass the CPA Exam

CPA Exam prepAs a recently licensed CPA, the long study hours, time commitment and life balancing I did to prepare for the Uniform CPA Examination is still fresh in my mind. After reading the Journal of Accountancy article in which members shared their personal exam experiences, I started thinking back to my own journey as a candidate.  

I can remember the moment I finally received the results of my last exam section. I was filled with an overwhelming sense of relief and, of course, pride. My commitment to accounting had paid off. But one thing that stands out to me is when I prepared for the exam, I focused on a few strategies for success. 

I know your firm’s CPA candidates will each have their own way to tackle the exam. But as someone who has been through the experience, I think it’s helpful for you to share your knowledge and personal experience. Don’t hesitate to talk about what worked and what didn’t. Let them know you understand what they’re facing.

So, where to start? Ask your candidates a basic question: “What’s your exam strategy?” If you get the long, awkward pause, here are five quick tips to share:

  1. Understand the candidate requirements

For anyone pursuing the CPA, this is where it all starts. The exam process requires quite a few steps, so it’s best to know the lay of the land ahead of time. My journey began with a seminar hosted by the New Jersey Society of CPAs. I learned all about what I needed to do, what the requirements were and which exam partners I needed to turn to for guidance. The key is doing your homework before you jump into testing.

  1. Know the exam content and how it’s tested

If you don’t know the subject matter and what you’re expected to do, how can you pass the exam? There are four sections of exam content and various concepts to study. The exam is not about memorization.

I started with a review of what was then known as the Content and Skill Specification Outlines, which gave a broad overview of what the exam tested. Today, your candidates have access to the CPA Exam Blueprints, which provide far more information to help them prepare. This should be the foundation of their study tools.

I also used several other resources, such as the AICPA’s sample tests, and paid review course providers. I even listened to audio exam prep whenever I was driving.

  1. Manage time wisely

I cannot stress enough how important this tip is. Eighteen months can go by pretty fast. I found it challenging to balance the exam, family, friends and work. Before I began testing, I created a study plan. This helped me stay on track. I worked my calendar backwards from test day, giving me plenty of time to learn the material. Along with filling the calendar with specific study topics, I peppered in work and personal commitments. This helped me better manage my time.

When it came to an actual test day, I had my own personal routine: schedule an early test time, wake up refreshed and avoid last-minute studying. This kept me focused on the task at hand: getting through each of those testlets. Once I was done, I spent the rest of the day doing something special for myself to celebrate all my hard work.

  1. Form a support network

I recognize that the candidate is the only one who can take and pass the exam, but that doesn’t mean the journey has to be a solo act. Friends, family, colleagues, professors and, most importantly, you, can be a valuable support network for a candidate.

Testing began for me after my firm’s first busy season. Fortunately, two coworkers were also starting their exam journey, so we teamed up for nightly study sessions. This was a huge motivator because we knew how the others were feeling and could lean on one another for support.

I also surrounded myself with people who supported my goal of getting the CPA license. One such person was my career coach at my firm. She kept tabs on my progress, offered guidance and gave me the encouragement I needed along the way.

Being a part of your candidate’s journey is a must for you. You have a vested interest in each candidate earning their CPA and the value they will continue to bring to your team. So let them know you’re there to support them.

  1. Rely on exam partners

It’s common sense that your candidates should be familiar with the AICPA and our other exam partners, the National Association of State Boards of Accountancy and Prometric. We give candidates the most up-to-date and accurate information they need to get through all four parts of the exam. So make sure your candidates bookmark our website (aicpa.org/cpaexam) and follow us on social media.

You can also tell your candidates to join our CPA Exam candidate group on LinkedIn. This is a forum where we share information and announcements, and candidates can connect with others taking the exam.

Early in 2018, the AICPA will introduce a new toolkit to help your firm support CPA candidates throughout their entire Exam journey. You’ll find tips to help them develop test-taking strategies, a tracking sheet to stay up to date on candidate progress through each section and an event guide to help you plan engaging Exam-related activities for staff pursuing the credential. If you want to receive news of the toolkit release, email us at pcps@aicpa.org.

Whether your firm or office has one candidate or 100, they are all facing the same challenges that come with embarking on the CPA exam journey. You’ve been there, done that. Now it’s time to share wisdom and offer the support you received when you were working your way through the exam.

These five simple strategies are not only helpful, but they can be a great icebreaker with a candidate first starting their journey. With these tips in mind, and any others you can provide, your candidates will be well-positioned to join the ranks of our profession. 

Elizabeth Burkhalter, CPA – Manager of Examination Content, Association of International Certified Professional Accountants

CPA Exam prep courtesy of Shutterstock.


     

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Source: AICPA