Alerts & Bulletins
Improving Governance and Oversight by Reducing Project Risk
By: Derrick Sturisky, Principal, Risk Advisory Services Group Background Many organizations are deploying a number of strategic, high profile, capital intensive information technology (IT) or business projects. Often, these types of projects are delivered late with expanded budgets, and/or don’t meet stakeholder quality expectations. Improving governance and oversight of these projects is crucial in addressing these unacceptable outcomes. This may be accomplished by enhanced management of project risks. Conducting a comprehensive project risk review, combined with developing a robust project risk capability, should provide boards of directors with increased confidence that organizations can deliver high quality strategic projects that are. Read More.
U.S. Supreme Court Rules Unfavorably on Tax Treatment of Severance Payments
In its Quality Stores decision on March 25th, the U.S. Supreme Court (“the Court”) ruled that severance payments not tied to the receipt of state unemployment benefits were taxable for Social Security and Medicare purposes. Many taxpayers had filed protective refund claims when the Quality Stores decision was upheld at the Sixth Circuit. Those claims will now be denied. The initial case in this controversy concerning the application of Social Security and Medicare taxes to severance pay was CSX Corp. v. United States. While CSX won at the lower court, the Federal Circuit Court of Appeals reversed the decision. This. Read More.
Private Companies Win Exception to VIE Analysis
Highlights Private companies that meet the requirements of ASU 2014-07 will no longer be required to do a VIE analysis for lessors under common control. If the election is made, there are additional disclosures that need to be made. The ASU allows early adoption for any period not yet issued, so many entities with 2013 year ends can still benefit. Background Private companies have often complained that the benefits of applying variable interest entity (“VIE”) guidance to a lessor entity under common control did not justify the costs. Many times, common owners establish separate entities for tax or estate planning. Read More.
Not For Profit A&A Update
Recently Issued ASUs In addition to the Not-for-Profit (“NFP”) Financial Statement Project, the Financial Accounting Standards Board (“FASB”; “the Board”) has issued three major Accounting Standards Updates (“ASU”) that impact NFPs. ASU 2012-05, Classification of Sales Proceeds of Donated Financial Assets, settles diversity in practice about how NFPs present the sale of donated financial assets (i.e. securities) in the statement of cash flows. Prior to this ASU, some NFPs classified the cash receipts arising from the sale of donated financial assets as investing cash flows, and others as operating cash flows. The ASU determines that if an NFP receives a. Read More.
ACA Guidance Presents Further Challenges for Higher Education Institutions
On February 10th, 2014, the Internal Revenue Service (“IRS”) issued Final Regulations on the Affordable Care Act’s (“ACA”) employer mandate. The Final Regulations contain much anticipated guidance to help colleges and universities determine when they must provide health insurance for adjunct faculty and student employees. The higher education community has been waiting for definitive guidance on this issue, hoping a uniform method of determining full-time status of these employees would be provided that reflects the unique work circumstances and characteristics of these and other common positions on campus. Many college administrators have expressed concern that any significant change in health. Read More.
Pass-Through Entity Tax Affecting for Business Valuations
By: Rudolf P. Armbruster, ASA, CVA The issue of tax affecting the earnings of pass-through entities such as S corporations, general partnerships, limited partnerships or limited liability companies is a debated issue in the business valuation community. In general, well-known business valuation authorities including Shannon Pratt, Christopher Mercer and Roger Grabowski all agree that there is no definitive answer to the treatment of pass-through entities in all cases. The tax affecting issue has been argued in the following four Tax Court cases: Gross v. Commissioner, T.C. Memo. 19999-254, affd. 272 F. 3d. 333 (6th Cir. 2001) Wall v. Commissioner, T.C. Memo. 2001-75, filed March 27,. Read More.
Working Capital – Issues Beyond Solvency
By: C. Brett Cooper, CPA·ABV, ASA, BVAL, Cr.FA Working capital is vital to the success of all businesses. It brings the requisite capital to provide the sustenance to maintain operations and allow for the growth of a business. The term is an abbreviated version of the more proper financial and accounting expression, “Net Working Capital”. Net Working Capital is the amount of liquid assets available to a business and calculated by subtracting current liabilities from current assets. Some financial references define working capital as the current assets of a business. The Finance Dictionary defines it as the difference between current assets and current liabilities. Suffice it. Read More.