CPAs and Advisors with Your Growth in Mind

IRS Proposes Guidance for Taxing Highly Compensated Employees

After issuing preliminary guidance clarifying when nonprofits must pay the 21 percent unrelated business income tax related to employee parking, the Internal Revenue Service (“IRS”) has published Notice 2019-09 explaining when nonprofit employers should pay the 21 percent tax on employees with an annual compensation above $1 million. The preliminary guidance advises nonprofits to use the calendar year ending within their fiscal year to calculate the tax. In addition, nonprofits cannot avoid the tax by dividing highly compensated employees’ compensation between multiple related organizations. Comments on the noticed are due Tuesday, April 2.

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Finance Companies Lacking in Digital Transformation

Based on recent findings by the Association of International Certified Professional Accountants, organizations are missing out on significant growth potential. In a report published on January 17, only 11 percent of finance executives surveyed are using artificial intelligence. The report also discovered over one-third of executives spend more time gathering data than analyzing data. Other survey findings include chief financial officers needing to speed up digital transformation across operational excellence, digital intelligence and business influence. For instance, 13 percent of respondents said they have curtailed robotic process automation mostly due to concerns over data security. Almost two-thirds of large companies. Read More.

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Corp Fin Issues Interpretive Guidance on Board Diversity Disclosures

The Securities and Exchange Commission’s Division of Corporation Finance (“Corp Fin”) has issued new interpretive guidance to clarify company disclosures on board diversity. Presented in a question-and-answer format, the new guidance adds an item to the Compliance and Disclosure Interpretations (“C&DIs”): Regulation S-K concerning Subpart 400 of Regulation S-K, which covers information separate from what companies must disclose in financial statements. Subpart 400 concerns details associated with corporate governance matters such as executive pay and board director qualifications. Question 116.11 of the C&DIs inquires what aspects regarding a board member with respect to diversity must be disclosed under Item 401.. Read More.

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Small Business Administration Threshold Update

On December 19, 2018,  we posted a blog regarding the Small Business Runway Extension Act of 2018 and the impact on the revenue test established by 13 CFR §121.104. As a refresher, the Small Business Runway Extension Act amended the method to calculate the average annual gross receipts from three years to a five-year average when determining a contractor’s small business status. Subsequently, on December 20, 2018, the Small Business Administration (“SBA”) offered some clarifying guidance on the effective date of the new amendment to section 3(a)(2)(C)(ii)(II) of the Small Business Act, based on inquiries if the Small Business Runway Extension Act is effective. Read More.

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FASB Issues Narrow Proposal for Credit Losses Standard

The Financial Accounting Standards Board (“FASB”) has released a proposal aimed to help banking institutions implement Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Narrow in scope, the proposed amendment would ease the transition to the credit losses standard by allowing the fair value measurement of certain bank assets. Proposed ASU No. 2019-100, Targeted Transition Relief for Topic 326, Financial Instruments—Credit Losses, would permit banks to irrevocably elect the fair value option on an instrument-by-instrument basis for qualified financial assets that are measured at amortized cost when they adopt ASU No.. Read More.

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Companies Fined for Failing to Remediate Internal Control Problems

Four public companies have settled with the Securities and Exchange Commission (“SEC”) after being charged with failing to resolve their internal control reporting failures. The SEC said the companies disclosed material weaknesses in internal control over financial reporting (“ICFR”) for seven to ten straight annual reporting periods. Such weaknesses involved certain high-risk areas of the companies’ financial statement presentation. Grupo Simec, a Mexican iron and steel manufacturer, disclosed material weaknesses in its filings from 2008 to 2017. However, in 2015 and 2016, company management did not test its controls. The SEC alleged Grupo Simec failed develop a control structure and. Read More.

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