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3 Trends Driving Changes in Accounting

Published on October 25, 2016

The accounting sector has arguably been slow to adopt new technology, eschewing new, and often unproven, technology for older, tried and true tools. However, in the immortal words of Bob Dylan, “the times they are a-changin’”.

With the changes to the audit threshold among other things, accounting firms are finding themselves reassessing and looking to expand their client services in order to continue growing their businesses. A big part of achieving this is improving efficiency. It’s becoming harder to ignore the potential gains in efficiency and revenue that can be achieved with the right technology. As a result, those in favor of change have reached a critical mass. The following are the top technologies enabling this change:

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Accounting for Cooperative Business Combinations

Published on October 25, 2016

The cooperative landscape continues to change throughout the country as agribusiness organizations consolidate. Historically, consolidation has been a result of distressed cooperatives or privately held businesses looking to combine with a stronger company. Today’s environment is much different — cooperatives with strong balance sheets are consolidating to improve customer service, reduce overhead, upgrade technology, or address leadership changes as management ages.

One of the first questions that should be asked early in the process of a cooperative merger is, “What impact will this combination have on my cooperative’s balance sheet?” To answer this question, the management and board of directors for both cooperatives will need to consider several factors.

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Eight Practices That Help Prevent Fraud in Your Agribusiness

Published on October 25, 2016

Agribusinesses that become victims of employee fraud tend to place unrestricted trust in those they shouldn’t — including the credentialed controller or CFO they hired to help run their business. In fact, sometimes the individual who commits fraud is a long-term employee in a finance role. These individuals have the capability of doing the most damage, so it is important to use financial and operational protocols that remove opportunities for fraud.

Fraud in agribusiness
As an agribusiness, you may have been a victim of internal fraud, and it occurs more frequently than you might imagine. Though the patterns of theft and the results were all different, the victims shared five similar shortcomings:
• Leadership failed to establish a tone of vigilance in the organization.
• Employees did not know how to report suspected fraudulent activity.
• The part-time or absentee owners trusted their fraudulent employees completely.
• They either did not have internal controls in place at all or those they had were not followed.
• The perpetrator was caught by chance, not through systematic fraud controls.

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Continued Rise Projected for Accountants' Starting Salaries in 2017

Published on September 20, 2016

Starting salaries for U.S. accounting and finance positions will continue to rise in 2017, reflecting high demand for skilled professionals, according to a new salary guide.

Increases in starting salaries will range from 3.0% to 4.3% in 2017, depending on the position, according to the Robert Half 2017 Salary Guide.

The prediction trails the unusually high forecast for 2016, when the guide said starting salaries in accounting and finance would rise 4.0% to 5.3%, depending on the position. But the magnitude of the projected increase for 2017 doesn’t indicate a decrease in competitiveness in the job market, said Tim Hird, executive director of Robert Half Management Resources.

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Avoiding Cost Segregation Recapture Tax

Published on September 20, 2016

Here are some ways to lower any depreciation recapture when disposing of a property. Savvy tax professionals who recommend cost-segregation studies are well aware of the recapture tax rules that require taxpayers to pay back any tax deductions for accelerated depreciation when the property is sold. After all, in the right situation, the net present value of those tax savings far exceeds any recapture tax payback. While the effects of a cost-segregation study can magnify recapture issues, tax professionals should consider a number of worthwhile opportunities to reduce or avoid recapture tax that is realized upon sale of property.

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The Risks of Intercompany Accounting

Published on September 20, 2016

Companies that botch the accounting for transactions between different legal entities within their organizations can make their financial reporting slipshod.

Deloitte polled more than 3,800 professionals, most of them people who work in accounting and finance, during a May webcast. It found 25.6 percent of the respondents indicated their company’s intercompany accounting framework was still “developing.” That is, it was a goal they still wanted to achieve, but their companies had not yet standardized their governance.
Another 42.5 percent said their company’s intercompany accounting framework was “defined.” In other words, they were aiming to achieve consistency in intercompany accounting but were still working on doing so. Only 9.2 percent of the respondents indicated their company’s intercompany accounting could be described as “leading.” That is, it “provides a holistic perspective, with efficient systems and communication across critical functions.”

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FASB Proposes Targeted Changes to Hedge Accounting Rules

Published on September 20, 2016

FASB proposed targeted changes to hedge accounting standards Thursday that are designed to help financial statements provide an accurate depiction of how an organization manages risk.

The board proposed that the economic results of an institution’s risk management activities would be portrayed more faithfully by:
• Expanding the use of component hedging for nonfinancial and financial risks.
• Refining the measurement techniques for hedged items in fair value hedges of benchmark interest rate risk.
• Eliminating the separate measurement and reporting of hedge ineffectiveness.
• Requiring for cash flow and net investment hedges that all changes in fair value of the hedging instrument included in the hedging relationship be deferred in other comprehensive income and released to the income statement in the period or periods when the hedged item affects earnings.
• Requiring that changes in the fair value of hedging instruments be recorded in the same income statement line item as the earnings effect of the hedged item.
• Requiring enhanced disclosures to highlight the effect of hedge accounting on individual income statement line items.

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FASB clarifies the classification of certain cash receipts and cash payments

Published on September 20, 2016

The FASB issued final amendments to clarify how entities should classify certain cash receipts and cash payments on the statement of cash flows. The new guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance will generally be applied retrospectively and is effective for public business entities for fiscal years beginning after 15 December 2017, and interim periods within those years. For all other entities, it is effective for fiscal years beginning after 15 December 2018, and interim periods within fiscal years beginning after 15 December 2019. Early adoption is permitted.
(Source: EY AccountingLink – US Week in Review – September 1, 2016)

FASB Seeks Uniformity in Cash Flow Presentation

Published on September 20, 2016

Concerns over divergent practices for reporting on the statement of cash flows led to FASB’s issuance Friday of a new standard for presenting and classifying certain cash payments and cash receipts.

Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, provides guidance for eight specific cash flow issues:

• Debt prepayment or debt extinguishment costs.
• Settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing.
• Contingent consideration payments made after a business combination.
• Proceeds from the settlement of insurance claims.
• Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies.
• Distributions received from equity-method investees.
• Beneficial interests in securitization transactions.
• Separately identifiable cash flows and application of the predominance principle.

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Sales and Use Tax Audit Sampling

Published on August 12, 2016

Business taxpayers sometimes face surprisingly large sales and use tax audit assessments when the tax or taxable amount is projected from seemingly small and infrequent errors in the auditor's sample. Depending on how the sample is designed and weighted, large audit assessments can either reasonably reflect the taxpayer's actual facts or unintentionally be in error due to the sampling methodology itself. Many taxpayers are not equipped to evaluate the appropriateness of a jurisdiction's methodologies and projections and do not know whether or how to challenge them.

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