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The Hidden Costs of a Data Breach

Published on August 12, 2016

Much of the business discussion around cyber-security relates to protection of key assets such as customer information and intellectual property, often after the news that another company has suffered a large data breach. While strengthening defenses against cyber-attackers is important, companies also must be prepared to handle the reputational and financial hits that a cyber incident can produce for years down the road.

Cyber-security has the attention of CFOs and other decision-makers. And for good reason: The average cost of a data breach has risen 29% since 2013, to about $4 million per incident, according to an annual report from IBM and Ponemon Institute. And a 2015 survey of US finance decision-makers shows that organizations are increasing spending on cyber-security.

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Cost Segregation Recapture Tax

Published on August 12, 2016

Cost Segregation Recapture Tax

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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FASB proposes concepts for financial statement presentation

Published on August 12, 2016

FASB issued a proposal that would establish a set of concepts for how recognized items should be presented in a financial statement.

The exposure draft issued by FASB is designed for provide a foundation for the board as it creates future accounting standards, with a goal of enhancing financial statement users’ ability to assess prospects for future cash flows by addressing how to: 

The proposal, Concepts Statement 8—Conceptual Framework for Financial Reporting: Chapter 7: Presentation, is part of FASB’s larger project to create a new conceptual framework, which also would address concepts related to measurement and disclosure.

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FASB proposes changing income tax disclosure requirements

Published on August 12, 2016

FASB proposed accounting rules Tuesday that would change disclosure requirements for income taxes on organizations' financial statements.

Under the proposal, existing disclosure requirements would change and organizations would be required to provide new disclosures. The proposal would require preparers to: 

Additional disclosures also would be required, with differentiation between requirements for public business entities and other organizations. The proposal is titled Proposed Accounting Standards Update, Income Taxes (Topic 740), Disclosure Framework—Changes to the Disclosure Requirements for Income Taxes.

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What should FASB work on next?

Published on August 12, 2016

FASB is asking for public comment on which financial accounting and reporting topics it should consider adding to its agenda.

The board issued an Invitation to Comment document that explains areas of concern that were identified in a recent survey of FASB’s advisory groups.

After completing major projects in recent years on standards such as revenue recognition, leases, and credit impairment, FASB is seeking input on other areas of accounting and financial reporting that need improvement.

The Invitation to Comment covers areas of concern identified in a recent survey of FASB’s advisory groups. The document discusses potential issues and possible solutions in the following areas: 

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Zero-Based Budgeting Is Not a Wonder Diet for Companies

Published on July 25, 2016

Zero-based budgeting (ZBB) is elegantly logical: Expenses must be justified for each new budget period based on demonstrable needs and costs, as opposed to the more common method of using last year’s budget as your starting point, then adjusting up or down. ZBB is a straightforward, intuitively simple way to aggressively strip out costs that cannot be rationally justified. Who would argue that a business should not eliminate unjustifiable costs?

ZBB has been around for decades, but is currently enjoying a revival driven by powerful investors like 3G Capital Partners, the force behind the 2015 merger of Kraft Foods and H.J. Heinz. Such high-profile exposure has prompted more companies to view ZBB as a fresh “wonder diet” for achieving radical corporate leanness. ZBB’s resurgence is further fueled by the uncertain markets hindering many companies’ efforts to attract fresh capital, as we see venture capital and private equity funds increasingly pushing ZBB on their portfolio companies, in the hope of securing a more rapid and profitable exit on their investments.

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To Hold Someone Accountable, First Define What Accountable Means

Published on July 25, 2016

At the end of a meeting, most leaders know that they should recap next steps and determine who is accountable for each. As prescribed in the commonly used responsibility models — RACI, RAPID, and the others — accountability should fall to one (and only one) person per item, even if the work involved requires input and contributions from others. Unfortunately, over the years we’ve spent advising organizations, we’ve found that the word “accountable” can mean different things to different people.

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Keeping Up with Tech Is Accountants' Biggest Annoyance, Survey Says

Published on July 25, 2016

The biggest technology “annoyance” faced by accountants is keeping up with changing software, according to a recent survey, with security and risk management in second place.

The accountants responding to the recently released Third Annual Accounting Firm Operations and Technology survey also reported several challenges in their day-to-day practice. The biggest one, unchanged from previous years, is workflow efficiency (34 percent). A new category for this year, security, came in second place with 19 percent citing it as their biggest concern. Fourteen percent of respondents indicated that getting clients on board with working with the firm in a more digital way is their biggest challenge.

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How to tackle implementation of multiple high-profile accounting standards

Published on July 25, 2016

A wave of significant accounting standard setting has created heavy compliance burdens that many company finance departments are struggling to handle.

Just 37% of more than 140 companies surveyed by KPMG LLP said they are on the right track in their implementation of the new revenue recognition standard issued by FASB and the International Accounting Standards Board (IASB), which takes effect at the beginning of 2018 for public companies.

Meanwhile, new lease accounting requirements have companies attempting a challenging process of locating all their lease agreements and extracting data points from them that haven’t been necessary for accounting in the past.

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Companies Still Behind on Implementing Revenue Recognition Standard

Published on June 23, 2016

The majority of companies admit they are behind on implementing the new revenue recognition standard from the Financial Accounting Standards Board, according to a new survey, despite a delay of the effective date by one year.

FASB and the International Accounting Standards Board released a long-awaited converged revenue recognition standard in May 2014, but later decided to extend the date it takes effect by one year to give companies more time to implement it.

However, according to a new survey by KPMG LLP of 140 companies, 60 percent of respondents indicated that they are running behind schedule in their overall implementation of the standard, which has an effective date as early as Jan. 1, 2018, for many organizations.

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