March 2019 Article Archives

3 Technologies Transforming Accounting, Finance and Tax

Published on March 25, 2019

The data is clear: when considering technology within an organization, the question is no longer whether to invest — it's how.

According to KPMG’s 2018 U.S. CEO Outlook, CEOs are thinking a lot about technology and data and analytics (D&A) for their organizations. Ninety-eight percent of CEOs view technology disruption as an opportunity rather than as a threat. Eighty-six percent of CEOs consider their companies to be active disruptors, and, for a vast majority, technology is the only significant disruption their business faces.

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How Workplace Trends Are Affecting Small Businesses

Published on March 25, 2019

It's widely known that finding top-tier talent is a challenge many small CPA firms and other small businesses face. On the most recent episode of The Small Biz Brunch, a podcast from AICPA's #CPApowered campaign, I chatted with Mark Astrinos, CPA/PFS about this issue, changing trends in the workplace and how they’re affecting bottom lines and company cultures.

A business owner himself, he had some key insights into hiring and retaining top talent, especially when it comes to millennials. We've distilled three of those in this post (lets people know there is more info in the podcast).

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What You Need to Know About the New Hedging Guidance

Published on March 25, 2019

The new hedge accounting guidance, which is effective in the first quarter of 2019 for calendar-year PBEs, changes the way entities account for and present their hedging relationships to better portray the economics of their risk management activities in their financial statements. The extent of the changes will vary by entity because some amendments are elective. However, other amendments require entities to change their financial reporting.

Entities must apply the new presentation and disclosure requirements prospectively to all new and existing hedging relationships. These requirements are applied prospectively, which means that comparative information for periods before adoption remains unchanged. This may result in a lack of comparability for entities that historically presented amounts related to hedge ineffectiveness and excluded components in an income statement line other than where the earnings effect of the hedged item is presented (e.g., other income or expense).

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Understanding the Purpose Requirement in Section 1031 Related-party Transactions

Published on March 25, 2019

Section 1031 transactions can vary greatly in their complexity. Basic 1031 transactions may require very little mental horsepower to conduct, but certain transactions can be extremely tricky.

Both the underlying code and the accompanying Section (k) Treasury Regulations contain many rules and requirements, and the fulfillment of certain requirements may be subject to dispute.

This is why we have a body of case law which has developed around Section 1031 exchanges, also known as like-kind exchanges. Over time, disputes have come up regarding whether a given requirement had been correctly satisfied, and the courts have stepped in and given us a clearer picture of how these requirements operate in the real world. Though the courts have provided a good deal of clarification in many areas, there are still plenty of unanswered questions. And certain requirements — such as the one to be discussed here — will always be open to debate because they require an individualized, case-by-case analysis in every instance. Certain areas, in other words, will always have a layer of grayness.

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Challenges Related to the New Leases Standard

Published on March 25, 2019

Management should focus on making sure the entity has controls in place to appropriately account for leases under the new leases standard. This will require companies to design different policies, processes and controls to account for leases prospectively (i.e., beginning in the quarter that the standard is adopted) because the prospective accounting model for the new leases standard is different from its transition provisions for existing leases (which, for most entities, will involve applying certain concepts of both Accounting Standards Codification (ASC) 840 and ASC 842). It may be challenging for entities to manage separate processes and controls over their entire lease portfolio — one for leases that existed at adoption and another for new leases and those that are modified or reassessed after adoption.

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FASB Clarifies Aspects of Lease Accounting Standard

Published on March 25, 2019

The Financial Accounting Standards Board issued an accounting standards update clarifying some of the disclosure and implementation requirements of the new leasing standard.

The new leases standard will put operating leases on the balance sheet of many companies for the first time. The standard takes effect for public companies this year and for private companies next year.

The update deals with two lessor implementation issues. It clarifies that lessees and lessors are exempt from a certain interim disclosure requirement associated with adopting the new leases standard. It also aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers with some of FASB’s existing guidance. That means the fair value of the underlying asset at the commencement of a lease is its cost, reflecting any volume or trade discounts that may apply. But if there has been a significant lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in Topic 820, Fair Value Measurement) should be applied.

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