• Accounting methods: Private companies have options

    Businesses need financial information that’s accurate, relevant and timely. The Securities and Exchange Commission requires publicly traded companies to follow U.S. Generally Accepted Accounting Principles (GAAP), often considered the “gold standard” in financial reporting in the United States. But privately held companies can use simplified alternative accounting methods. What’s right for your business depends on its size, regulatory and contractual requirements, management’s future plans and [...]

    Published On: August 5, 2021Categories: Business, Featured
  • Analytics software: A brave new world in auditing

    Analytical software tools will never fully replace auditors, but they can help auditors do their work more efficiently and effectively. Here’s an overview of how data analytics — such as outlier detection, regression analysis and semantic modeling — can enhance the audit process. Auditors bring experience and professional skepticism When it’s appropriate, instead of manually testing a representative data sample, auditors can use analytical software [...]

    Published On: July 28, 2021Categories: Business, Featured
  • Internal control questionnaires: How to see the complete picture

    Businesses rely on internal controls to help ensure the accuracy and integrity of their financial statements, as well as prevent fraud, waste and abuse. Given their importance, internal controls are a key area of focus for internal and external auditors. Many auditors use detailed internal control questionnaires to help evaluate the internal control environment — and ensure a comprehensive assessment. Although some audit teams still [...]

    Published On: July 27, 2021Categories: Business, Featured
  • Is your company ready for agile auditing?

    Agility — or the ability to react quickly — is essential to surviving and thriving in today’s competitive landscape. Though agile techniques were originally used in the realm of software development, this concept has many applications in the modern business world, including how companies approach their internal audits. Here’s an overview of agile auditing and why many internal audit teams are jumping on the bandwagon. [...]

    Published On: July 20, 2021Categories: Business, Featured
  • Auditing WIP

    Many types of businesses — such as homebuilders and manufacturers — turn raw materials into finished products for customers. Production is a continuous process. So, any work that’s been started but isn’t yet completed before the end of the accounting period is reported as work in progress (WIP) under U.S. Generally Accepted Accounting Principles (GAAP). The value of WIP relies on management’s estimates. Auditors often [...]

    Published On: July 12, 2021Categories: Business, Featured
  • Follow the cutoff rules for revenue and expenses

    Timing counts in financial reporting. Under the accrual method of accounting, the end of the accounting period serves as a strict “cutoff” for recognizing revenue and expenses. However, during the COVID-19 pandemic, managers may be tempted to show earnings or reduce losses. As a result, they may extend revenue cutoffs beyond the end of the period or delay reporting expenses until the next period. Here’s [...]

    Published On: July 2, 2021Categories: Business, Featured
  • Accounting estimates present challenges in times of uncertainty

    In today’s unprecedented market conditions, it can be challenging to predict metrics that underlie your company’s accounting estimates. Examples of key “unknowns” include how much longer certain pandemic issues will continue, how federal stimulus spending will affect the economy over the long run, and the extent to which tax laws and environment regulations may change under the Biden administration. Your predictions on these matters could, [...]

    Published On: June 24, 2021Categories: Business, Featured
  • Accounting methods: Private companies have options

    Businesses need financial information that’s accurate, relevant and timely. The Securities and Exchange Commission requires publicly traded companies to follow U.S. Generally Accepted Accounting Principles (GAAP), often considered the “gold standard” in financial reporting in the United States. But privately held companies can use simplified alternative accounting methods. What’s right for your business depends on its size, regulatory and contractual requirements, management’s future plans and [...]

    Published On: June 23, 2021Categories: Business, Featured
  • Hit or miss: Is your working capital on-target?

    Working capital equals the difference between current assets and current liabilities. Organizations need a certain amount of working capital to run their operations smoothly. The optimal (or “target”) amount of working capital depends on the nature of operations and the industry. Inefficient working capital management can hinder growth and performance. Benchmarks The term “liquidity” refers to how quickly an item can be converted to cash. [...]

    Published On: June 10, 2021Categories: Business, Featured
  • How to strengthen your internal controls

    Internal controls are a system of policies and procedures organizations put in place to protect assets and improve operating efficiency. Effective internal controls are critical to accurate financial reporting. A solid system of controls can help prevent, detect and correct financial misstatements due to errors and fraud. Internal and external risk factors evolve over time. So, upon completion of the year-end financial statements, managers and [...]

    Published On: June 3, 2021Categories: Business, Featured
  • Using your financial statements to evaluate capital budgeting decisions

    Strategic investments — such as expanding a plant, purchasing a major piece of equipment or introducing a new product line — can add long-term value. But management shouldn’t base these decisions on gut instinct. A comprehensive, formal analysis can help minimize the guesswork and maximize your return on investment. Forecasting cash flows Financial forecasts typically start with the most recent income statement. Then assumptions are [...]

    Published On: May 26, 2021Categories: Business, Featured
  • What’s “fair value” in an accounting context?

    In recent years, the accounting rules for certain balance sheet items have transitioned from historical cost to “fair value.” Examples of assets that may currently be reported at fair value are asset retirement obligations, derivatives and intangible assets acquired in a business combination. Though fair value may better align your company’s financial statements with today’s market values, estimating fair value may require subjective judgment. GAAP [...]

    Published On: May 20, 2021Categories: Business, Featured
  • Receivables may be a source of cash in tough times

    Many companies are continuing to struggle financially during the COVID-19 pandemic. If cash is tight, what can your business do to shorten its cash cycle? The answer could lie in your outstanding accounts receivable. Here are five strategies to help convert receivables into cash ASAP. 1. Apply for a line of credit. A line of credit can help bridge the “cash gap” between making a [...]

    Published On: May 19, 2021Categories: Business, Featured
  • Liabilities for unused time off mount as pandemic lingers

    During the pandemic, many employees have postponed using their allotted paid time off until COVID-related restrictions are lifted and safety concerns subside. This situation has caused an increase in accruals for certain employers. Here’s some guidance to help evaluate whether your company is required to report a liability for so-called “compensated absences” and, if so, how to estimate the proper amount. Balance sheet effects Compensated [...]

    Published On: May 6, 2021Categories: Business, Featured