• How to communicate accounting information to laypeople

    Accurate, timely financial information is key to making good decisions for executives, board members, investors and other stakeholders. But not everyone who reads your financial statements will really understand the numbers they receive and what they mean to your organization. Here are some ways to present your financial results in a reader friendly manner. Consider your audience The people who rely on your organization’s financial [...]

    Published On: May 3, 2024Categories: Business, Featured
  • Getting a handle on inventory

    Inventory is a key balance sheet item for many companies. Depending on the nature of your operations, inventory may include raw materials, work-in-progress (WIP) inventory and finished goods. While you need to have enough inventory on hand to meet your customers’ needs, carrying excessive amounts can be costly. Here are some smart ways to manage inventory more efficiently — without compromising revenue and customer service.  [...]

    Published On: May 2, 2024Categories: Business, Featured
  • ESG audits: Navigating new frontiers in corporate responsibility

    Reporting on environmental, social and governance (ESG) matters is an increasingly crucial area of corporate compliance. While ESG reporting and disclosure apply primarily to public companies, there are efforts aimed at requiring private companies to also report on these matters. For example, the European Union’s Corporate Sustainability Reporting Directive requires private organizations that meet specific criteria to publish social and environmental risks and their impacts. [...]

    Published On: May 1, 2024Categories: Business, Featured
  • Auditing WIP today

    External auditors spend a lot of time during fieldwork evaluating how businesses report work in progress (WIP) inventory. Here’s why this warrants special attention and how auditors evaluate whether WIP estimates seem reasonable. Valuing WIP Companies may report various categories of inventory on their balance sheets, depending on the nature of their operations. For companies that convert raw materials into finished goods, a key element [...]

    Published On: April 30, 2024Categories: Business, Featured
  • Mind the GAAP: How to ensure transparency when using non-GAAP metrics

    At Financial Executives International’s Corporate Financial Reporting Insights Conference last November, staff from the Securities and Exchange Commission (SEC) expressed concerns related to the use of financial metrics that don’t conform to U.S. Generally Accepted Accounting Principles (GAAP). Companies continue to have trouble complying with the SEC’s guidelines on non-GAAP reporting, said Lindsay McCord, chief accountant of the SEC’s Division of Corporation Finance. Here’s some [...]

    Published On: April 29, 2024Categories: Business, Featured
  • Why it’s important to get your company’s financials done on time

    Have you completed your company’s year-end financial statements yet? Most calendar-year entities issue their year-end financials by March of the following year. Lenders and investors may think the worst if a company’s financial reports aren’t submitted in a timely manner. Here are three assumptions your stakeholders could make when your financial statements are late. 1. Negative financial results No one wants to be the bearer [...]

    Published On: March 5, 2024Categories: Business, Featured
  • Auditing revenue recognition

      The top line of an income statement for a for-profit business is revenue (or sales). Reporting this line item correctly is critical to producing accurate financial statements. Under U.S. Generally Accepted Accounting Principles (GAAP), revenue is recognized when it’s earned. With accrual-basis accounting, that typically happens when goods or services are delivered to the customer, not necessarily when cash is collected from the customer. [...]

    Published On: February 26, 2024Categories: Business, Featured
  • Liquidity overload: Why having too much cash may be bad for business

      In today’s uncertain marketplace, many businesses are stashing operating cash in their bank accounts, even though they might not have imminent plans to deploy their reserves. However, excessive “rainy day” funds could be an inefficient use of capital. Here’s a systematic approach to help estimate reasonable cash reserves and maximize your company’s return on long-term financial positions. What’s the harm in stockpiling cash? An [...]

    Published On: February 21, 2024Categories: Business, Featured
  • 9 tax considerations if you’re starting a business as a sole proprietor

      When launching a small business, many entrepreneurs start out as sole proprietors. If you’re launching a venture as a sole proprietorship, you need to understand the tax issues involved. Here are nine considerations: 1. You may qualify for the pass-through deduction. To the extent your business generates qualified business income, you’re currently eligible to claim the 20% pass-through deduction, subject to limitations. The deduction [...]

    Published On: February 14, 2024Categories: Business, Featured
  • Inventory management systems: What’s right for your business?

      If your business has significant inventory on its balance sheet, it can be costly. The carrying costs of inventory include warehousing, salaries, insurance, taxes, and transportation, as well as depreciation and shrinkage. Plus, tying up working capital in inventory detracts from other strategic investment opportunities. Reducing these costs can help improve a company’s profits and boost operating cash flow. Here are two alternative inventory [...]

    Published On: February 11, 2024Categories: Business, Featured
  • Solid financial reporting can help attract debt and equity financing

      Financial reporting plays a key role when a business needs funds for continued operations and strategic investment opportunities. Lenders and investors will generally want to review your company’s financial statements before they give it money. Timely, reliable reports can increase the odds that a bank will approve your company’s loan application and equity investors will provide capital. Relevant financial information Financial statements are a [...]

    Published On: February 10, 2024Categories: Business, Featured
  • Best practices for M&A due diligence

      Engaging in a merger or acquisition (M&A) can help your business grow, but it also can be risky. Buyers must understand the strengths and weaknesses of their intended partners or acquisition targets before entering the transactions. A robust due diligence process does more than assess the reasonableness of the sales price. It also can help verify the seller’s disclosures, confirm the target’s strategic fit, [...]

    Published On: February 9, 2024Categories: Business, Featured
  • Auditing concepts: Close-up on materiality

      As audit season begins for calendar-year entities, it’s important to review issues that may arise during fieldwork. One common issue is materiality. This concept is used to determine what’s important enough to be included in — and what can be omitted from — a financial statement. Here’s how materiality is determined and used during an external financial statement audit. What is materiality? Under U.S. [...]

    Published On: February 8, 2024Categories: Business, Featured
  • 6 tips to improve job-costing systems

    Companies that work on customer-specific or long-term projects — such as homebuilders, contractors, custom manufacturers and professional practices — generally track job costs to gauge the profitability of each project. In turn, this helps them bid future projects. Unfortunately, the job-costing process tends to be cumbersome, causing some expenses to inadvertently fall through the cracks instead of being allocated properly. Here are six tips to [...]

    Published On: February 7, 2024Categories: Business, Featured