May 16. 2012 | Kristin Drozdowski

101 Uses for SharePoint

Okay, I’m not going to list 101 ways to use SharePoint, but I’ll bet I could.

It’s hard to find a company these days that isn’t using SharePoint, but I’ve been surprised by the number of users who seem to view it only as a document repository.  After all, isn’t being a document repository what a network shared drive can do for you?  SharePoint not only allows you to store documents centrally, but also to collaborate with co-workers, maintain version history, add columns of information to be associated with documents, add lists of information that can be quickly and easily transformed into an Excel spreadsheet, and more.  These are just the basics.  With a little creative thinking, the possibilities are endless.

Remember the days of the network shared drive with folder, inside folder, inside folder, and naming conventions mutating with every user?  My personal favorite was using some combination of “v1,” “v2,” or a date after the filename to manage version history, only to find that an earlier version had a more current date stamp.  It’s a miracle we could find anything.  Our Risk Services team has created a SharePoint portal with multiple SharePoint sites to manage almost everything our group needs.  We have areas for blogs and newsletter articles, proposal and seminar development, upcoming training and networking opportunities, policies and procedures, links to frequently used websites, and more.  We’ve even created a Customer Relationship Management (CRM) Database for our firm using SharePoint.  If our team is working on it, there’s a site for it.

No matter what your business, SharePoint can help you get organized and share information efficiently and effectively across your team or department.  For example, Accounting Departments can manage account reconciliations, including the use of a simple approval workflow to track preparation and approval.  Internal Audit Departments can manage audit work paper preparation and approval.  Once you envision the layout, creating sites is simple.

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May 10. 2012 | Patricia Suchter

Value Pricing vs. Hourly Billing

CPA professionals typically use an hourly rate to bill customers for the services provided.  However, some CPA professionals believe we should start moving away from hourly billing and start moving towards value pricing.

Value pricing is the practice of setting the price based on the value of the services provided to the customer.  Some will argue that most accounting firms do just that by examining hours spent providing services and marking them up or down according to the value given to the customer for those services.  Value pricing is a little bit different, as it allows you to provide a fixed price up front to the customer and/or bundle services into a package deal.

Advantages of value pricing:

• Provides the opportunity to cross-sell additional services
• Improves communication
• Projects confidence as opposed to being unable to inform the client up front of a price as with hourly billing
• Allows the firm to gain back price leverage
• Easier to increase fixed-price agreement (FPA) prices than to increase your hourly rate
• Provides a competitive differentiation for your firm
• Provides less risk for the client when it comes to the certainty of the price
• Allows the client to focus on the firm’s total value proposition rather than prices for each service rendered.
  

Approximately one quarter of accounts in small and sole practitioner firms have implemented value pricing and some professionals believe this will become the way of the future.  One of those professionals is Jody Padar, an up and coming CPA who has transformed her father’s CPA firm.  Check out this interview she did in which she talks about value pricing:  http://www.freshbooks.com/blog/2012/03/21/cpa-jody-padar-and-the-new-world-of-digital-accounting/.

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April 27. 2012 | Vanessa Teitelbaum

Client Service

“From:  Transit, DoNotReply – Good morning Ms. Teitelbaum, I do apologize for your bus not showing up but the bus in question did not come because of an unscheduled service interruption.  Again, I do apologize for your bus not showing up."

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April 25. 2012 | Daniel O'Shea

What’s on your 990?

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April 23. 2012 | Jim Wagenmann

Individual Retirement Accounts

Any taxpayer with earned income, wages, or self-employment income can contribute to an Individual Retirement Account (IRA).  The contribution limit for 2011 is the lesser of earned income or $5,000.  If you were age 50 or older by December 31, 2011, you may also contribute an additional $1,000 as a catch-up contribution for a total of $6,000.  Contributions to an IRA could have been made at any time during 2011 or they can also be made before April 17, 2012, and earmarked as 2011 contributions.

The tax deduction rules are somewhat complex and depend upon coverage by an employer plan and your income level.  If you and/or your spouse are not covered by an employer plan, you may contribute to a tax-deductible IRA no matter what your income level is.  If you and your spouse are covered by an employer plan, the deductibility of the IRA depends upon your adjusted gross income (AGI) shown on your tax return.  If you are single and your adjusted gross income is less than $56,000, the IRA would be fully deductible.  If your AGI is between $56,000 and $66,000, the deductible portion of the IRA contribution is reduced while the nondeductible portion is increased.  If your AGI is above $66,000, the entire IRA contribution becomes nondeductible even though it can still be retained by the IRA account.  If you are married filing jointly, the income limits for computing the amount of tax-deductible IRA contributions are AGI between $90,000 and $110,000.  If you are married filing a separate return, the tax deductible income limits are at AGI of $0.00 to $10,000.

One point to consider is that if you are married filing separate and you are under a separate maintenance agreement and you have lived apart for the entire year, the single taxpayer rules will apply rather than the married filing separate rules.  Another scenario to keep in mind is where you are married filing jointly and only one spouse is covered by an employer plan.  The income limits for calculating the deductible portion of an IRA contribution are $169,000 to $179,000 of combined AGI.  The covered spouse will still have to follow the married filing jointly rules above.

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April 18. 2012 | Rebecca McDonald

Accounting Department Tune-Up

After frequenting the car repair shop recently to keep my aging car on the road, it dawned on me that accounting departments – like our cars – need tune-ups.  Whether it’s a simple rotation of responsibilities or swapping out software, you want to make sure your department is running like a well oiled machine and you have a reliable accounting advisor in case of a blowout.

With that said, my career as an auditor and consultant has afforded me the pleasure of observing some very effective accounting teams and others that are in much need of a tune-up.

Often, accounting departments just need a fresh vantage point on how the department is approaching its daily workload.  There may be hidden talents and gems in your group and the restructuring of responsibilities can make all the difference.  Shuffling the workload or streamlining a process can add efficiency and increase productivity.  Sometimes replacing a part or two is in order.  While this can be a daunting task, like new oil it improves the functionality of the team and can breathe new life into the group.  We can provide the guidance and support in navigating these difficult tasks.

In other cases, it is a matter of technology.  Software tools like QlickView and SharePoint help accounting departments and management stay connected with real time reporting and data management.  How much time does your team spend recreating reports for management in Excel? Think of the margin for error.  With QlickView, management has financial reports at their fingertips.  With on demand access to reporting data that management needs to make decisions, they no longer have to task accounting to run that report again.  SharePoint, for example, can automate the accounts payable approval process.  It not only saves a few trees, but also eliminates the headaches of tracking down invoices.  Gone are the days of invoices sitting on a project manager’s desk waiting for approval.  Automating transforms it into a transparent process.  These tools are cost effective ways to streamline key processes in the accounting department.

We are the trusty – with a strong emphasis on trusty – mechanic who will let you know what is really going on under your accounting department’s hood.  Or think of Watkins Meegan as your rental car when you have an open accounting position; we’ll keep you on the road until you get the position filled.  Watkins Meegan specializes in accounting department tune-ups, from consultations on your current procedures and restructuring support to technology improvements that incrementally increase efficiency and provide cost savings.  We can help.  Give us a call, and let’s rev up your accounting team’s engine.

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April 11. 2012 | Jim Wagenmann

Head of Household Filing Status

Many taxpayers do not understand the rules for which tax tables they can use when they are married and living apart from their spouse.  Just because you are married does not mean that your only choices are married filing jointly or married filing separately.  If you meet the tests spelled out in the tax code and regulations, you may also file as single or as head of household.  Both of these choices are less taxing than married filing separately.  The tests to qualify as single are as follows:

1. You must file a separate return from your spouse;
2. You must maintain for more than half of the tax year the principal place of abode of a child for whom you are entitled to a dependency exemption or would have been entitled except for having released the exemption to the non-custodial parent;
3. You have to have furnished over half the cost of maintaining the household; and
4. During the last six months of the year, the spouse was not a member of the household.

Satisfying the above allows you to use the single tax rates rather than having to use the married filing separate rates.
By satisfying the following rules, you may qualify to use the less taxing head of household tax rates.  These provisions are as follows:

1. For more than six months of the year (does not have to be consecutive), provides the place of abode of a qualifying child or a child for whom you may claim a dependency exemption; or
2. Provides a place of abode for either your mother or father for whom you do claim a dependency exemption.

In addition, you must be treated as unmarried at the end of the year, not be a surviving spouse, not be a nonresident alien at any time during the year, and you must maintain a household.

If you are domestic partners living in a community property state and you provide more than half of the cost of maintaining the household from your own funds, you can qualify for using the head of household tax rates.

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April 4. 2012 | Rebecca Kehoe

Independent Auditor Rotation: Which Side of Fence Are You On?

Sunny Side:  On August 16, 2011, the Public Company Accounting Oversight Board (PCAOB) issued its Concept Release on Auditor Independence and Audit Firm Rotation, stating that the Board’s inspections have found audit deficiencies attributable to a failure of the audit firm to “exercise the required professional skepticism and objectivity.”  As a possible solution to this problem, the PCAOB’s Investor Advisory Group urged its members to consider mandatory rotation stating that their “key” concern was the level of “coziness” independent audit firms develop with the management of the company being audited based on their “long running audit relationships.”

Grass is Greener Side:  On December 14, 2011, GAO issued its comments to the PCAOB Concept Release stating that it is not convinced that audit quality issues identified by the PCAOB are caused by lack of auditor independence or professional objectivity.  GAO says that mandatory auditor rotation IS NOT (emphasis added) the way to go, as mandatory rotation “could actually place strain on audit quality in the initial years of an auditor’s tenure due to new auditor’s lack of specific knowledge of the client’s operations, systems and controls.”  GAO feels that more extensive documentation and management review is what it will take to drive improvements in the audit process.

So where do you side?

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March 28. 2012 | Lindsay Riebel

First Busy Season Survival Guide

1. Break up the week with a planned day in which you will go out to lunch with colleagues or friends who work nearby.  Although as a first year accountant, you have probably 90 hours of backlog, a one day a week lunch helps you keep your sanity while staring at what seems to be the same 1040 that you have been examining at all week long.
2. Update your music list on your Ipod or computer with upbeat music that perhaps helped your productivity in college or with the CPA exam.
3. Keep a snack cabinet.  Although we have all heard of the busy season 15, a healthy snack when you are feeling drained will prevent your mind going and keep your stomach from distracting you from work at 5 pm.
4. Make plans for after busy season.  An exciting trip or even just a fun event to look forward to will sustain you when you realize you still have 5 Saturdays left.
5. Plan ahead for your days off.  During busy season, free time is sparse and although a fun night with friends seems like a better option than laundry, having clean clothes is important and so is having food to eat for dinner.
6. Keep in contact with the outside world.  Because laundry and food might have to be a priority some days, plan your nights out with friends ahead of time.  This way you have something to look forward to and you won’t become stressed about your other responsibilities.
   

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March 21. 2012 | David Greaves

Solution Shopping

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March 13. 2012 | Bill Russell

A “Win-Win”: Tax Incentives Now Available to Not-For-Profits Hiring Unemployed Heroes and Wounded Warriors

According to a United States Department of Labor unemployment report, there were nearly 900,000 unemployed veterans in the United States as of October 2011, and the average overall unemployment rate was 12.1% for veterans returning home from Iraq and Afghanistan.  In order to restore confidence and pride to Veterans transitioning back home, tax incentives were introduced in 2011 to offer employers larger tax benefits for hiring unemployed veterans.  The new benefits offered are part of the Veterans Opportunity to Work (VOW) to Hire Heroes Act of 2011 in conjunction with the Work Opportunity Tax Credit (WOTC).  In January 2012, the IRS announced that tax-exempt organizations are now allowed to benefit from the WOTC (IRS Notice 2012-13).

As with any governmental program, there is some paperwork involved, albeit minor compared to the benefits derived for the employer and for the veteran being hired.  A brief recap follows:

Before any tax credits can be determined, employers are required to submit a certification request by filing Form 8850 with the state employment security agency or Designated Local Agency (DLA) by June 19, 2012, for veterans hired between November 22, 2011 and May 22, 2012, and, for veterans hired thereafter, within 28 days after the veteran’s date of hire.  The DLA will then certify and authorize a qualified veteran to be included in the WOTC calculation.

 

Tax credits ranging from 16% to 26% are available for hiring unemployed veterans, depending on the length of unemployment prior to being hired, hours worked during the year, and any related service disabilities.  As with most tax credits, certain limitations apply.  For-profit entities have a maximum allowable credit limitation of $9,600 per qualified veteran and tax-exempt entities have a limitation of $6,240.  There is also a distinction on how the tax credits are applied.  For-profit entities apply the credit as a general business credit on Form 3800, while tax-exempt entities apply the credit against the employer’s portion of the social security tax liability as determined on their respective 941 employment tax returns.

Not-For-Profits have a history of serving the community, and now have an additional incentive for hiring those who have served not just their community, but also their country.  Please contact us for more information on the Act.

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March 7. 2012 | Mary Lou Gervie

Don’t File Your Tax Return at a Local IRS Office

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March 2. 2012 | Lindsay Dattilio

A New Tax Form for 2011

Previously I mentioned the IRS has come out with a new form for the 2011 tax year, Form 8938, to report the fair market value of a taxpayer’s foreign financial assets if the value exceeded a certain limit.  The minimum total value requirement for Form 8938 is $50,000 at the end of the year or $75,000 at any point during the year for single or married filing separate filers, and $100,000 at the end of the year and $150,000 at any point during the year for married filing joint filers.  There are other provisions (and exceptions) for trusts, partnerships, and corporations.

What is considered to be a specified foreign financial asset by the IRS includes several common assets, such as: interest in a foreign trust, estate, pension plan, or deferred compensation plan, interest in a foreign entity (even foreign disregarded entities), and, of course, a financial account maintained by a foreign financial institution.  Most taxpayers will have a reporting requirement simply due to their foreign bank account if the total value exceeds the appropriate threshold.  Taxpayers are still required to file an FBAR even if they have a Form 8938.  However, taxpayers do not have to report their foreign financial asset if it is already reported on Forms 3520, 5471, 8621, 8865, or 8891.

In addition to the fair market value of the specific asset needing to be reported, the foreign income earned by that specific asset is to be detailed on the form.  It’s also worth noting that foreign real estate, including foreign rental properties, is not required to be reported on this form, even if the taxpayer recognizes foreign income from their rental property.

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February 29. 2012 | Lindsay Dattilio

Here We Go Again!

The IRS has reopened the Offshore Voluntary Disclosure Program, a measure designed to encourage taxpayers to report their previous unreported worldwide income, following the collection of over $4.4 billion from the original programs initiated in 2009 and 2011.  The IRS says there is no deadline this time, as the program will remain open indefinitely.  With that said, the IRS could abruptly change the provisions of the program, if not end it altogether, at any time.  The only other key difference announced is an increase in the maximum penalty applied to the highest aggregate value of all undisclosed foreign accounts and/or the highest asset balance of all undisclosed foreign entities, which was previously 25 percent.  The IRS has boosted the maximum penalty up to 27.5 percent.

Speaking of disclosure, the IRS has announced a new form for the 2011 tax year, Form 8938, Statement of Specified Foreign Financial Assets.  This new form requires taxpayers to report the fair market value of all foreign financial assets, if over a certain threshold, to be attached to their income tax return; but more on that later.

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February 22. 2012 | Rebecca Kehoe

January 2012: Small Business Month

January 2012 appears to be Small Business Month.  On January 13, 2012 President Obama elevated the Small Business Administration (SBA) back to a cabinet level position and proposed combining six agencies and offices with the SBA into a single agency overseeing trade and business.  The six agencies and offices are:  Small Business Administration, Office of the U.S. Trade Representative, Export-Import Bank, Overseas Private Investment Corporation, and the Trade and Development Agency.  Take note that only SBA is cabinet level.  In addition, on January 31, 2012 two bills were introduced into Congress:  HR 3850 that provides disincentives for agencies that do not make their small business subcontracting goals by taking bonuses away from agencies officials and increases the government-wide small business contracting goal from 23 percent to 25 percent; and HR 3851 which elevates the position of the agencies’ Director of Small and Disadvantaged Business Utilization Office (SADBU) to Senior Executive Service (SES).   On February 2, 2012, HR 3893 was introduced which would require stricter limitations on subcontracting by small businesses to large businesses under set aside programs and require executive agencies to solicit public comments on procedures with respect to decisions to covert a function being performed by a small business concern to performance by a Federal employee.  January 2012 was a very good month for Small Business.

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February 15. 2012 | Bhavna Negandhi

What Clients Want

Having spent over seven years in consulting, I understand some of the basic reasons why clients bring in consultants.  It’s usually to access specialized skills which their organization does not possess.  They appreciate consultants who want them to succeed and have faith in their future.  Though some consultants strive to surpass expectations, most clients are thrilled when a project simply goes according to plan.  They are grateful and pleasantly surprised with over-the-top results.  But most don't hold their breath on any advisor's promise to go beyond what's expected.

Be aware that clients know their business best and are hardier than they look.  So don’t wait to break the bad news to them.  They want to be able to trust you and look for your enthusiasm, attention, commitment, professionalism, and sensitivity in their matters of business.  It may seem like a tall order, but remember - “Clients want to choose the right firm for the right project to get the work done the right way.” So, while ‘wowing’ the client is an important aspect, the first requirement is delivering what was promised, on time.

Clients value consultants because of their deep expertise and their ability to knock out short-term projects by leveraging that expertise.  They tend to gravitate towards advisors who use their experience to solve problems rather than just apply what worked last time.  Value-add?  Yes.  Flexibility?  Yes.  Chaos?  No.

Your primary interest as a consultant is in achieving the client’s goals – not in your business development.  Stay focused on the plan with a clear intention of an exit.  A good consultant would make arrangements for continuous progression after the project ends.  You will be surprised to learn that such intent leads to more additional work than any efforts to prolong a project or sell follow-on projects.

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February 8. 2012 | Rebecca McDonald

How Much Juice Can You Squeeze Out of That Orange?

As we make New Year’s resolutions and hit the gym to sweat off a few pounds, I hear the voice of my trainer asking me:  “How much more juice can you squeeze out of that orange?”  That orange is me and my New Year’s fitness goals and are they really attainable without the right support and approach?

This resonates on many fronts, especially when you are running an accounting department.  With year-end close, SEC filings, audit preparedness, and a list of projects ranging from internal control documentation to those account reconciliations that haven’t been tackled all year,  how much more juice can you squeeze out of your accounting team?

I know this feeling all too well; my days as a Controller of a publically traded company were spent juggling the demands of our accounting team on a lean budget and it was taxing.  This was the case until I took a hard look at our priorities and deadlines and realized that with additional interim support we could make it happen.  With the clock ticking, I picked up the phone and called in assistance.  This was a welcome reprieve to our strapped accounting team.  The extra help from accounting consultants gave our team the wherewithal to tackle the priority projects and meet our deadlines.  It also improved team morale and gave us the added boost we needed.  That was an “aha” moment and one smart decision.

Do you have a list of accounting projects that have been put on the back burner over the year? Are your auditors ready to start and you haven’t touched that prepared by client list?  How about that position that is going to be open for 3 months while your accounting staff is on leave?  There’s a solution without overburdening your accounting team.  Watkins Meegan’s customizable approach to project accounting lets you decide how much assistance you need.

With all that said, personal training is very much like an accounting department.  How do you best allocate your resources and realize that you might not be able to squeeze any more juice out of that orange?  Give us a call and we’ll give you and your accounting team the extra strength needed to get your projects across the finish line.

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February 1. 2012 | Sara Woods

Wedding Write-Off

With my own wedding just months away, I have become quite familiar with the wedding section at Barnes & Noble.  However, it wasn’t until I found out that the average spent for a NJ wedding is between $27,521 and $45,868(!!) (http://www.costofwedding.com/ to find your hometown average) that I started looking for ways to decrease the cost of my big day.

When I was younger, I remember hearing people talk about inviting business associates to big events and deducting part of it as a business expense because they were “networking.”  Okay, do people really talk about corporate strategy while dancing the Electric Slide?  While that is a little questionable, there are legitimate ways of deducting a wedding.  As a good little accountant and a shopper of deals, I discovered that Turbo Tax even has a “wedding write-off” section to help turn that big day into a big deduction.

The Venue
Just one example of a tax-deductible venue in Virginia:  Oatlands Plantation, a National Trust Historic Site and a National Historic Landmark.

Food/Flowers
Donate the flowers to Hospice or a Children’s Hospital (just remember what types of flowers you picked because some contain A LOT of pollen, which is an allergen).  Leftover food can be donated to a homeless shelter.

The Dress
Donate the wedding dress to a non-profit organization, such as Brides Against Breast Cancer, Making Memories, or the I Do Foundation.  These organizations take tuxes, bridesmaids’ gowns, etc.

Favors?
Give your guests the gift that keeps on giving – make a donation in their name to you and your fiancé’s favorite charity.

Presents!
If you set up your registry through IDoFoundation.org, you can create a charity registry or a wedding gift registry with its partner stores and up to 10% of gift purchases will be donated to your favorite charity.

Honeymoon
Yes, you can even donate your honeymoon – well, your time, that is.  Take a ‘Volunteer Honeymoon’!  Hands Up Holidays' website can help you plan a “meaningful” honeymoon.  Whether it be ‘Naigani for a relaxing week, then working on the school in Suva’ or a ‘Luxury river cruise in Wat Kai, then work on a volunteer project in Phang Nga,’ this site helps you tailor your honeymoon experience to combine a luxury adventure with a rewarding volunteer experience.

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January 25. 2012 | Beth Dodson

It’s That Time of Year Again!

It’s that time of year again!  For those of you who are new to Watkins Meegan, welcome to the madness that we call “busy season.”  This busy season will be my seventh at Watkins Meegan, and while I’m still learning and growing professionally, there two things that I know for sure will help you get through the next few months:

1. Make plans!  Identify something that you can look forward to after April 15th and put it on your calendar.  Noting it on your calendar is important because it’s a visible reminder to you on those particularly tough days at the office that in just X-number of weeks you’ll be doing something you love (and that whatever it is will most likely will have nothing to do with using your 10-key).
2. Make friends!  Find a colleague who can relate to the challenges you’re facing.  While maintaining friends outside of work is important, having someone just a few cubicles away to vent to when you’re at your breaking point is priceless.  It will make you feel 300 times better in a matter of seconds.  Think of it as free therapy.  But don’t forget to return the favor!
   

You will undoubtedly encounter a whole series of highs and lows between now and April 15th, but think of this and every busy season as an opportunity for professional growth.  You CAN do this and you will.  And when all is said and done, you will know more on April 16th than you do today – no matter what your level of experience is.  Good luck!

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January 17. 2012 | Bill Russell

The Benefits of Volunteering

In the spirit of looking for ways to contribute to my local community, I joined a volunteer organization this year.  The organization is structured around several fundraisers held during the year with all proceeds going to those in need.  One fundraiser, among many, consisted of an annual Christmas tree sale.  The plan was to sell Christmas trees from 6:00pm-9:00pm Monday through Friday and 9:00am-9:00pm on Saturday and Sunday.  To be honest, I was a little overwhelmed by the potential commitment and effort required to coordinate such a large fundraising effort.

After a few cold evenings of selling trees, I began to realize that I was benefiting more from the volunteer experience than originally anticipated.  My expectations began to change and I was pleasantly surprised to learn that my fellow volunteers, dressed in old sweats and jackets, soon became identified as highly polished individuals.  The people around me consisted of former major airline operation managers, decorated Army majors, and Naval Aviation pilots.  One gentleman, originally mistaken as an older man of small stature, was later identified as a block of steel with years of Vietnam Black Ops experience.  Another younger gentleman, originally perceived as a college freshman, soon was appropriately identified as an airborne infantry soldier who was awarded the Purple Heart for injuries sustained during his tours in Iraq.  As I was exposed to the experiences of those around me, the once chilly evenings soon became a classroom for military and local community history lessons.

Although our lives may seem chaotic with all the pressures of work, relationships, and time restraints, the benefit of helping others in such a noble cause provides us with new outlooks.  Had I not been in a position to listen and take in what was going on around me, I may have missed the boat.  I have learned that the strongest communicators are normally the best listeners and the best lesson learned is to not judge a book by its cover.

Happy New Year!

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January 11. 2012 | Jim Wagenmann

Checking the Retirement Plan Box on the W-2 Form

An employee’s W-2 form requires that you check the box if they are benefiting from a retirement plan.  The term benefiting has different meanings depending on the type of plan that you offer.  Just because you have a plan does not mean that the box should always be checked if an employee is eligible to participate in the plan.  In some situations, an account balance will require that the box be checked; in other cases, an account balance does not matter.

If you offer a plan that would require a contribution, such as a defined benefit plan or a money purchase plan, the box will always be checked for those participants with an account balance in the plan.  This is the case even if the plan is frozen and you are not making a current contribution.

If you offer a profit sharing plan, such as a Simple plan, a SEP-IRA, or a discretionary profit sharing plan, you will always check the box for those participants who receive a contribution for the year – not in that calendar year.  If you don’t make a contribution, you have to determine if there are forfeitures in the plan that are being allocated to the participants; if so, check the box.  If you do not make a contribution and no forfeitures are allocated, then you leave the box blank even if the participant has an account balance.

Checking the box matters because you are informing the IRS as to the employee’s participation in a retirement plan.  The rules for contributing to an IRA and determining if such contribution is deductible on the employee’s tax return is dependent on their participation in an employer plan.  Checking the box incorrectly may negate the employee making a deductible IRA contribution.

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January 4. 2012 | Jeffrey Walsh

Do You Own Hidden Treasure?

• Bank accounts and safe deposit box contents
• Stocks, mutual funds, bonds, dividends
• Uncashed checks and wages
• Insurance policies, CD’s, trust funds
• Utility deposits, escrow accounts

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December 29. 2011 | Andrea Contres

Merry Marketing in 2012

1. Become a LinkedIn Mover and Shaker.
2. Use our CRM.
3. Pick two networking events to attend each month.
4. Commit to one coffee or lunch meeting per month with a referral source or prospect.
5. Go out to lunch with a director or member once a quarter.
6. Find out if your top 10 clients are on facebook or twitter.
7. Write a blog post for the WatkinsWire!
8. Say hello to colleagues in the hallway.
9. Join an industry specific association or a charity of your choice!  I am extremely proud of everyone at Watkins Meegan for raising over $12,000 for the 2011 Leukemia & Lymphoma Society’s Light the Night Walk!  Let’s beat $12k in 2012!
10. Pass your CPA, CIA, or get your MBA.
11. Help out with recruiting!
12. (12 for 2012) Attend the annual Watkins Meegan Holiday Party and/or summer picnic!

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December 21. 2011 | Rebecca Kehoe

End of the Year Review, and Not Just for Taxes!

It’s that time again – time to gather all your accounting and timekeeping information for your taxes.  But let’s not forget to clean up and account for a few more items that could be hanging out there, like Teaming Agreements and Non-Disclosure Agreements (NDA).  These types of agreements tend to live on beyond the proposal submission date, especially if you do not win the contract.  It is important to understand just how long these agreements are going to last.

If you don’t think they are important, ask the Army.  In 2005, a company applied for a patent for a new type of lead free, environmentally friendly bullet, and then entered into 3 separate NDAs with the Army concerning its bullet research and development.  In 2010, the Army announced the development of a very similar bullet with a different contractor.  The first contractor sued the government stating that the bullet design copied its 2005 patent and violated the terms of the NDAs.  The government requested dismissal of the case, but the U.S. Court of Federal Claims found the contractor had merit and allowed the contractor to bring its claims, including violations of the NDAs.  The case is still pending.

The bottom line:  It does not matter who issues the TA or NDA; so long as they are fully executed, they will need to be monitored to ensure compliance for the duration of the agreement.

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December 15. 2011 | Joshua Moore

Accountants Gone Wild?

As the end of the year approaches and the masses are scurrying around finishing their last-minute holiday shopping, we accountants are primarily busy preparing for year-end tax planning.  While the latter is true, many accounting firms are also hosting their holiday party.
 

Even though accountants are perceived by the general public as mild-mannered and straight-laced, we too, like to “let loose” with a year-end celebration.  Such was the case as Watkins Meegan hosted its annual holiday party on December 3rd.  Not only does the holiday party serve as a reflection of the firm’s yearly achievements, I believe it primarily serves as a “Thank You!” to the employees.
 

After Mike Micholas, Managing Member, delivered his “Thank You!” speech, the attendees were treated to a dinner and dessert that would rival my Grandma’s holiday baking.  As the night unfolded and the band played on, the quiet and normally reserved accountants began to dance.  To no surprise, the noise level in the room grew louder and louder.  What was about to take place could be considered one of the greatest YouTube videos.
 

Accountants Gone Wild?  Yes!!  As I stood near the back of the room, a circle had formed on the dance floor as if a big schoolyard fight had just broken out.  Curious person that I am, I inched closer to see firsthand what all the commotion was about.  Much to my surprise and delight, a break dancing party had commenced.  As I watched in awe as two of my colleagues were having a dance-off, I turned to another coworker and said, “Accountants Gone Wild!”
 

As you and your family celebrate the holidays, be sure to take time to reflect and commemorate the year’s events.  And if you’re feeling a little wild, celebrate like us accountants with a dance party.
 

From Watkins Meegan’s family to yours - Happy Holidays!!

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December 7. 2011 | Robert Payne

Black Friday, Small Business Saturday, and Cyber Monday….What Happens on Sunday?

Who dared to shop on Black Friday to fight – literally – for bargains? Well, I can tell you I didn’t.  I don’t really want to venture out to stores with all those crowds and the behavior that these “bargains” bring with them. You can pick up the purchases straight away. You probably pay by credit or debit card.

Then we had Small Business Saturday. That seemed so much more interesting and we did not have the extreme events of Black Friday, but were there the same type of bargains to be had? Probably not, but it was a much nicer event. Probably pay by cash, debit or credit card.

Then came Cyber Monday. Sit back in the comfort of your own home, click a few buttons and the purchase is yours. But is that as much fun?  You have to wait for days for the items to arrive. If purchasing online, make sure that you use a secure site (i.e., one that is prefixed is https). Buying online you pay by debit card or credit card (or maybe via PayPal, as this does not expose your bank details), but you definitely can’t use cash.

Each event has its pluses and minuses. Black Friday gives you bargains, but a lot of hassle. Small Business Saturday offers you a better experience, but probably not the bargains for which you are looking. Cyber Monday gives you convenience, but are your personal details safe when buying online and you can’t see what you are actually buying? If a bargain appears too good to be true, it probably is.

For me, the best day was Sunday. No shopping, no crowds, no hassle. I think I will call it Sensible Sunday. You can forget Black Friday, Small Business Saturday, and Cyber Monday. Give me Sensible Sunday instead.

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December 1. 2011 | David Greaves

Quieting the Noise

It’s difficult this time of year to find the occasion to just sit down and relax, to reflect on what we are thankful for in our lives.  For Watkins Meegan, this season means tax and audit planning.  Outside of our walls, there are more than enough distractions.  The approaching holidays seem to make our lives more hectic.  Shoppers glut the parking lots of every store in sight.  Roads become even more congested than normal with travelers in and out of town.

Trying to listen to the radio or watch television is no help as politicians, pundits, and protesters are noisily tackling big issues from the economy, to the presidency, to Occupy Wall Street movements.

Amidst all of this calamity, we need to take a moment and concentrate our energy on the people closest to us who matter the most in our lives.  It’s like the Apollo 13 astronauts who needed to overcome a mechanical failure in a high pressure situation, and use their collective training to focus on a sliver of hope for re-entry and a safe landing.  Let the noise take over, and go skipping off the atmosphere.

For me, I find my focused sliver of hope every time I get home after a long day and a difficult commute.  My two-year-old daughter drops what she is doing, runs to me, and jumps up into my arms.  My boys and my wife make their way over, too, and I’ve found my peace.

It’s the time of year to find those people we are most thankful for, whoever they may be. Although the noise around us won’t go away, it becomes a lot quieter when we take a moment to put it in perspective.

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November 23. 2011 | Lindsay Dattilio

Say “Thank You” – And Not Just at Thanksgiving

Watkins Meegan, and countless other CPA firms, recently wrapped up the college recruiting season. As always, our firm looks to bring on board only the best and brightest candidates the surrounding colleges and universities have to offer. During this process, the current staff spoke openly and honestly about what made them choose Watkins Meegan, and offered up advice to the applicants about how to go about choosing a firm that’s right for them. However, it was during this recruiting process that I realized the reasons firms attract recruits are not the same reasons firms maintain a quality staff.

For example, most new recruits aren’t interested in how managers motivate their staff, but you’ll find motivation to be one of the top concerns among current employees, and this goes for all industries. How often do you hear interviewees ask you how they will be valued by your firm? In my opinion, most employees appreciate a “thank you” or a personal e-mail to tell them what a great job they did on a certain project. For many staff, recognition by their superiors demonstrates they are valued and respected by their employer. So, the next time you see someone going above and beyond, make sure their manager or superior hears about it.

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November 21. 2011 | Anthony Bocchini

An Accountant’s Holiday Wish List

The fall tax deadlines have come and gone, signaling that winter is officially here.  The last of the Halloween candy is now gone; spooky decorations and carved pumpkins have given way to falling leaves and Christmas lights sprinkled throughout local neighborhoods.

It’s an exciting time, but preparing for all that comes with holiday traditions can also be quite hectic.  An especially frustrating aspect of the holidays for me is the shopping.   No matter how far in advance I plan it out, I always end up running out to pick up last minute gifts.  So, as I prepare myself for the upcoming holidays, I thought it would be helpful to put together a list of gifts that accountants might appreciate:

Accountant’s Wish List:

1. The Wall Street Journal Subscription – Reading the WSJ is one of the best ways to keep up with all the latest happenings in the business world.  The online access is especially helpful during business trips.
2. Business Card Holder – A great way to keep your business cards organized and in mint condition before passing them out at a marketing or networking event.
3. Stress Ball – With deadlines seemingly always on the horizon, stress is unavoidable.  A soft, handheld ball to squeeze in an effort to relieve the tension is great to help you relax and get back on track.
4. iPad – They still aren’t exactly cheap, but iPads have gone from being a cool personal toy to an exciting new way to do business, capable of running all sorts of business-related software and specialized applications.
5. Dry Cleaner Gift Certificates – In a client driven industry, appearance can be crucial in maintaining good business relationships.  Freshly laundered business suits aren’t cheap; these gift cards can definitely come in handy.
   

If you’ve got a family full of accountants like I do, you might be able to use a few of these suggestions in your holiday shopping.  Feel free to drop any other gift ideas in the comments section!

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November 9. 2011 | Rebecca Kehoe

Have Congress and the White House Heard the "Occupy" Protestors?

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November 3. 2011 | Lauryn Blair

Mint.com – An Accountant’s Dream

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October 26. 2011 | Scott Spencer

Business versus Pleasure: Deadlines & Sights

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October 20. 2011 | Scott Spencer

Business versus Pleasure: Creating Relationships

How was your trip?  What state did you visit?  What do you do while away?  Do you still work here?  Those are a few questions you may hear after coming back from a two-week trip or, in some cases, seven weeks.  Most people associate business travel with hours trapped in an airport or a sleazy hotel room; however, after your first trip you realize traveling is about the business relationships you create, the crazy hours you work, and the amazing landmarks you see in cities all over the country.  

New destinations are always the most exciting.  You are immediately introduced to at least 10 fresh contacts in the industry.  Or in business development terms:  10 more business cards, 10 more LinkedIn invitations to accept, and 10 more client prospects.  Accounting firms live and die by signing new clients and you never know when someone will stumble upon your Watkins Meegan card and inquire about services.  (Bringing new business to the firm always looks good!)  Increasing your personal network and leaving a lasting impression on potential clients are two of the most important aspects of traveling around the country.  Read part II of Business versus Pleasure to hear about some of the grueling hours we work and to find out which city holds the famous Pumpkin Festival.

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October 12. 2011 | Jason Fleetwood

And who will you be for Halloween?

I sat down with my 5-year old daughter to look through a few magazines and help her decide on a Halloween costume.  After a few minutes, I asked “Why don’t you dress up as an accountant – then you could be like Dad?”  She thought about it for a second and replied, “No, Dad – girls don’t wear shirts with a tie.”  I laughed, but it got me thinking maybe that’s all we are perceived to be - suit, tie, glasses, calculator…yep, you’re an accountant.

Well, what if I stretched that perception?  What if I challenged you to think outside the box for your next Halloween party?  What if I posed the question, “If you were to dress up as your favorite Watkins Meegan employee for Halloween, who would you be?”

For instance, maybe you could dress up as a professional golfer and go to the party as John Seek.  Or perhaps you could suit up as a Webster’s dictionary and go as Tim Pollins.  To help you with your Halloween costumes, I came up with several more suggestions:

• What, golf isn’t your game?  That’s o.k. – go dressed in your L.A. Lakers purple and gold, and tell everyone you are Landy Thompson.
• The dictionary isn’t your “go to” reference as an accountant?  No problem – go as the 2011 Master Tax Guide and tell your friends you are Anne Elliott or Lita Castro.
• You’re just not that into tax?  Don’t sweat it – be the hit of the party when you show up as Jerry Hahne or Rob Wilkins wearing a GAAP Guide.
• Some of you may want to head to a party with your friends.  Perfect, dress up as the Three Stooges and tell everyone you are Joe Post, Gary Robinson, and Randy Taylor.
• Superheroes – we all love our superheroes.  So go as Tom Greenawalt and Eric Rafail and dress up as Batman and Robin (although you may have to fight over who is Batman).
• So you think you can dance?  Then put on your best dancewear, go dancing with the stars, and tell everyone you are Patrick “Kip” Huffman.
• Want to dress up as a military officer in support of our troops?  No problem – put on your best service dress uniform and tell ‘em you are Lieutenant Colonel Cheryll Justo.

So there you have it – at Watkins Meegan, we’re not just a shirt and a tie.  In fact, with a little imagination, we have all of your Halloween party costumes covered.

Wait, what is that you are asking – “But Jason, what if we wanted to go as you?”  I am sure you all have a thought on this, but in case you don’t…just throw a red cape around your neck and put a big “S” on your chest.

Happy Halloween!!!

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October 6. 2011 | Katie Madden Lee

Arthur Andersen Wins Nobel Prize

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September 30. 2011 | Rich Wilkinson

Federal Budget Season

It’s that time of year again. And, there’s nothing wonderful about it.

After a week of wrangling and the very real threat of a Government shutdown, we finally have agreement on a Continuing Resolution (CR) to fund the Government until November 18th - six whole weeks!

The problem is, this budget brinksmanship has become the new normal. There was once an expectation that Congress would pass all twelve or thirteen (depending on the year) annual appropriation bills by September 30th and the President would sign them.

With experience, the expectation became that most of them would be passed and signed and there would be a CR for the late bills. Then it was some of them. Then it was none of them. A CR would be necessary to prevent a Government wide shutdown, but the required bills would soon be passed superseding the CR.

Last year, there were six successive “temporary” CRs culminating in a seventh CR for the full year. There were no actual appropriations bills passed for FY 2011. There never will be. We operated for the entire year under the admonition “Just spend what you did last year.”

We’re on track for the same kind of experience this year. Except this year we’re faced with across the board percentage cuts as a result of the Debt Ceiling deal or the actions of the Supercommittee (or both). Worse, if the Supercommittee fails to act by Thanksgiving, the cuts may not be across the board – half or more of them may be in DOD.

And, some GovCon experts put the probability of a shutdown sometime this year at 75% or more. If it happens, we’ll be looking at stop work orders, lockouts, delay of work claims and probably a dozen other expensive consequences. Depending on when and where the cuts fall, some of those stop work orders could turn into terminations.

This is just no way to run a __________.  (household, business, railroad, country – pick one).

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September 23. 2011 | Daniel O'Shea

The Role of the CFO: Much More Than a Financial Historian

In these economic times, many Not-For-Profit Boards and CEO’s underutilize a great resource right in their midst:  the CFO.  Although board members and CEO’s will often remind you that their CFO is a member of senior management, they view the primary role of the CFO as one of a financial reporter.  Yes, the CFO also performs budgeting and, in some cases, projections and forecasts, but mostly they are relied upon as financial historians.

In a book about the collapse of financial firms such as Bear Stearns and Lehman Brothers, there is a discussion about one company’s deteriorating stock and the effect CDO’s are having on the balance sheet.  The CEO tells his board that accounting rules are to blame for write-downs that are occurring. Fortunately, an astute board member points out that accounting is not the problem – the market is.  If only there were more voices of reason.

Accounting rules can, and do, determine how a transaction affects an organization’s financial position and the results of operations.  Unless a merger or acquisition is involved, CFO’s are often kept in the dark at the origination of significant transactions, and then are left to sort out the details and report the effects as part of monthly reporting.  In many cases, the effects are not favorable and may be different than expected.  Often, it is not just the effect of a transaction, but rather the surprise of the effect that causes consternation among CEO’s and boards.  Organizations cannot control the effect, but they can control the surprise.  The key is to involve CFO’s in the discussions taking place before a significant transaction or venture is undertaken.  They can provide valuable insight and help establish expectations. They also know when to call in outside advisors such as external accountants.  They are not emotionally involved in the transaction and can provide objective viewpoints.  Most importantly, CFO’s can help manage expectations.

Is your organization involving its CFO in the early stages of the deal?

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September 14. 2011 | Rick Westerman

Moneyball: Measure What’s Important

I love to read, but as a general rule I don’t care for most business books.  An exception is Michael Lewis’ Moneyball, which has been made into a movie opening this month.  The book (and I’m guessing the movie) is about the Oakland A’s “success” in exploring statistical measurements that were not regularly used by other teams to select players.  Suiting the A’s limited financial resources, these ballplayers had much lower salary demands than other players sought by wealthy teams like the Yankees.

Before I continue, I should say that I know little or nothing about baseball.  I do know something about business measurements.  As a former CFO, I utilized dozens of measurements such as budget variances, standard cost vs. actual cost, earnings per share, labor turnover, backlog volume, order markup, inventory efficiency, cash sufficiency, and on and on and on.

In short, we were measuring almost everything, but were we measuring the right thing?

So what about Moneyball?  The book was introduced to me by Dr. Michael Hammer (author of Reengineering the Corporation), who showed me that in many companies, measurements (financial and non financial) were often misaligned with corporate strategies, and actually became an impediment to success.  After all, metrics drive behavior.

Here’s a simple example.  We had five hundred different ways to measure factory labor variances (expected vs. actual).  One quarter we started experiencing unfavorable material variances while unfavorable labor variances lessened.  Out on the factory floor, an employee told me that material could be saved, but it would take more labor to fabricate.  Because we hyper focused on labor, material took a back seat.

With our enlightenment, we decided to review the alignment of our measurements with our strategies.  First, we had to determine what was most important, i.e., answer the question “what was our economic engine?” (see Jim Collin’s hedgehog concept in the book Good to Great).  Next, we cleaned up our measurements to make sure they were balanced (see Kaplan and Norton’s book Balanced Scorecard).  Most importantly, we created a process of continually assessing our metrics to ensure they were driving the right behavior.

The A’s success or lack of success is not important.  Factors other than metrics, such as strategy, have profound impacts on business prosperity.  It wasn’t perfect, but in the end we dropped bad metrics while saving some administrative costs.  More importantly, we came away with a better set of measurements.

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September 7. 2011 | Rebecca Kehoe

Do You Know the “Two and Two” Standard in Pay Equity?

The Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) is making pay equity its top enforcement priority.  Federal Contractors need to be prepared to defend their employee compensation systems and results.  During 2010, OFCCP changed its compliance review trigger for requesting more detailed compensation data from the Bush administrative “prima facie case” of discrimination to a “two and two” standard.  The “two and two” standard means that if a particular employee pay grouping submitted by the contractor shows disparities of $2,000 or 2% in pay between the highest and lowest-paid members of the group, OFCCP will send that contractor a letter seeking data regarding 12 or more factors related to pay that could explain the disparity.   It has been observed that virtually none of the contractors that have been subject to the OFCCP compensation reviews have been able to pass the “two and two” standard and have had to provide more detailed data to demonstrate that the disparities within a specific pay group are not the result of unlawful sex or race bias.  Contractors can protect themselves by collecting and storing more detailed data on pay, such as prior related job experience and individual salary history prior to joining the contractor.  Pay groupings should also be clear and meaningful.

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September 1. 2011 | Louise Peabody

Auditor Rotation – Up for Discussion

The Public Company Accounting Oversight Board (PCAOB) has reopened the discussion about requiring public companies to change audit firms after multiple years on an engagement.  On August 16, 2011, PCAOB issued a concept paper, Concept Release on Auditor Independence and Audit Firm Rotation, and has scheduled a roundtable for March 2012 where different views on the issue will be heard. 

The concept of audit rotation is debated periodically, typically after a large audit failure or financial scandal.  The PCAOB release presents historical background and context as well as the views of a variety of past supporters and detractors.   PCAOB quotes from recent large and small firm inspection reports citing an increase in the number of findings, including lack of professional skepticism by the audit team and acceptance of management views and responses without sufficient corroborating evidence or critical analysis.  

Will required rotation make auditors more skeptical and willing to challenge management?  If auditors know another audit firm will be reviewing their workpapers and assumptions in the future, will they perform better audits?  PCAOB acknowledges that the concept of audit rotation does not address all audit findings and notes it is difficult to assess the costs vs. benefits of changing auditors.  The increased risks and costs in the first year or two of auditing a new company are also noted.  PCAOB is asking for public input about how to enhance auditor independence, objectivity, and professional skepticism either through auditor rotation or other means.

PCAOB will certainly be hearing from public companies, their auditors, and other stakeholders as well.  The concept paper is available at http://pcaobus.org/Rules/Rulemaking/Pages/Docket037.aspx

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August 24. 2011 | Matthew Bart

Uncertainty in the Estate Tax: President Obama’s Recent Comments

In 2013, if the Senate and House fail to act, estate taxes will revert back to their 2001 levels, with a total exemption of $1,000,000.  Currently, the estate tax exemption, as passed in the 2010 Tax Act, is $5,000,000, and with portability (the carryover of any unused exemption from the first spouse), the exemption can total up to $10,000,000.  What is reasonable to expect after December 31, 2012?  As we have seen recently with the debate over raising the nation’s debt ceiling, as trillion-dollar annual federal budget deficits mount and federal spending continues to grow, lengthy debate over whether or not to extend the current levels of estate tax exemptions is almost a certainty.

President Obama, on the last stop of his recent Midwest bus tour, when asked about the estate tax, responded “…there’s no reason why we have to go all the way back to the 2001 level.  There is a compromise that has been discussed where you’d essentially have a $7,000,000 exemption per family.”  A reduction in the estate tax exemption from $10,000,000 down to $7,000,000 would have significant consequences, given that at the current estate tax rate of 35%, a loss of $3,000,000 of exemption could mean up to $1,050,000 of additional estate tax liability.  While the 2012 election cycle could change the balance of power in Washington across all branches of government, President Obama is clearly indicating that if he is re-elected in 2012, a reduction in the estate tax exemption is likely after December 31, 2012.

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August 17. 2011 | Kip Huffman

Things I've Seen

Before I begin, I would like to list nine fun facts about this blog:  1) These facts are not relevant to my blog, 2) You’re probably wondering what my facts are about, if not the blog, 3) This fact is very important to my blog, 5) This fact is not nearly as important, 6) You didn’t notice that I skipped number four, 8) You’re smiling and thinking “How could I have missed that?”, 9) Did it again, we skipped seven, 10) There are truly only eight facts in my blog, but this is part of my segue.

As many of you may have noticed or, better yet, have been unable to notice because of our lack of presence, I and many of my colleagues have been scattered across the United States working on government contracts.  We have been called the “traveling crew,” the “Accounting Solutions Group (ASG),” and even “those people with that funny room by the front door”; I much prefer “Road Warriors.”  I’m still waiting to see if there is some way we can incorporate that into our group’s Mission Statement.

In my travels I have seen many things:  greyhound dog races in Alabama, the largest crucifix I’ve ever encountered (nearly 7 stories tall) in Illinois, relentless rain in Washington (and, subsequently, the greenest landscape imaginable), a Cirque Du Soleil-style show in Florida (I danced with a team of people on stilts that night), and co-workers line dancing to rap music in Mississippi.  I have spent St. Patrick’s Day in South Carolina, a birthday in California, an anniversary in Kansas, and Easter in California.  But one common theme that prevails no matter where we go is that a good accountant is an invaluable asset (had to tie all this into accounting somehow)!

P.S.  For those of you in Watkins Meegan, please check the ASG portal.  We will be updating it regularly with pictures from our travels.  Who knows – there might be some action photos from the Cirque Du Soleil night!

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August 10. 2011 | Jason Fleetwood

CPA’s and Deadlines: The Art of Chaos

One would think that in a profession built around deadlines, CPA’s would have figured out how to master them.  Every year we know when they are – March 15th, April 15th, June 15th, September 15th, October 15th – and those are just a few of them!!  Yet, somehow, these deadlines always seem to get the better of us.

Some of my colleagues will contend that they get everything done ahead of time and I need to be better organized.  I would argue that they aren’t busy enough and need to get out to meet more new clients.  Still others will insist that I need to do a better job of planning in advance.  My response to that is every time we formulate a plan, something unforeseen comes up the next day and the plan is thrown out the window.  We end up spending more time talking about the work that needs to be done than it actually takes to get the work done.

The truth is, I’m not sure the most organized CPA or the CPA with the best plan is able to meet each deadline without some level of headache or stress.  We tell ourselves this year is going to be different (I’ve been saying it for 13 years now), but it never really does change.  Thus, you have to embrace the chaos.  Know that each big deadline will bring surprises, and work together to get things done.  You have to communicate – with both your clients and your fellow workers.  And you have to perform – don’t let your work product suffer as the deadline draws closer and the pressure mounts.

Until someone comes up with a better solution, I continue to tackle each deadline the best way I know how:  by mastering the art of chaos.  CPA or not, I’m sure everyone battles the same problem – too much to do in too little time!

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August 4. 2011 | David Greaves

Economic Fantasy and Reality Part II

Without further adieu, here is part II of my post.

The recent deal that was struck failed to address many key issues, and leaves the nation open to a default in the future.  Spending cuts were included in the agreement, but many are weighed in the back end, with bigger reductions coming in future years.  Social Security, Medicare, and Medicaid programs are running out of money fast, and big decisions affecting these programs were not made.  International and domestic investors have seen U.S. Treasuries as the definition of risk-free investments.  If risk increases on these investments due to a still-present threat of default on current debts, investors could start looking elsewhere to park their funds.  S&P has even put the nation’s AAA rating on credit watch with negative implications.  U.S. Treasuries are used as collateral for loans in the “repo” market, and are also where many investments of money market funds lie.

The government should pay attention to the deal the NFL owners and players just signed.  Both used inflammatory rhetoric against one another in the seemingly endless process.  Both sides initially dug in their heels, refusing to give in to the other’s demands.  In doing so, millions of fans grew impatient, distrustful, and even resentful of everyone involved.  The same feelings abound throughout the country for the politicians in Washington.  They’ve been brewing for a long time and are becoming crystal clear during the debt debate.  In the end of the NFL dispute, neither side got exactly what it wanted.  Agreements were made, key issues important to both sides were addressed, rhetoric was softened, and, most importantly, I can get back to my draft strategy for my 5 leagues.  Well, maybe I’ll go back to 6.  If I win, I’ll spend the money to contribute to our economic recovery.

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August 3. 2011 | David Greaves

Economic Fantasy and Reality Part I

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July 27. 2011 | Chau Phan

The CPA Exam and Me

In the maddening period of preparing for the CPA Exam, there were many times I went crazy running around the house kicking and screaming or, even worse, dancing and singing, to Spice Girls and Backstreet Boys, of course.  Here are things that I have learned:

1. Taking the CPA Exam in the summer is very challenging.  There is more time for everything BUT studying.  It’s hot; and you find all sorts of excuses for doing other things.
2. Taking the CPA Exam when you are on vacation is actually better.  At home, there are plenty of distractions.  Vacations leave you feeling guilty when you know you should be studying.  So you end up studying wherever you go – on the airplane, in the car, at the hotel, etc.
3. Taking the CPA Exam after a holiday is a great excuse for not attending a crowded family holiday event.
4. Taking the CPA Exam during tax season is okay.  Bosses will be more lenient when you request to take time off in February (but not in April).
5. It is okay to take the CPA Exam while studying for your master’s degree.  If you are lucky, some of the material will be similar; and if not, you’re studying anyway.
6. Having people ignore you is the best tactic for chatterers.  Those feelings of desperation for chitchatting will pass.
7. People who push you to study and take the tests (while you may want to kill them at the time) are incredibly helpful.  In the end, those are the ones I have to thank.  They have made my life miserable, but I wouldn’t have made it without their encouragement.

So for all of you who still need to take the tests and are studying for them now, congratulations for making the effort!  Now go study.

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July 20. 2011 | Drew Dunn

How Social Is Your Brand?

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July 13. 2011 | Mary Lou Gervie

Workers’ Compensation Fraud

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July 1. 2011 | Kristen Soles

Necessary Evils

There are some things in life that are necessary evils.  Some necessary evils, if approached correctly,   can even be beneficial.  Mowing the lawn?  Definitely a necessary evil, along with cleaning the bathroom, sitting in traffic, and watching the Bachelorette (what is with Ashley anyway?).  How about the dentist?  I could argue that if you have a good dentist who fixes a tooth, on which you’ve had cavities filled four different times, with some new age dental material so you can now eat beef jerky in peace, you might have necessary benefits.  (Shout out to Mark Jeffries, D.D.S.!)  Lastly, what about audits?  That’s a tough one.  Many people view audits similarly to dental visits.  However, I’d argue that if they are done right, the results can be extremely beneficial, though perhaps not as tasty as beef jerky.

In this context, I’m specifically referring to the government contracting community.  Most government contractors are required to have an audit by their bank, board of directors, or for RFP purposes.  So begins the necessary evil.  What if you had a CPA firm performing your audit that knows your industry inside and out?  That same CPA firm performs DCAA mock audits, consults on cost and pricing data, rate buildups, etc.  Now you’ve got some necessary benefits built into that audit.  Auditors are required to perform certain procedures during the course of an audit in accordance with Generally Accepted Accounting Principles (GAAP).  Many things in GovCon fall outside of those requirements.  Certainly it would be a “value add” and great for your client/firm relationship if your CPA firm went the extra mile and looked at some of those GovCon compliance issues during the course of the audit.

Those of you who have had audits know about the management letters issued at the conclusion of the process.  Often they contain a laundry list of all the transactions found that a company did incorrectly during the course of the prior year.  They may also call attention to deficiencies in internal control that should be corrected.  At Watkins Meegan, we specialize in government contracting and feel it necessary to both comply with GAAP and look at those GovCon areas of compliance inherent to government contractors.  As a result, some of our management letters this year had the following additional comments.

• The Company is not in compliance with the new FAR lowest cost travel principle; as a result, travel costs could be disallowed by the DCAA.
• The Company did not take into account unreasonable executive compensation and reclassify portions over the threshold to unallowable costs.
• The Company is not allocating service center costs to its final cost objectives in a causal beneficial manner.

We believe our clients are better served if they receive such advice as part of their annual audit rather than hearing it from the DCAA and risk penalties or a cost disallowance.  These are the services that turn the necessary evil of an audit into a necessary benefit to a government contractor.  There’s not a lot you can do about yard work and traffic, but you can minimize the pain and suffering of going to the dentist and facing DCAA with preventative maintenance.  As for the Bachelorette, we can only hope Ashley finds love with someone as crazy as she is to ensure a happy ending.

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June 29. 2011 | Bhavesh Vadhani

Small and mid-size businesses - Are you concerned about keeping your information secured? If yes, what are you doing about it? Just being concerned is not enough.

You may have heard about the various data breaches and cyber attacks that have occurred recently.  A majority of the organizations that were on the front page of the newspapers due to data and security breaches are large corporations, such as SONY, CITI, ADP, Lockheed Martin, and RSA.  But that doesn’t mean small to mid-size businesses are not targeted.  If you are a small to mid-size business owner, have you asked yourself the question “what if my organization is targeted, deliberately or accidentally?”  Are you concerned about data and information security within your firm?  If yes, that’s a good sign and a step in the right direction, and in line with 96 percent of small to mid-size business owners who responded to a recent survey by the security and document destruction company, Shred-it.  But is just being concerned enough or did you take the next step?  The survey results showed:

• Only one-third of the respondents had done a security review,
• Only one-fifth of the respondents had completed a security audit in the last 6 months,
• 25 percent had never done a security review,
• 35 percent have no protocol in place for dealing with secure data, and
• 31 percent have never trained their staff on information security awareness and company policy and procedures regarding information security.

According to Ponemon Institute, a privacy and information management research firm, the average cost related to data breaches was $214 per compromised record, or $7.2 million in 2010.  Admitting this number may be more skewed towards large organizations; even if you take one percent of the average cost ($72,000) that your organization may have to incur for a data breach, are you ready for that?

Information and data security is vital to organizations of any size.  Companies need to safeguard their customers’ and employees’ sensitive information and take the actions necessary to minimize the risk of exposure that could lead to a data or security breach.  Companies need to make sure that they have formal information security policies in place and train their employees to thoroughly know the policies and follow them consistently.  Companies should conduct periodic information security audits and take diligent steps to mitigate the risks associated with the gaps identified as part of the audit.  If need be, hire a third party that is well-informed and keeps you compliant with pertinent legislation, training requirements, etc.  Remember, securing data and information is a cost of doing business today and one data or information security breach could put you out of business.

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June 22. 2011 | Jim Wagenmann

Keogh and Other Owner-Only Plans Need to Be Dealt With

The Internal Revenue Service is looking for such plans that have been in existence for years but have not been contributed to, for whatever reason.  The IRS is looking to disqualify the plan and tax the assets that are in the plan trust account.

Under the law, all plans are to be amended periodically to conform to changes in the law.  There are many such plans that have not been looked at for many years and either continue to file or have stopped filing forms 5500-EZ.   If you have such a plan, it would benefit you to roll over the assets into a new owner-only plan which would be treated as conforming to all of the plan amendments you may have missed.  After doing this, you should then either roll over the assets directly to another qualified plan or an Individual Retirement Account.  Doing so will keep the IRS from being able to disqualify the plan and tax the assets.

If you have any questions or would like to discuss your situation, please let us know.

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June 16. 2011 | Bryan Allen

Flexibility. (Introducing Accounting Solutions.)

Flexibility.  You might first think of athletics when you read that word.  Perhaps you think of the “Sit and Reach Test” from gym class.  I think of Watkins Meegan’s Accounting Solutions Group.

The Accounting Solutions Group provides the flexibility businesses need to meet the constantly changing accounting demands in today’s business environment.  Whether there is a need to outsource the complete accounting function, assist with staff augmentation from CFO to staff level, or provide technical accounting support, the Accounting Solutions Group is uniquely flexible to provide the appropriate experience and know-how to meet your company’s accounting needs.

The Accounting Solutions Group’s bench strength is comprised of experienced professionals assembled to meet the project specific needs of our clients’ accounting goals.  We also draw from Watkins Meegan’s vast pool of experienced professionals across Industry Groups to be the “go to” resource for any accounting challenge.  From large public companies to organizations building their back office infrastructure, we deliver top-notch financial reporting expertise.

As your business environment changes and you discover the need for a flexible partner to meet your company’s specific accounting challenges, think of Watkins Meegan’s Accounting Solutions Group.

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June 13. 2011 | Anne Sesso

Are You Protecting Your Client’s Credit Card Data?

1. Do you accept payment information by fax, email, or traditional mail?
2. Do you store paper records containing credit card data?
3. If you answered yes to question one or two, is the information kept in an unsecured location?
4. Does your computer network have a firewall?
5. Do you run virus scans at least weekly on all of your computers?
6. Is your virus scanning software up-to-date?
7. Do you restrict access to data to a need-to-know basis?
8. Does each person with computer access have a unique ID?
9. Do you maintain a policy that addresses information security?

Taking the time to make sure your business has the proper controls in place can protect your reputation, avoid financial penalties and litigation, and protect your customer’s information.

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June 6. 2011 | Pete Ragone

Seven? Yes – Seven (7)

Time has moved quickly since I joined Watkins Meegan as a senior manager in the Construction Industry Group over four months ago.  When I was first asked to create a Construction Industry Group (CIG) blog, I went through a laundry list of topics I could possibly write about – “Status of IFRS” or “What Convergence Means to You” (I came to my senses), “Summer Tax Planning Dos and Don’ts“ (not really my forte), “Potential Impact of FASB’s Recent Proposal to Overhaul Revenue Recognition for Long-Term Contracts” (not the right forum, but would help you get to sleep at night), or “How to Make the Most of Your CPE Trainings” (again, not the right forum or time).

So now you’re wondering, what’s the title “Seven” all about?  And no, this isn’t a reference to that movie with Brad Pitt and Morgan Freeman (if you haven’t seen it, rent it, but be warned, it is not for the faint of heart or squeamish).

For those of you I have not had the pleasure of meeting, I’m using today’s blog to let you know that I am the father of seven wonderful children (four girls, three boys - ranging in ages from 2 to 18).  As incredulous as it seems, it is possible to have a large family and still work in public accounting.  I decided to list the top 10 questions or comments I hear when a person finds out I have 7 children.

10) “Wow, are they all yours?”  Yes, they are all mine.  Are you looking for some? I’d be happy to lend a few to you.  They make great conversation pieces.

9) “Are you Catholic?” Yes.  I do know plenty of Baptists, Mormons, and other non-Catholic couples with lots of kids, but I guess Catholics get all the press.

8) “How many times have you been married?”  In fact, I’ve only been married once (and still am).  We’re not the Brady Bunch + 1, and there are no multiple births.

7) “How on earth will you pay for college for all of them?” The world needs ditch diggers (I am in the CIG).

6) “How will you pay for all of those weddings?” I’m really hoping at least two will become nuns.  Otherwise, I have no idea.  Maybe a couple will do me a favor and elope.

5) “You do know what causes that, don’t you?” Why, no – please enlighten me.

4) “What do you drive, a bus?” Not quite, but we do have a Ford E250 Econoline 12-passenger Van.  Though it would be pretty cool to have that Partridge Family bus (all of you under 30 – Google it).

3) “You need to get cable, or don’t you have television?”  Why do you think I have so many kids?

2) “Wow – how do you stay sane?”  Whoever said I was sane?

1) “Are you done?”  With the blog – almost; with the children, I’d say yes, but then I’d be tempting the fates.

And for those of you who haven’t done the math yet on the tax impact of having all those children:

• 2010 Personal Exemptions $3,650 x 7 = $25,550.
• 2010 Child Tax Credits $1,000 x 6 = $6,000 (oldest is 18, so not applicable).
• Total Tax Impact - $31,550.

Trust me, that is a drop in the bucket compared to what it takes to feed, house, clothe, educate, raise, and provide recreational activities for seven children in one year.

So now you know the significance of the number 7 (at least as it relates to me).  Have a great summer!

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June 1. 2011 | Andrea Contres

Go Ahead, Play on Your Smartphone

Seeing someone typing away on their Smartphone or hearing somebody’s cell phone ring is annoying and disrespectful in any meeting, especially if you are the person sitting next to that “can’t leave their phone at their desk for 2 minutes” person or if you are the one leading the meeting.  However with Smartphones becoming “smarter,” this may have all changed.

A few months ago I discovered QR (Quick Response) codes, and instantly a wave of “marketer’s” excitement flew through the office!  These Japanese-developed codes look similar to barcodes and scan the same way.  However, they open up a whole new world to anyone with a Smartphone.   QR codes have the ability to link your phone directly to any site on the Internet, any phone number, any image or coupon, text messages, and much more.  After grasping this new marketing technology, I realized the sky was the limit with QR codes.  You could put a code on everything (not that I recommend this), but why not add a code to your business card that links to your online bio or your LinkedIn page?   Moreover,  they could be placed on all marketing materials,  brochures, one-pagers, event postcards, the homepage, and  advertisements. Lastly, the real beauty of the QRs is they are free and easy to create.  QR Codes could revolutionize the way we do business.  Soon we may all be carrying around our Smartphones and speaking in code!

Check out my bio by scanning the above QR code!

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May 26. 2011 | Carla Robinson

Spring Has Sprung!

The warmer weather has finally arrived and that leads many of us to tackle spring cleaning.  Here are a few reminders while you are busy clearing out those garages, attics, and closets.

Don’t forget to ask for and keep your receipts for charitable noncash donations.  Donated items are valued by the taxpayer – not the charitable organization.  If the estimated fair market value of the donated items in total is greater than $250, the taxpayer must have written acknowledgement from the charitable organization.  If the estimated fair market value of all noncash donations exceeds $500, IRS Form 8283 must be completed, which includes the name/address of the charity, fair market value of the items donated, date of donation, date of acquisition, and original cost of the items donated.  In cases where the noncash items total more than $5,000, a qualified appraisal must be obtained.  This includes noncash donations of household items and clothing (both of which must be in good or better condition).  This typically happens during the year of a residential move.  Please note that donations of automobiles have their own special rules for tax deductions.

Clients retain their individual tax returns and backup documentation for many years.  We are often asked how long is long enough.  A general rule to follow is keeping your tax records for at least 3 years.  The IRS can audit a tax return for up to 3 years from the original due date of the return or the filing date of the return, whichever is later.  The record retention rules for states might be considered as well; however, most states follow federal guidelines.  There are some tax records that should be kept for as long as you own an asset.  Settlements sheets, legal ownership documents, and invoices, which can substantiate the cost basis for real estate, investments and other fixed assets, should be retained for use in the year the property is sold.  Finally, there are other records that should be kept permanently.  These include employment records, lease agreements, and insurance policies.  Document disposal is also very important and we recommend shredding.  There are many free community shred days available in the area.

I hope these ideas have given you a little more incentive to dust off some new-found tax savings and not increase your honey-do list too much this spring!

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May 18. 2011 | Corey Reinke

Enterprise Risk Management on a Budget

Decreasing donations and shrinking government grants mean that more and more pressure is being placed on non-profit leaders.  Boards of directors and management must identify and manage risks at an earlier stage, long before they impact the organization’s mission. While some non-profits already have measures in place for risk identification and management, they often fail to identify how potential shortfalls in one operational area may affect other areas as well.

One of the ways an organization can effectively identify and manage risk is by implementing an enterprise risk management (ERM) plan. ERM is a process that helps management ensure their organization’s objectives are being met while risks, both internal and external, are identified and managed. While most boards immediately think of expensive software and consultants, there is actually an easy and inexpensive way to begin the implementation of ERM using a very low-tech approach.

 
Because risks need to be identified and managed across the enterprise, a simple way to begin the implementation of ERM is through a serious and ongoing conversation among board members and management.  Commitment at the top level of the organization is a key success indicator for any ERM program.

This discussion should be focused on the top 10-15 risks likely to threaten the organization’s mission critical objectives. Management can then link each of the related risks to the organization’s key initiatives and consider ways to mitigate impact. While a full-blown ERM plan is more extensive and more time consuming, this simple approach can get an organization started in the right direction. For more ideas on simple approaches to enterprise risk management, contact us at watkinsmeegan@watkinsmeegan.com. Additional  resources can be found at http://www.aicpa.org/ERM.

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May 11. 2011 | Dave Welch

The Fraud Triangle and Your Company

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May 4. 2011 | Rebecca Kehoe

Winners and Losers in the Fiscal Year 2011 Budget Agreement

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April 27. 2011 | Elizabeth Dunseith

The SEC Continues to Respond to Dodd-Frank Act

This past summer, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act which responded to calls for further regulations around the financial sector.  As mentioned in my last post, one of the changes that resulted from the legislation was the permanent exemption of non-accelerated files to be SOX compliant.  In addition, the SEC has released several new proposed guidelines in response to the Act.

One of the proposals relates to incentive based compensation for Officers and other key personnel.  In light of recent scandals, the SEC is calling for stricter regulations and more transparency regarding the compensation plans Officers receive.  Losses incurred by the Company as a result of aggressive risk-taking or inappropriate management may reduce the amount of compensation received by the Officers and other key individuals.

Another proposed rule worth highlighting is the revision to the reliance on credit risk rating.  The over-reliance on credit ratings by financial institutions played an important role in the financial crisis we are experiencing.  Investors began depending on the rating and overlooking other, more telling information about a company's current financial status.  The proposal includes removing all references or requirements to rely on National Recognized Statistical Rating Organization (NRSRO) credit risk ratings and allows the fund's board or its designee to determine the risk based on several subjective factors.  Concerns have been raised that this may lead to additional areas of risk as a result of the subjectivity and lack of defined guidelines.  What are your thoughts?

These are just two of the new proposed rules the SEC has released in recent months.  For more releases, refer to the SEC official website http://www.sec.gov/spotlight/dodd-frank.shtml

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April 13. 2011 | Jason Fleetwood

Ode to the Big Day

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April 6. 2011 | Katie Madden Lee

April 16th - The first day of the rest of your…Year…

Ahhh, April 15th (or April 18th this year, thanks to Emancipation Day falling on April 15, 2011) – these words are music to an accountant’s ears.  For most of us, April is considered the end of “busy season,” and although the rest of the year is certainly challenging for us, these first 3½ months are the extreme.  Busy season technically kicks off in December, with year-end tax planning for all of our clients, both corporate and individual.  Tax planning can be as stressful as tax preparation (some might say more stressful) because there isn’t much room for error.

Enter January, when the temperatures outside are decreasing as the hours in the office begin increasing.  January typically means the start of longer days, dinners in the office, and working on weekends.  With less time to take care of personal tasks, we tend to put certain things off until after the deadline.  On a daily basis in the office, I make a list of work-related items that are required to be finished that day or by the end of the week. I also keep a running checklist of personal items that need to be addressed.  The difference is that I actually accomplish and cross off items on my work-related list, while my personal list just keeps getting longer.

Here are the top ten items on my agenda after 3½ months of procrastinating:

1. File my own tax return (assuming I get the extension filed on time).
2. Introduce myself to the person I keep passing by around the house.  Oh, wait – isn’t he the man I just married in October?
3. Locate and dust off my running shoes.  Time to get back into my fitness routine.
4. Finally watch and mail back the Netflix movie we’ve had in the DVD player since January.
5. Officially book the dream vacation I’ve been envisioning over the last 4 months.
6. Take those golf lessons that were part of my New Year’s resolutions - for 2008!
7. Shred those huge piles that have accumulated on my desk.  Didn’t we go paperless a few years ago?
8. Get an oil change.  If the recommended miles between changes didn’t increase to 10,000, I’m in big trouble.
9. Sleep in on Saturdays and . . . 
10. . . . sleep in on Sundays!

As we wind down this annual ritual, I would like to thank my Watkins Meegan co-workers for their hard work and the extra effort they have put forth to take care of our clients’ needs and to get the job done.  Hang in there; it’s almost over!

April 16th/19th is right around the corner.  What is on your list?

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March 30. 2011 | Andrew Clahane

Google Alerts: A Remedy for TSO (Tax Season Overload)

If you’re an accountant, you understand what I mean by “Tax Season Overload” or “TSO.”  If not, please understand why we accountants seem a little groggy from February through April 15th.

During tax season, the only thing going through most accountants’ minds is “Summary Tax Memos” and “Accrual to Cash Reconciliations.”  So when friends ask, “How are you?” or “What have you been up to?” – it takes us a little time to answer.  Don’t worry, we all know that “tax lingo” is not what our friendly nine-to-five, 40-hours-per-week, well-rested conversation partners want to hear.  Personally, when responding, I quickly ponder something to add that is remotely normal, interesting, and coherent.  What’s happening in the world of sports?  Politics?  My life? – all things I actually used to follow quite closely.  But 9 out of 10 times, I have nothing of interest to contribute.

Needless to say, most accountants feel out of the loop during tax season.  During this time, we tend to fall behind on current events, firm updates, client updates or advances, and, yes, even sleep.  For those who want a quick catch-up on almost any topic, I might have the solution for you!

A co-worker introduced me to a content monitoring service called Google Alerts (http://www.google.com/alerts).  The email alert system, which is powered by Google, allows you to enter any topic(s) of interest and select the frequency and quality of alerts you would like to receive via email on the topic(s) entered.

At first I was not overly excited by the idea of having my inbox swamped with tons of notices from all over the web. However, after trying it out, I found that these alerts can be used as a powerful business tool.  For example, I entered “Watkins Meegan” as a relevant alert topic and selected my preferred criteria.  Within several hours, I received a Watkins Meegan alert.  Not only can this service be used to keep you up-to-date with your own employer, but also informed about your clients and what is going on outside of your cubicle.  I also suggest setting a Google Alert for yourself.  You should always know what is being said about you on the Internet – good or bad.  Good luck to all accountants and friends of accountants; only 20 or so more days to go!

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March 23. 2011 | Daniel O'Shea

Unlimited FDIC Coverage Now Available

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March 16. 2011 | Mary Lou Gervie

Check Tampering Schemes

Dishonest employees often obtain checks, place false information on them, and divert them for personal gain.  This can be done through forgery by signing the check on the face or forging an endorsement on the back of the check.  A paycheck or a business check can be altered for a different amount or payee.  There are concealed check schemes where the fraudster prepares the check and includes it in a stack of checks to be signed, typically during a very busy part of the day, and the signer fails to recognize the false check.

However, another scheme, prevalent in the Washington, DC, area and perpetrated by an organized ring of criminals, is where a signed check which has not cleared the bank is stolen by a bank or vendor employee.  The check is taken to a copy machine business where it is duplicated, redacted for payee, check number and amount, and then reissued to a “mule” who cashes the check for a small fee.  The primary target has been mid-to-large size construction companies, but it can happen to anyone.

Effective internal controls help catch these check tampering schemes early.  Daily monitoring of cleared checks or using a “positive pay” service provided by your bank are two recommendations.  Clearly, timely bank reconciliations are a must.

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March 9. 2011 | Rebecca Kehoe

Federal Corporate Compliance Monitors

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March 7. 2011 | Andrea Contres

Supporting the GWSCPA and Mobility in DC

As the Marketing Communications Manager of Watkins Meegan, I do not always understand every “accounting term” I hear.  Over the last 10 months, I have, however, learned a few, one of which is “accounting mobility”.  After getting involved with the Greater Washington Society of Certified Public Accountants (GWSCPA) and its Young Emerging Accountants (YEA), I became interested in the association’s big push for 2011, “Introducing the Mobility Bill to DC.”  What really piqued my interest was how much power and passion the group had and how much the organization cared about the well-being of its members.  I am assuming that because you are reading an accounting firm’s blog, you know what mobility means to an accountant, but I will explain just in case.  Accounting Mobility is the ability of an accountant to receive practicing rights outside of their home jurisdiction, where they have met the requirements to become a CPA and have passed the exam.  Being that the DC Metro Area is comprised of three jurisdictions, the District of Columbia, Virginia, and Maryland, I imagine mobility would be a quite a value add to a one jurisdiction CPA who is practicing in all three jurisdictions.

As of right now there are only three states, DC, NY, and HI, that do not have accounting mobility, all of which have legislation in progress.  PA, GA, and MA have mobility, but it is only enacted with other states that have mobility.  This could present a great competitive disadvantage to DC if other states follow in these reciprocal relationships.  (See the map for 2011 mobility coverage for more information.)  The GWSCPA has been working with Capitol Hill and DC Council Members Yvette Alexander and Mary Cheh to pass mobility in DC for the last two years.  On February 1st, the Council Members introduced the Accounting Mobility Act of 2011 (B1900080).  This is the first step, and the GWSCPA hopes legislation victories will follow.  If you are interested in learning more about what you can do to assist in gaining mobility in DC, visit the GWSCPA website.  To learn more about why mobility is good for DC, click here.

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March 2. 2011 | Kristin Drozdowski

Is Your Board Asking About Risk Management?

If not, they should be.  Over the last two months, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released two thought papers on the topic of Enterprise Risk Management (ERM) in the wake of two surveys performed on the current state of enterprise risk oversight.  One of the key findings of the surveys concluded: “There appears to be a notable level of dissatisfaction with how organizations are currently overseeing enterprise-wide risks.  Almost half (42.4 percent) described their organization’s level of functioning ERM processes as ‘very immature’ or ’somewhat mature.’  About a third (35 percent) admit that they are ‘Not at All Satisfied’ or are ‘Minimally’ satisfied with the nature and extent of reporting to senior executives of key risk indicators.”

Implementing and sustaining a successful ERM program is not an easy task. It takes time and dedication, which we all know translates into dollars.  Not only can ERM be time consuming to implement, but the level of monitoring and updating required to create a sustainable program can feel overwhelming.

Reading the COSO thought papers, combined with experience performing financial statement risk assessments and assisting in ERM development, made me think of what companies should pay particular attention to while implementing and improving upon an ERM program:

1. Obtain Support from Senior Management.  If management doesn’t treat ERM as important, neither will employees.
2. Break Down the Process into Smaller Steps.  Determine how to break down the organization into manageable areas and then focus on one area at a time.
3. Incorporate throughout the Entire Organization.  While support from senior leadership is key, it is also important to involve employees across all levels of the organization.  This will only strengthen the process by empowering employees to focus on the more important issues facing the organization.

The two risk oversight surveys and both COSO ERM thought papers can be found at www.coso.org.

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February 16. 2011 | Jason Fleetwood

Busy Season – From A to Z

Contributions from Joe Post, CPA

For certified public accountants, it is that time of year again.  Time to saddle up and earn your paycheck, put your family and friends on hold as you do what it takes to get the job done, including late night number crunching, last-minute extensions, and the following items that figure to highlight my (and maybe your) 2011 busy season.

A – April 15th . . . no need to elaborate.
B – BTL . . . bagels, team meeting, lunch.  It is quite the protocol for Saturdays during busy season.
C – Charitable Contributions . . . hang onto those donation receipts!
D – Depreciation . . . once again the rules have changed.  Take 100 percent bonus depreciation for certain capital investments placed in service after September 8, 2010 and through December 31, 2011.
E – E-file . . . save some trees and file your return electronically.
F – Forms . . . there are far too many to count.  1040, 990, 1120, 4562, 5500, 7004 - just to name a few.
G – GTL . . . gym, tan, laundry.  Is there anyone else out there who can’t miss an episode of Jersey Shore?
H – Hoyas . . . it’s all about the Big East this year.  One of the nation’s toughest schedules should have Georgetown ready for the big dance.
I – IRS Hotline . . . good luck trying to reach someone.
J – Jason and Joe . . . enough said.
K – Katy Perry . . . not sure what she has to do with busy season, but talk about “Firework”s!
L – Lease Accounting . . . quite the stir FASB is causing.  Call Rob Wilkins at 301-664-6887 and he’ll fill you in.
M – March Madness . . . it allows us to take a break from the daily grind as we follow our favorite college basketball team (and try and win the office pool)!
N – NOL . . . carry forward or carry back?
O – October 15th . . . if you can’t get it filed by April, it’s time to extend.
P – Plug-in Electric Vehicle Credit . . . I wonder how many taxpayers actually own a plug-in electric vehicle.  All of the luxury SUV’s I see on the road definitely require gasoline.
Q – Qualified Revocable Trust . . . wondering what this is?  Don’t ask me.  Call Jim Wagenmann at 301-664-8203.
R – Refund . . . if you come up with something other than this, your client will surely let you know how they feel.
S – Super Bowl . . . Congratulations to all the Packers fans.  Will I ever be able to congratulate all of us Redskins fans?
T – Taxes . . . it’s all about reducing your taxes.
U – Underpayment Penalties . . . don’t let this happen to you.
V – Valentine’s Day . . . this is a reminder for all of the guys.  Hopefully this will get posted before the big day!
W – Watkins Meegan LLC . . . if you need a reputable accounting firm, then call us (and ask for me – maybe I can prove that writing a blog is effective at bringing in business).
X – Xbox . . . it helps provide a much needed break from reading state filing instructions.
Y – Yemen . . . don’t forget about the foreign tax credit.
Z – Zzzzzzzzz’s . . . commonly referred to as sleep.  Unfortunately, it becomes scarce as the April deadline approaches.

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February 9. 2011 | Beth Dodson

February is Here!

1. Prepare a budget:  Track what you bring in and what you spend for a month, including those trips to Starbucks.  Really look at your expenses.  Those lattes add up!
2. Commit to cutting back:  Use the budget you prepared as a tool to identify opportunities to save.  If you go out to lunch three times a week, scale it back to twice (this may serve dual benefits).  Set up an automatic bank transfer to move saved money from your checking to your savings each month and stick with it.
3. Be less generous:  While we love to treat our friends, this can be a costly habit.  Stop picking up the dinner checks and especially the bar tabs.  If you struggle with this one, prepare before you go out; take cash and leave the plastic at home. 
4. Cash is king:  Cut back on your credit card spending and pay down your balances. If you’re an impulsive buyer, leave your cards at home.  Carrying a balance?  Pay the cards with the highest rates first.  Consider transferring your balances to an interest free card (but pay attention to the fees and to how long you have to repay the balance before interest kicks in).
5. Pay your taxes:  Yes, but don’t float the government a loan!  The IRS says that the average income tax refund is $3,000; that’s $3,000 you could have used to pay down debt or to increase your retirement savings.  If your refund is too large, adjust your withholdings so you can get more of your money in each paycheck.  No idea what your tax liability will be in 2011?  Talk to a tax advisor about doing tax planning for the year and find out.  Don’t have a tax advisor??  Funny – as it turns out, I have the answer for that problem too.
   

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February 2. 2011 | Yocheved Baumer

A Great Website to Add to Your Favorites

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January 27. 2011 | Eric Pearson

The Stereotypical Accountant

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January 24. 2011 | Lindsay Dattilio

Benefits to Rule 26 Amendments

As previously discussed, Rule 26 of the Federal Rules of Civil Procedures was amended December 1, 2010. Under Rule 26, attorney work product and communications between attorney and expert witnesses were discoverable to other parties. The amendment restricts, and nearly eliminates, discoverability of all work papers and communications.

Attorneys would go to great lengths to protect their draft reports and would attempt to only communicate verbally to avoid creating any drafts. Law firms over the years have become more creative in their ways to get around this rule. It was even common to hire two experts – one to prepare the work and develop opinions and another to give the actual testimony. They would conduct their practices in a manner that would avoid creating any types of draft reports, which would be susceptible for viewing the other party. Law firms are seeing this change as an excellent way to cut costs, as they can eliminate these wasteful and burdensome practices. Rule 26 now protects these reports and communications from discoverability. Fortunately, Rule 26 has been extended to not only the expert themselves, but any employees or assistants involved with the case.

Of course, it is recommended that attorneys and experts still use good judgment when using communications, and to remember that Rule 26 does not afford one hundred percent confidentiality with respect to work product. Also, exactly which engagements the new rule will apply to is still up in the air. It has yet to be decided if discoverability of all communications and drafts are protected as of December 1 or for specific engagements beginning on that date, or if it only applies to charges filed after that date. We only know for certain the amendments are not applied retroactively.

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January 19. 2011 | Lindsay Dattilio

Changes to Rule 26

CPAs and other industry professionals who perform duties as expert witnesses are subject to Rule 26 of the Federal Rules of Civil Procedures, and as of December 1, 2010, major revisions to the rule have taken place. Rule 26, established in 1993, dictates the discoverability of attorney work product and communications between experts and attorneys. Supported by the American Bar Association and the U.S. Department of Justice, changes to Rule 26 aim to encourage better communication between attorneys and their experts by prohibiting the discoverability of draft expert testimony, with a few exceptions of course.

Prior to the amendments to Rule 26, nearly all draft expert reports and work papers were discoverable to other parties, regardless of form. Attorneys would spend just as much time seeking to discover the other party’s work product as they would spend on their own depositions and testimony. All drafts shared with counsel as well as any written communication, including e-mails, meeting notes, and discussions, were subject to discoverability under Rule 26.

However, experts will still be required to disclose information pertaining to their compensation, and facts or data used to support their issued opinion. It is important to note that this rule only extends to expert witnesses engaged to perform expert testimony and who submit a written report. Rule 26 does not apply to experts such as treating physicians and government accident investigators. Overall, lawyers and experts across the board are in favor of the provisions and agree that they are long overdue.

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January 12. 2011 | Kristen Soles

What motivates you at work?

Probably a lot of different things.  But often there is that one thing that motivates you from your core - that keeps you moving forward when life gets a little crazy. 

What motivates me stems from my childhood.  I grew up in a military family and was your typical “Air Force brat.”  When I was learning to drive, my father left for a year to serve in Desert Storm.  (In retrospect, I wonder which one of my parents truly deserved the hazard pay for the deployment.)  In addition to my father, both grandfathers and a cousin were in the armed forces.  Sadly, my cousin recently lost his life fighting in our current war. 

I myself am a CPA in our firm’s government contracting group.  I like to think my latent motives for working with the Federal Government are due to growing up the way I did.  In my profession, I am frequently called upon by my government contractors for advice on matters essential to doing business with the Federal Government.  In and around the offices in which I do business, I am consistently reminded of the pride we have for those who served by the sheer number of American flags displayed. I also often see crests from various armed forces branches, pictures of the Pentagon, Navy ships, planes, or other contraptions that my clients have helped build or improve (many of which I’ll admit I don’t fully understand).  Some of the owners of the companies I service are actually former military themselves.  It is a fortunate thing I grew up knowing military personnel time (subtract 12 and you’re golden); if not, I’d be late for quite a few meetings.  I also frequent government contracting events and award ceremonies, all of which begin with the national anthem and the presentation of colors.  (Nine hundred people in a room and you can hear a pin drop between the cadences being called.)

 I tend to miss these sorts of touches in civilian life and am grateful that I have clients who bring that feeling back; they remind me of where I came from.  It’s comforting to have a continual reminder of what we stand for and how hard we’ve fought to get here.  Those are the times when I am most aware of my strongest motivation.  My clients are patriots, many of them continuing to serve our country in a contracting capacity.  So pride is my motivator - not only the pride I feel for the work that my clients do and have done to keep my family safe, but also the pride in the quality of work and service our firm provides in support of their efforts.  It’s worthwhile to reflect on your motivators.  Doing so keeps you focused, and giving it a name makes it easier to pull out when you need it. What motivates you at work?

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January 10. 2011 | Bhavesh Vadhani

Is Your Data Secure on Your Organization’s Digital Photocopiers?

I have always been a strong proponent of ensuring that data on digital photocopiers, scanners, and fax machines be given the same amount of attention, if not more, than data on any other critical system or resource of an organization.  Seldom does a firm consider the risks associated with data being on copiers, faxes, and printers.  They think that because these resources are on their premises and they have physical access controls in place for the premises nothing else needs to be done.  There are plenty of incidents that suggest otherwise and lately, following a push from the U.S. Congress, The Federal Trade Commission (FTC) agreed and released guidance with advice on how to secure data on copiers.

“Make sure your information security plan covers the digital copiers your company uses” states the FTC. The agency released, “Copier Data Security:  A Guide for Businesses.”  Included are tips for safeguarding sensitive data such as personally identifiable information, medical records, social security numbers, account numbers, etc. that may be stored on the hard drives of digital copiers in order to prevent the risk of fraud and identity theft.  The guidance comes on the heels of a congressional inquiry following an incident in 2010 that resulted in a health plan provider notifying more than 400,000 people that their personal or medical data may have been compromised.  The FTC recommends that organizations evaluate options for securing the data on the copier’s hard drive including any encryption or overwriting features, and should consider how data that accumulates on the copier over time will be destroyed, degaussed, or disposed.  The entire guidance can be found at the FTC website or at the following link.

http://business.ftc.gov/documents/bus43-copier-data-security

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January 5. 2011 | Robert Payne

Risk Management in 2010

When I started my career in information security in the financial services industry over 30 years ago, risk assessments were performed but we didn’t realize we were performing risk management functions. The risk assessments were conducted solely for our own internal departmental use. Other areas of the business were unaware of any risk activities and had no input in the process. Fast forward 20 years to 2000, when I started in internal audit. Risk management was no longer an isolated function. Every division of the business had a team of risk managers, and the business had a corporate risk management function to coordinate the decentralized risk management functions. Come 2010 the risk management function had been decimated. Management had decided that risk management was a costly overhead in a struggling market. The number of risk managers was reduced significantly and the function centralized. Risk management, at least operational risk management, was taking a back seat in a depressed market.

Today ‘Risk Management’ seems to be a common theme within many professional organizations (e.g.., IIA, ACFE, and ISACA) , as well as the topic of many articles posted on various websites.   At meetings, individual risk managers disclose many of the lessons they’ve learned during their time implementing and operating risk management frameworks. For example, it is important not to look at risks in isolation but to understand how risks interact with each other. In addition, a change to the business strategy will almost certainly impact existing risks (i.e. remove a risk, reduce a risk, or increase a risk), or introduce a new risk. The failure to review risks on a regular basis may cause them to become outdated and irrelevant.

Risk management, as with all business processes, has its challenges. It can be complex and costly to implement and maintain no matter the size of the business. It is evident there are many ways to implement and operate a risk management function, but a business should remember that risk management is simply another business process. It is important to ensure that any risk management process that is implemented meets business requirements, is integrated within the business, complements existing processes, and is appropriate for any regulatory environment in which the business operates.  In conclusion, Risk Management is an overhead and does not add to the top-line of a company’s balance sheet and financial statement, if done consistently and correctly it can sure improve the bottom-line.

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December 30. 2010 | Jim Wagenmann

Family Wealth Planning Provisions of the 2010 Tax Act

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December 22. 2010 | Jason Fleetwood

Two simple yet often overlooked words

As I was out Christmas shopping this past weekend (with by the looks of it, everyone else in the DC metropolitan area), I couldn’t help but notice how hurried people were to get from one place to the next.  Whether it was impatient drivers honking their horns, the overblown sighs and disgusted looks from shoppers in long check-out lines, or folks moving a mile a minute through the mall running over anyone in their path, I wondered to myself, “Where is the holiday spirit?”  Are we too busy to hold the door open for someone?  Too rushed to wait patiently for a parking spot?  Are we all so focused on our own agenda that we can’t stop and be thankful for living in this great country of ours?
 

With the New Year rapidly approaching, I have a lot in which I am thankful (and I am hoping that everyone who reads this does as well).  In the spirit of the holidays, I want to say “thank you” (two simple words that we often overlook) to the following:

Thank you-
To everyone at Watkins Meegan for making our Firm such a great place to be employed.
To all of the clients I work with for their continued support of the services our Firm provides.
To all of my business associates and contacts for the relationships that we have developed.
To our armed forces for protecting our country and fighting for freedom throughout the world
To London Fletcher, LaRon Landry, Brandon Banks, and Ryan Torain for giving all of us diehard Redskins fanatics something to cheer for.
For the miracle of modern medicine for helping those with cancer and other illnesses live longer and providing hope in finding cures.
To my family and friends for providing memories that will last a lifetime.
And to my loving wife and two adorable daughters who give me the best reason of all to get out of bed each day.

Merry Christmas have a happy and healthy 2011!!!
 

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December 15. 2010 | Michelle Godwin

Kids These Days...

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December 9. 2010 | Daniel O'Shea

The Wayback Machine

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December 1. 2010 | Rick Westerman

COSO Modernization: Improving the Wheel or Adding Different Treads?

On November 18, 2010, COSO announced a project to update the Committee of Sponsoring Organizations (COSO) “Internal Controls - Integrated Framework” (the COSO Report).  As some readers may recall, the COSO Report, released in 1992, included an Executive Summary, Framework, Reporting to External Parties, and Evaluation Tools.  Now eighteen years old, the original COSO Report’s reference tools are thought to be outdated.  Updates will not change basic principles, but will provide “comprehensive and relevant conceptual guidance and practical examples.”

With respect to financial reporting, the COSO Report has been a foundation of compliance with the Sarbanes-Oxley Act.  However, many critical controls related to current financial reporting challenges are not illustrated in the Report’s Evaluation Tools.  For example, a quick word search of the text finds no mention of derivatives, stock options, or fair value.  COSO’s news release indicates that enhancements will concentrate on operating and regulatory compliance environments.  It’s likely the operating environment may be more focused on service oriented businesses, while compliance enhancements could address stepped up enforcement in regulatory areas, such as Foreign Corrupt Practices, Federal Income Tax, and False Claims.

It will be interesting to see if the COSO Report is affected by convergence between GAAP and IFRS or new SEC rules related to board of directors’ governance, including voting, compensation, and risk management.

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November 24. 2010 | Rebecca Kehoe

“Qui Tam” Lawsuits Must Exactly Follow the Rules Set Forth in the False Claims Act

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November 17. 2010 | Louise Peabody

Unintended Consequences – SEC Proposal to Establish Whistleblower Program

On November 3, 2010, the SEC voted unanimously to establish a whistleblower program that requires the Commission to pay a reward to eligible whistleblowers. The whistleblower must provide original information on securities violations that leads to successful enforcement actions where the SEC obtains monetary sanctions in excess of $1 million.  The proposed rule is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted on July 21, 2010 (“Dodd-Frank”).  In her announcement, SEC Chairperson Mary Shapiro said “the proposal maps out a simple, straightforward procedure for would-be whistleblowers to provide (the agency) critical information.”

The announcement was anticipated by the business community. The issue has raised serious concerns that employees tempted by the reward will bypass internal lines of communications and company hot lines and go straight to government reporting mechanisms. Others have predicted a jump in reporting Foreign Corrupt Practices Act violations where recent fines and penalties have reached hundreds of millions of dollars.  Company executives also worry they will be forced to spend money defending false or misleading claims.

There is obvious tension between wanting to catch the “bad guys” and creating a “bounty hunting” environment resulting in increased litigation and expense. In its announcement, the SEC recognized the possibility of unintended consequences.  Comments on the proposed regulation must be submitted by December 17, 2010 (email: rule-comments@sec.gov).  Final rules must be issued by April 17, 2011.

Additional information:

http://www.sec.gov/index.htm
http://www.sec.gov/rules/proposed/2010/34-63237.pdf

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November 11. 2010 | Andrea Contres

Customer Relationship Management, Better Known as CRM

Customer Relationship Management (CRM) are words you probably hear often, if not every day, in your profession.  CRM's have become a valuable resource to most professionals.  Whether you're in sales, law, accounting, merchandising, marketing or retail, a CRM system is very important to your business and your potential future business.

CRM systems can be implemented for many different purposes.  Some are employed like Outlook or that rolodex, which sat on your father’s desk (the least efficient way to use your CRM) and others are applied to track leads from first meeting until sale, otherwise known as the entire pipeline.  The latter is the best way to utilize a CRM and takes full advantage of everything your CRM has to offer.  If your only purpose for a CRM system is organizing your address book, you might as well purchase the much cheaper version, Outlook, instead.

You have probably heard of the 80/20 rule, often expressed in sales or professional services.  (Interpretation:  80% of your business comes from current/existing clients.)  CRM systems are designed to help you maintain the relationships you have with these clients.  It organizes and keeps track of all of the information you could possibly want.  It also records meetings, sets alerts, keeps note of referrals and cross-selling opportunities, in addition to tracking all contact information, birthdays, children's names, anniversary dates, and more.  If you are naturally this organized you might not need a CRM, however most people do not fall into that category.   And a good CRM will foster communication, track information, and provide reporting, so as to make everyone more effective and efficient. 

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October 20. 2010 | Justin Reid

Do You Understand All of the Acronyms in the Government Contracting Industry?

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October 13. 2010 | Vanessa Teitelbaum

It’s Time to Prepare for the 2010 Audit

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October 6. 2010 | Bob Hambrecht

1099’s and more 1099’s…

If accountants weren’t already busy enough in the first quarter of each calendar year, they will soon have even more paper to push. In an effort to make up for lost revenue and help fund recent health care changes under the Patient Protection and Affordable Care Act, small businesses, including non-profits, may have to file even more Form 1099 information reports with the Internal Revenue Service (IRS) beginning in 2012.  Whenever a firm buys more than $600 a year in goods or services from a vendor, either an individual or a corporation, a Form 1099 will be required. Currently, a Form 1099 is only needed for every contractor paid at least $600 for services during a calendar year.

Small businesses will now have to begin tracking how much in goods and services were purchased from all its vendors. This will not be an issue for large purchases, but rather for smaller ones. For example, if you were to buy on average $50 a month from an office supply vendor, you will now need to monitor those small purchases to determine if the aggregate meets the $600 reporting threshold at year-end. The result will be more time spent tracking these payments. Additionally, if a vendor does not supply you with a tax ID number, you will be responsible for withholding 28% of the payment and sending it directly to the IRS.

Both Congress and the IRS see this as a way to help make up for the billions in taxes evaded each year. They understand this might be a cumbersome task for many. One loophole noted so far is that under the proposed regulation, “business purchases made with debit or credit cards would be exempt from the new reporting requirement because they are already reported by banks and other payment processors.” On September 14, 2010, the U.S. Senate rejected two proposals that would have repealed or modified the reporting requirements. Stay tuned to WatkinsWire for more developments.

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September 30. 2010 | Andrea Contres

Networking: Is it Really Beneficial?

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September 22. 2010 | Rebecca Kehoe

DoD Contractor Business System Reviews vs. DCAA Audits

The US Senate Armed Services Committee’s version of the Defense Authorization Act for Fiscal Year 2011 requires under Section 841 for the Secretary of Defense to develop a program (within 180 days after enactment) to review contractor business systems to ensure that such systems provide timely, reliable information for the management of DoD programs by the contractor and by the DoD.  The term “contractor business systems” is defined as accounting systems, estimating systems, purchasing systems, earned value management systems, material management and accounting systems, and property management systems.

The DoD is also to provide guidance and training to appropriate government officials (not yet named) on the data that is produced by contractor business systems and the manner in which such data should be used to effectively manage DoD programs.

Perhaps they should consult the DCAA.  Listed directly on the DCAA website (http://www.dcaa.mil ) under “DCAA Products and Services,” the DCAA provides “Contractor Internal Control System Audits” for the following systems; accounting, estimating, EDP (Electronic Data Processing), compensation, billing, material management, labor, purchasing, and indirect and other direct cost.

For Earned Value Management Systems, they can consult the DCMA which is currently responsible for setting the standards and surveillance for such systems.  http://www.acq.osd.mil/pm/ 

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September 9. 2010 | Kevin Jones

Year-End Tax Planning Even More Important in 2010

Every year about this time, we start to sound the horn for year-end tax planning.  Although many of you still have not filed your 2009 tax returns (business returns are due on September 15th, individual returns are due on October 15th) the end of the 2009 filing season is rapidly approaching, and it is time to start thinking about minimizing your taxes for 2010 and beyond.  This year, more than others, the “and beyond” part is particularly important.  As a result of the recently enacted Health Care legislation, as well as the scheduled end of the Bush tax cuts, actions taken now can significantly impact your tax bill not only in 2010, but for years to come.  Because of these changes, not only is tax planning more important than in the past, it is also more complex than ever before.

In the past, with relatively constant tax rules and rates from one year to the next, the general strategy each year (of course, depending on individual circumstances) was to defer income and accelerate expenses.  Now, with both ordinary income rates and capital gain rates expected to increase as soon as 2011, and with the additional .9-percent Medicare tax on wages and the 3.8-percent Medicare tax on investment income set to begin in 2013, strategies may be reversed in many situations.  It may not only be desirable to accelerate income or defer deductions, but it also may be prudent to review your investment portfolio and pension strategies in an effort to reduce income that will be subject to these additional taxes.  Other moving parts in the planning process include such factors as whether you are nearing retirement or plan to work for many more years, whether or not you are, or will be, subject to the alternative minimum tax, and other considerations.  As a result, it is important to consult with your tax advisor, investment advisor and estate planning advisor to be sure you are making the most of the opportunities available.

A television commercial once said: “you can pay me now or you can pay me later.”  In terms of taxes, that is frequently the issue.  Sometimes you can avoid tax altogether, but more often than not, it is merely a question of when.  Now, it is not only a question of when, but the “when” can also determine how much.  Be sure you make the most of these next few months.       

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September 2. 2010 | Katie Madden

Back to School Already? Top 10 Reasons to Major in Accounting…

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August 31. 2010 | Jim Wagenmann

Correcting Plan Failures Using Forfeitures

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August 26. 2010 | Sean Roddy

Paying for Free Speech

Over the past twelve months, I have written many blogs regarding the use of Social Media and the benefits that can be derived from it. I have written for Watkins Wire and the Financial Minute on the power of this new technology.  Chris Hughes, co-founder of Facebook, summed it best when I met him last year. He said the printing press, radio and television were major leaps forward in communication, but they all had severe limitations based on the fact that relatively few people controlled or generated what was communicated.

Everyone with access to the Internet can now be a generator and user of information, and because it is free the potential is limited only by our needs.  Watkins Meegan adopted these technologies almost one year ago and has been employing them very successfully ever since. Our blog, Watkins Wire, has been published at least once per week for nearly a year. We send out 6,000 electronic newsletters every two weeks and we post multiple micro-blogs each week on Facebook, LinkedIn and Twitter from our various offices.  We believe we have a duty to educate ourselves, our clients and our prospects in the most efficient and effective manner possible and this technology is one more arrow in our quiver enabling us to hit our target.

These are tough economic times and governments are looking for new ways to raise revenues. So I shouldn’t have been surprised when I read in Web CPA about the “blog tax”.  Philadelphia, the City of Brotherly Love, has instituted this concept.  Local bloggers in and outside of the city that transact business within the city need to get a $300 “business privilege license”, pay wage tax, and net profits tax for the privilege of blogging.  The Philadelphia Department of Revenue insists the city is entitled to these fees.  It would appear that paying for free speech has already begun.

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August 19. 2010 | Andrea Contres

Is Addressing Someone by Their First Name "ok" in Today's Society?

Generation X & the Millennials, also known as generation Y, have become accustomed to addressing everyone by their first names, but is this proper?  Both the baby boomer and mature generations would never address someone they do not know, especially a superior on a personal level.  They would always start off as Mr. or Ms. (perhaps the "matures" would use Mrs.). Are we witnessing a shift towards the familiar? What is appropriate professional language? 

Approximately, 80% of all firms use Mr. or Ms. when addressing themselves in their bios, especially accounting & law firms.  However you will find firms using first names on their websites.  One might think in today’s society and our new age technology, first names would be acceptable.  I ask, are there rules or is it strictly based on your personality?  If there are rules, should this be something discussed during your orientation to the firm?

After searching the internet, I found that you can use the first name only in informal and friendly situations with your friends, co-workers, acquaintances, or fellow students.  You should use the title and last name in formal situations such as meetings, public speaking, or when speaking to superiors at work or school.  If you are not sure whether your work place is formal or informal then you should use the title and or the last name of the person you’re speaking to, just to be safe.
 

After reading a brief article in the New York Times, I will think twice about addressing someone using their first name. One man is quoted by saying, “As a businessman, I resist people I don't know (and on the phone have never met) who address me by my given name. It makes me uncomfortable and robs me of the right of choosing to call someone a valued friend”.  As a professional we are all trying to create a great first impression and possibly a sale or contract.  If something as simple as how we address someone can alter that chance I would think twice before opening my mouth.
 

So, is one better than the other?  I am not sure, but I would recommend that when working with the baby boomer and mature generations  that you play it safe and use the title. 

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August 12. 2010 | Bob Hersh

IRS, Audits & Detecting Unreported Income

It’s good news when a lottery operator increases our odds for a winning ticket.  But not when it is ran by the IRS and its game is the “Audit Drawing.”  That’s a lottery which is painful to win.

Last year, 1.4 million individual income tax returns were audited.  The most in the past decade.  The IRS is spending part of its $12.2 billion budget in 2010 to hire 4,500 new agents and auditors, which is a recipe for even more audits this year.

The IRS loves to detect unreported income.  It gains not only additional tax revenue, but also a “PR-splash” with a criminal prosecution.  The IRS detects unreported income using both “direct” and “indirect” methods.

Adding up all the Forms 1099 from payers and comparing it to the amounts reported on a taxpayer’s individual return is a direct method.  When I worked for the IRS, we detected a fencing operation’s unreported income by contacting gold and precious metals dealers who gave us the amounts they paid the fence for his jewelry and other valuables – another direct method.

Bank deposits analysis is one of the most popular indirect methods of detecting unreported income.  The IRS adds up the deposits that you make to your bank accounts and compares the total to the income reported on your tax return.  By “bank accounts,” I mean all of your business and personal checking accounts, money market accounts, savings accounts, brokerage accounts, CD’s, retirement accounts, and any other accounts where you have money.  They will subtract nontaxable sources such as transfers, loans, gifts, and inheritances from the deposit total. Cash expenditures are also considered and added, when they come from sources other than the bank accounts. If the amount of taxable bank deposits and cash expenditures exceeds the income reported on the tax return, the result will be additional tax liability (plus penalties and interest) and possibly criminal prosecution.  That’s an “Audit Lottery” that nobody wants to hold.

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August 10. 2010 | Phil Aldridge

Part II: A Lack of Effective Internal Controls Over Grant Funds Can be Costly

Non-profit organizations that expend more than $500,000 in federal funds are required to have an audit performed in accordance with OMB Circular A-133, and are required to report any internal control or compliance deficiencies indentified during the audit, including questioned costs.  In addition, the organization may be subject to additional monitoring activities by the awarding agency in the form of site visits or grant-specific audits.  Grant recipients are required to prepare a Corrective Action Plan to address any findings or questioned costs identified.  Organizations that fail to address these findings on a timely basis or have a significant amount of questioned costs run the risk of being designated as high-risk and may be subject to additional administrative actions by the granting agency, including: increased grant monitoring and reporting; additional special conditions; withholding of federal grant funds; non-certification of future grant applications; collection of questioned costs through the U.S. Department of Treasury, Treasury Offset Program; or referral to the U.S. Government-Wide Suspension and Debarment List.

With the current state of our economy and the passage of the American Recovery and Reinvestment Act, federal agencies are now required to provide increased oversight over their grants, and the effort needed to address any issues that may be identified can be very costly.  With this in mind, if you currently have federal or state funding, it is essential that you evaluate your organization’s current control environment, and develop and implement policies and procedures to ensure that these funds are adequately accounted for and controlled.

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August 4. 2010 | Phil Aldridge

A Lack of Effective Internal Controls Over Grant Funds Can be Costly

You’ve spent a great deal of time, effort, and money to prepare and submit that grant application, and your hard work has paid off.  You’ve won the federal award.  But your work has actually just begun.  Now it’s time to ensure that the project is completed on time and within budget, and report the results to the awarding agency.  However, there is more to it than that.  It is essential to have effective internal control procedures in place, as well as staff members who have a thorough understanding of the rules and regulations overseeing the use of government grant funds.  A control deficiency regarding the accounting and reporting of grant expenditures has the potential to cost your organization even more time and money.

Federal and state governments have a long list of rules and regulations that must be adhered to when receiving grant funds.  Under OMB Circular A-122, the Federal Government has established specific cost principles to be used in determining the cost of grants, contracts, and other agreements.  In addition, OMB Circular A-110 defines the Uniform Administrative Requirements in which non-profit organizations must adhere.  A continuation from this post on non-profit organizations will follow.

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July 29. 2010 | Rebecca Kehoe

Government Contractors, Do You Want to Continue to Be Paid on Your Federal Contract?

As of June 18, 2010, President Obama issued a Presidential Memorandum to the heads of executive departments and agencies directing them to review current pre-payment and pre-award procedures and ensure that a thorough review of available databases with relevant information on eligibility occurs before the release of any Federal funds, to the extent permitted by law.  Agencies will now have to start checking existing databases before payment and/or reward to verify eligibility. 

What does this mean for you?  Make sure you are not in any of the databases as a party or person who is ineligible for payment from the Federal Government or you may not get paid on your current Federal contract.  The Government will soon consolidate its databases to create a “do not pay list” I believe will cause Prime Contractors to ensure that their 1st Tier Subcontractors are not on the list as well.

Within 90 days, each agency is to submit a plan to its OMB including information on its current pre-payment and pre-award procedures as well as a list of databases that the agency checks pursuant to those procedures.  Within 180 days, the Director of the OMB is to issue guidance, to be developed in consultation with affected agencies and taking into account current agency pre-payment and pre-award practices.  The guidance will clarify that the head of each agency is responsible for ensuring an efficient and accurate process to determine whether the information provided by the “do not pay list” is sufficient to stop payment, consistent with applicable laws and regulations, and, if so, whether a payment should be stopped under the circumstances.  Best practices will also be implemented.  If I were a Government Contractor, I would be doing my best to stay off the “do not pay list.”

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July 26. 2010 | Elizabeth Dunseith

Capitol Hill Makes Changes to SOX

As stated in my last blog, the Sarbanes-Oxley Act has received a lot of attention during the month of June.

Another important vote occurred within the Legislative Branch.  When the Sarbanes-Oxley Act was enacted in 2002, it included several new reporting requirements  under Section 404(b), requiring independent auditor attestation of the organization’s internal control over financial reporting (ICFR).  Accelerated filers (public float greater than $75M) have been required to comply since 2004, but the Smaller Reporting Companies have yet to file their first 10-Ks with the auditor attestations.  In early October 2009, the SEC issued its last and final extension for Smaller Reporting Companies; 10-Ks filed after June 15, 2010,  would be required to fully comply with 404(b).

However, Congress has changed that.  The Financial Reform Bill passed on June 30, 2010, includes the 404(b) exemption for smaller publicly traded companies, superseding the SEC’s final rule regarding the auditor’s attestation of ICFR.  It is interesting that in a time when there is an increased demand for transparency, regulations are being relaxed.  The external auditors may no longer be required to attest; however, Chief Financial Officers of all public companies, regardless of size, must still certify to the effectiveness of the ICFR as part of the 10-K filing.

Companies that are close to going over the current $75M cap should monitor their compliance requirements in the event they reach the Accelerated filer status and need to obtain the auditor’s attestation.  For purposes of this law,public float is measured as of the last day of the second quarter of a company’s fiscal year.  If your company may be close to the threshold, it is recommended to work with your external auditors early to avoid potential issues. 

The Executive Branch was also included in the recent SOX changes as President Obama signed the bill into law on Wednesday, July 21, 2010.

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July 21. 2010 | Elizabeth Dunseith

Supreme Court Makes Changes to SOX

Never a dull moment when it comes to the world of oversight, and the end of June was no exception with some big decisions from two of the three branches of government.

Let’s start with the Judicial Branch.  As a result of several accounting issues creating a lack of credibility within the profession, the Sarbanes-Oxley Act of 2002 was passed to help improve accountability and oversight regarding financial reporting.  Among several other things, the Public Company Accounting Oversight Board (PCAOB) was created.  The PCAOB was established as a private nonprofit organization intended to monitor external auditors of publicly held companies in the interest of protecting investors from fraudulent financial statements.  It gets a little complicated in that, while the PCAOB is a private organization, it is controlled by the Securities Exchange Commission (SEC or Commission), a government agency.   The Commission is responsible for appointment of PCAOB Officers and oversight of the Board; however, the Commission may only remove those appointed officers with good cause.  Last fall, the PCAOB was sued by the Free Enterprise Fund, a nonprofit organization, who argued the structure around the removal of officers in the PCAOB was unconstitutional.  The issue raised in the case of Free Enterprise Fund v. PCAOB is that the President’s removal power is twice removed.  The President has the authority to appoint SEC Commissioners; however, again, good cause is required in order to remove an appointed Commissioner.  Bottom line, if the President feels an Officer in the PCAOB is not doing his/her job adequately, he does not have the authority to remove that individual; rather, he is restricted by two levels of ‘good cause’ red tape.

The Free Enterprise Fund argued the constitutionality of this formation to the Supreme Court, and in a 5-4 decision on June 28, 2010, the Court affirmed the structure of the PCAOB to be unconstitutional.  However, the ruling doesn’t mean the PCAOB will be dissolved.  The decision now allows the SEC to remove members of the PCAOB at will rather than requiring good cause.  The PCAOB will continue to monitor the audit profession, and although the formation of the PCAOB may have been deemed unconstitutional, its purpose was not. The Sarbanes-Oxley Act was not only reviewed in the Judicial Branch; I will review the vote that occurred within the Legislative Branch next.

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July 15. 2010 | Anne Sesso

Combine Efforts for a Winning Team

Over the last month, World Cup Mania has taken the Nation (and most others) by storm!  Even if you are not a soccer fan it is hard to ignore the excitement surrounding this event.  Fans enjoy watching players work together to achieve success.   Everyone wants to be part of a winning organization.  At Watkins Meegan we have a talented team that is continually trying to find ways to assist our clients achieve their goals.

The key to achieving your goals is assembling the right combination of players/talent.  Each player offers a different skill set.   These complimentary skills are critical for achieving winning results.  Our staff accountants bring enhanced technical skills to our team, and our seasoned veterans provide valuable insight to the young staff.  Together Watkins Meegan has been assisting our clients achieve winning results for over 35 years.  Just like a soccer team, every company needs key elements, which are critical to achieving corporate success.  If success is a corporate goal, mediocrity should not be rewarded or encouraged.   Management should strive to assemble a cohesive team that is focused on finding, building and exploiting the key elements of its industry, while avoiding employees whose tendency is to think “me” instead of “team”.  Players participating in the World Cup focus on the larger team objectives and work together for a common goal; companies should strive to do the same. Watkins Meegan has and will continue to play a key role for our clients in assisting, finding, developing and exploiting winning strategies. 

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July 8. 2010 | Andrea Contres

Get on the Social Media Train - It's Time!

A little over six months ago, Watkins Meegan published its second blog, Accounting in the World of Web 2.0 World.  Although some people were reluctant or apprehensive about embracing this technology, we have clearly seen the importance of social media and are now venturing into other avenues, such as youTube and multiple Twitter pages. 

Watkins Meegan uses social media (Twitter, Facebook, blogging--WatkinsWire, youTube, LinkedIn) as an additional resource: to educate, enhance our brand as a thought leader and to expand our presence on the Web.  We are not alone; 81% of all firms use social media for marketing activities.  Like us, these firms are not stopping at just marketing; social media extends way beyond the realm of marketing.  It is a great tool for recruiting, following your competition, business development, education and more.

When creating a social media strategy/plan you must be patient; it is not something that will develop or change your firm’s Web presence over night.  However, you will see a change if you use the resources correctly.  There are many details companies must think about beforehand, such as: policies, guidelines, maintaining the voice of your brand, and education.  Watkins Meegan began its planning 10 months prior to actually launching the Web 2.0 campaign, and we continue to evaluate our strategy, learn new tools and embrace new ideas.  Educating your firm on social media and continued education for both the firm and yourself are something I highly encourage!  You cannot attend a conference or event today without social media being discussed.  This means you should jump aboard and continue learning because social media is constantly changing.  Also be creative – the options are endless!

As a marketing manager working in the professional services industry (CPA Firm), I found this great article published in the VA Society of CPA’s (VSCPA) magazine.  It is targeted specifically to accountants.  Share it!  http://www.vscpa.com/content/Resources/Career_Development/career01011002.aspx

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June 30. 2010 | Sean Roddy

Secret accounts are no longer secret.

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June 23. 2010 | Bob Hambrecht

Are You Looking for a New Way to Fundraise?

Are you a non-profit organization looking for a new, easy, relatively inexpensive way to fundraise? Are you tired of sending out direct mail solicitations, dealing with fundraising clearing houses, or making phone calls to ask for donations? Perhaps there is a non-profit organization that you wish you could help, but just aren’t sure how to go about it?

As many of you are aware, social media such as Facebook, MySpace and Twitter, are a few of the ways non-profits are spreading the word about their organizations and important news related to their mission. Well, why not connect with the other non-profit organizations that have joined the social media movement and fundraise online? There are various websites online including www.firstgiving.org, www.justgive.org, and www.giveforward.org, to name a few.  On these sites you can create your own fundraising page just as you would create an event on Facebook or MySpace.

If you are a non-profit organization, using an online website to raise funds will help you focus on what matters the most; the mission of the organization. Before committing to a particular website, be sure to review the terms and conditions of the website. The sites normally charge a nominal fee based on the amount of donations received and some sites only accept certain methods of payment (i.e. Paypal or credit cards). By creating a page on an online website, you can easily spread the word via your website, email, Facebook, Twitter, etc., to potential donors, colleagues, family, and friends all over the world.

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June 16. 2010 | Rebecca Kehoe

Another FAR Update: Case 2009-031, Termination for Convenience

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June 10. 2010 | Rebecca Kehoe

FAR Update: Case 2009-027, Personal Identity Verification of Contractor Personnel

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June 8. 2010 | Rebecca Kehoe

FAR Update: Unallowable Costs - Labor Relations

The Federal Government is proposing to make the costs of any activities undertaken by a Federal Contractor (including recipients of federal disbursements) to persuade employees to exercise or not to exercise the right to organize and bargain collectively through representatives of the employees’ own choosing unallowable. 

All activity costs related to collective bargaining will be unallowable, such as: preparing and distributing material, hiring or consulting legal counsel or consultants, meetings (including paying the salaries of the attendees at meetings held for this purpose), and planning or conducting activities by managers, supervisors, or union representatives during work hours.

What activity costs will remain allowable?  Costs incurred in maintaining satisfactory relations between the Federal Contractor and its employees, such as: costs of shop stewards, labor management committees, and employee publications.

What can you do?  Submit your comments on the proposed rule by June 14, 2010 by searching for FAR Case 2009-006 at www.regulations.gov, fax your comments to (202) 501-4067 or mail them to General Services Administration, Regulatory Secretariat (MVCB), 1800 F Street, NW, Room 4041, Washington, DC 20405.

http://www.regulations.gov/search/Regs/home.html#documentDetail?R=0900006480ad71d3

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June 4. 2010 | Rick Westerman

The Perfect Storm Part II

New Federal Acquisition Regulations on Ethics
As stated in my previous posting, “The economy has created a fraud-rich environment and the government is poised to punish government contractors who violate the rules.”  Read on to learn about the rules.

FAR Code 52.203-13, Contractor Code of Business Ethics and Conduct, should be familiar to all government contractors.  In December 2007, FAR rules went into effect regarding the establishment of a Code of Ethics, Internal Control System, and Hotline Posters.  The rules were closely scrutinized by contractors, government officials, and professionals to obtain clarification regarding what is required.  On December 12, 2008, the FAR published the final Contractor Code of Business Ethics and Conduct.

As expected, the original rules were altered and expanded with certain exceptions related to size of the contract, small business representation, and commercial item exclusion.   These rules may require establishment of internal control systems, criminal conduct monitoring, and performance evaluations of ethics programs and internal control systems.  The responsibility for internal control systems, business ethics, and compliance programs must be assigned at a sufficiently high level in the organization.  Where does responsibility for these programs lie in your organization?

Further, contractors are required to utilize reasonable efforts to ensure that principals (i.e., officers, directors, owners, partners, or any person with primary management responsibility) have not engaged in conduct which violates the contractor’s code of ethics.  To avoid concerns of possible debarment or suspension, contractor’s principals are required to disclose to the agency Office of Inspector General and Contracting Officer any instance of fraud, conflict of interest, bribery, or other criminal acts under USC Title 18 or the False Claims Act.

Expanded Federal False Claims Act
The Fraud Enforcement and Recovery Act added more teeth to the growing regulatory jaws.  Signed into law in May 2009, the act altered a number of false claim statutes.  More specifically, the act broadens the definition of what represents a fraudulent false claim by adding: 1) “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim,” and 2) “Knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.”

Effectively, a claim no longer has to be paid or approved; it just has to be submitted.  In addition, liabilities or amounts owed to the government, such as overpayments, are now included as false claims.

Awareness of possible risks (increased fraud) and compliance with new laws and regulations should be of paramount concern to contractors. In order to meet the challenge of new regulations, contractors can ready themselves by becoming more aware of the new rules and, if necessary, performing a fraud risk assessment. 

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June 1. 2010 | Rick Westerman

The Perfect Storm…Increased Economic Concerns

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May 26. 2010 | Jim Wagenmann

Is Your Return Preparer Able to Serve Your Needs?

In today’s increasingly complex world of taxes, financial planning, insurance and estate and trust matters you need to determine if your tax advisors can adequately serve your needs.

In many cases, people view a tax return as a commodity that anyone can prepare. They look to pay the least possible amount to complete this task.  For the simplest returns (those that show only wages, interest, and a standard deduction) most accountants can prepare them, and it makes sense that you should be seeking the lowest cost to accomplish this task.

However, once you add a business interest such as a schedule C, partnership or an S-corporation you start to add complexity. At this point, you need a tax return preparer that has experience dealing with these matters. There are many planning opportunities and elections that need to be considered in order to prepare a return that is not only accurate but arrives at the lowest supportable liability. At this level of complexity, cost is still a concern but since you are moving out of the realm of a commodity and into a world of opportunity, the expertise of your tax preparer becomes more important.

When you are at the point where you are adding different investment vehicles, more numerous business interests, rental properties, retirement concerns, trusts and estate planning, you have reached a level where the landscape is populated by fewer qualified tax advisors.  Your needs can only be served by individuals who have a working knowledge of the many types of tax returns that will be involved in order to keep you straight with the various taxing authorities to whom you are reporting.

At this level just knowing how to prepare a 1040, a 1041, a 1065 or an 1120 is just not good enough.  It is imperative that the advisor not only knows how to prepare the various returns, but also how all of the various pieces fit together. You should be able to expect an advisor to counsel you on the inter-relationship of all of your financial transactions and related matters.  It is possible that you can do one thing in one area of your financial life and have it be totally wrong in another area.

Whether you are looking to engage an advisor or are considering making a change you need to determine during your evaluation process, if the person or firm you are considering have the breadth of knowledge and experience you will need to meet the complexities of the financial, tax, and business world of today. 

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May 21. 2010 | Daniel O'Shea

990-N Update: IRS Will Work with Small NFP’s Facing Revocation of Exempt Status

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May 19. 2010 | Jill Winnacott

Watkins Meegan Young Professional's Initiative

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May 13. 2010 | Seth Cohen

What Are You Paying in Managment Fees for your Company's 401(k) Plan?

The Employee Retirement Income Security Act of 1974 (ERISA) requires employee benefit plan fiduciaries to act solely in the interests of, and for the exclusive benefit of, plan participants and beneficiaries.  As part of that obligation plan, fiduciaries should consider the costs associated with the benefit plan, among other things, when choosing investment options for their plan and selecting service providers.  Recently, plan providers have found new ways to hide fees from fiduciaries that are ultimately charged to the plan and its participants.  These fees generally fall into several categories: (1) plan administration fees for day-to-day operations of the plan such as recordkeeping and trustee fees, (2) investment fees for managing the plan’s investments, (3) individual service fees such as loan or distribution fees, (4) annuity fees charged by insurance carriers and (5) sales fees paid by some funds to the plan providers.

Investment fees are the most difficult to ascertain and can be analyzed by reviewing the prospectus of each fund the plan invests in (and that’s assuming a simple investor can decipher a prospectus).  These fees are often charged through an expense ratio which is deducted from the income or losses of the overall fund before allocating fund returns to the participant, and can range from zero to one and a half percent per year.  Therefore, if a plan has $20 million in assets, fees could be as high as $300,000 on an annual basis.  The worst part is that because these fees aren’t directly shown as being deducted from a participant’s account, participants and fiduciaries most often don’t even know they exist!

It’s important to know that these fees are “in the hands” of the plan fiduciary and the greater the assets and number of participants a plan has, the more control the plan’s fiduciary has to renegotiate these fees.  It’s vital (and required) that your plan’s fiduciary sit down with a professional who understands your plan (say, your accountant!) and analyze what fees are being charged to the plan to determine  whether or not they can be reduced.  Options include renegotiating with your current plan providers or shopping plan assets to different  providers to get the best deal for the plan and its participants, to name a couple.  Keep in mind that if you as fiduciary can reduce fees being charged to participants, you are not only performing your fiduciary duties, but you’re putting cash back into the pockets of participants who have confidence in you!

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May 10. 2010 | John Seek

Watkins Meegan Compares its Talent to the "American Idol" Selection Process

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May 6. 2010 | Sean Roddy

The SBA’s “ARC”…

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April 28. 2010 | Daniel O'Shea

May 15 and the Form 990-N Filing Requirement-Don’t Risk Losing your Exemption

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April 21. 2010 | Sean Roddy

IFRS and GAAP Convergence

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April 14. 2010 | Christine Williamson

Watkins Meegan to present at the Deltek Insight 2010 Conference

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April 7. 2010 | Kristin Drozdowski

Policies and Procedures - A Necessary Evil or Just Good Business Sense?

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March 31. 2010 | Kevin Jones

Marginal Tax Rates and Phaseouts – Enough Already!

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March 24. 2010 | Jason Fleetwood, and Katie Madden

Tax Season Madness

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March 18. 2010 | Gary Robinson

Why Millions of Americans Now Fall Subject to the Alternative Minimum Tax

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March 16. 2010 | James Kanuch

Endowments

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March 3. 2010 | Stephanie Kelly

Infidelity...sometimes it's financial

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February 24. 2010 | David Wright

More SBA and SDB Proposed Changes from the Obama Administration

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February 17. 2010 | Elizabeth Dunseith

XBRL - Are You Ready?

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February 10. 2010 | Kevin Jones

How Well Do You Know Your Return Preparer

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February 4. 2010 | Jason Fleetwood, and Katie Madden

Accountant's New Year's Resolutions

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January 29. 2010 | John Seek

Embracing Opportunity

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January 26. 2010 | Lorraine Sexton

Cash Management- Survive and Thrive

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January 20. 2010 | Jennifer Mavrikes

What’s New with the Not So New TAG Program?

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January 13. 2010 | Mary Lou Gervie

Employee Misclassification

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January 6. 2010 | Justin Reid

New proposals to the SBA and SDB Programs

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December 29. 2009 | Bhavesh Vadhani

Increasing Need for Assurance - Why?

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December 22. 2009 | Kevin Jones

Using the Tax Code to Implement Social Policy

Oliver Wendell Holmes, the great Supreme Court Justice, once stated that, one way or another, “taxes are what we pay for a civilized society.” While we all recognize that taxes provide the government with the means to accomplish its mission, we see that, more and more, our system of taxation is used as an instrument to implement social policy. 

Currently, the federal tax code provides billions of dollars each year in incentives to encourage socially valued activities. These include incentives to home ownership, charitable contributions, health insurance, education, going green, and countless others. These incentives take one of two forms. First, an incentive may take the form of a deduction from income. This type of incentive links the size of the tax break to the taxpayer’s marginal tax bracket. Second, an incentive may take the form of a tax credit, which may be either refundable or non-refundable. Refundable credits are much more appealing to those with little or no tax liability because they are available regardless of whether the taxpayer actually is required to pay any tax. The benefits of deductions compared with credits will not be resolved anytime soon, but in either case, the tax code is the vehicle used to implement social policy.

In case one wonders why the tax code is used for social policy initiatives, the answer is quite simple…politics. Incentives of this type are nothing more than another form of government spending program. This is not to indicate any agreement or disagreement with this method of financing government operations. That is for you to decide. Nevertheless, this type of program is often preferred by Congress to typical spending programs because spending programs are much more visible and, thus, more subject to public scrutiny. Tax preferences, on the other hand, can more easily be concealed within the complexity of the federal tax code. 

In this sense, it is much more efficient for legislators and more palatable for the public to create a new incentive program rather than a new spending program. This is particularly true in these times of increased federal deficits. Is this smoke and mirrors? Maybe it is, but countering the benefits legislators enjoy by using the tax code in this manner is the clear fact that by using the tax code to achieve social goals beyond raising revenue for necessary government programs, it may be impossible to achieve true tax simplification.

My personal views notwithstanding, as a tax professional, I certainly don’t mind all the complexity.  It may be true that the only things certain are death and taxes, but running closely behind are: (a) the ingenuity of governments in taxing their citizens, and (b) the creativity of the people in avoiding them.   Because of that, there will always be a need for those that can find creative solutions to taxing problems.

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December 16. 2009 | Jason Fleetwood

Impaired or Not Impaired…That is the Question

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December 9. 2009 | Bruce Hall

The Burden of Tax Compliance

It’s that time of year again. The holidays are looming, a chill is in the air… and your government is working hard to pass legislation before year end.

At the recent AICPA National Tax Conference, the Commissioner of the IRS and the IRS Taxpayer Advocate both admitted that the IRS is overwhelmed by routine activities.  One of the metrics used to measure success is whether the phone is answered more than 70 percent of the time. We can only hope this is coupled with metrics measuring the resolution of taxpayer issues. The feeling that many taxpayers get is that stacks of correspondence go unanswered, while erroneous underpayment notices, often in duplicate and triplicate, get mailed.

In the midst of the most dramatic economic downturn in generations, the IRS is allocating significant resources to enforcement issues. Perhaps similar resources should be distributed to ensure that refunds are made timely and unnecessary underpayment notices, which can frighten taxpayers, are sent less frequently, thereby saving both time and money. It appears that the government is attacking on all fronts.

State tax departments are operating in a similar fashion to the IRS. Notice after notice is generated, responses by taxpayers or their representatives are sent multiple times by multiple modes of communication, and phone call after phone call results in mounting frustration. One common error I have encountered with some states involves the withholding tax that pass-through entities are required to pay on behalf of nonresident owners. When the owner later files their tax return properly claiming the withholding as a credit against their tax, the state is ignoring the withholding even when documentation is attached to the returns. Not only did the states hold the refunds, they actually issue bills even though the taxpayer is owed money. I wonder how many taxpayers are incorrectly paying these bills.

These problems have not stopped the wheels of our government from grinding along. There are at least four bills winding their way through Congress, all of which potentially have significant tax provisions, and some of which will affect the current year. Perhaps a little more attention to relieving the burdens of tax compliance should be the focus. Most Americans don’t mind paying their taxes as much as having to deal with the taxing authority.

No one is sure where we will end up, but the certainties of death and taxes are likely to be joined by increased regulation and more government oversight.

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December 2. 2009 | Ed Rodriguez

Budgets Are Increasing at the IRS - What Does That Mean For You?

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November 24. 2009 | Daniel O'Shea

Thanks-Giving is Upon Us

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November 18. 2009 | Christine Williamson

Prepare Yourself for Limitations of Pass-Through Charges and Rising Indirect Rates

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November 11. 2009 | Brian Linville

The IFRS (International Financial Reporting Standards) Struggle

Once companies understand what IFRS is, they need to stay in the loop of what will happen next and how it affects them.

Our Director of Quality Control, Brian Linville, just attended a two-day conference held jointly by the International Accounting Standards Board (IASB) Foundation and the American Institute of Certified Public Accountants in which a few of the topics and presenters tried to help attendees determine what steps to take next. Presenters included standard setters from the Financial Accounting Standards Board (FASB) and the IASB, the U.S. Securities and Exchange Commission (SEC), the Public Company Accounting Oversight Board (PCAOB), and several companies who had already gone through the switch.

The most anticipated section was the presentation by SEC Chief Accountant James Kroeker. Everyone was hoping to hear a decision on whether the SEC would stick to its current roadmap to require public companies to transition to IFRS in 2014. While we did not get an answer to that question, Mr. Kroeker indicated that we should not wait for the SEC to make a decision; rather, we should continue with our (FASB and IASB) conversion project. Mr. Kroeker did indicate we would hear more on the roadmap this fall from the SEC.

On the previous day, FASB and IASB had just announced that they would hold monthly meetings to meet their 2011 convergence goal. They realized that the meetings had a dramatic impact in coming to agreements faster. After all that, the questions still remain. Should you start training people? Should you analyze the potential effects of switching to IFRS? Everyone is struggling with what to do and when to do it.  Academia and CPA firms are also feeling the pains and trying to decide what to do.

Whatever you determine your answer to be, keep up with the current standards (GAAP). There are several significant standards that may change as a result of the convergence project, but keeping up with GAAP should minimize the effects of switching to IFRS as the convergence project moves forward. 

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November 4. 2009 | Kevin Jones

'Tis the Season for Tax Planning

As the year begins to wind down, many of us begin to focus our attention on the activities of the new seasons that are upon us. Most of those are rather obvious…starting with the Fall season with its cooler weather and beautiful colors, leading into Thanksgiving, Christmas, and finally, the New Year. This time of year also brings us full swing into the baseball playoffs, college and NFL football seasons and the fun of tailgating and cheering for our favorite teams. However, not to be lost in all the hoopla of this time of year is another season…one that we don’t often think about and, in fact, probably don’t want to think about…tax planning season.

That’s right, tax planning season. Yes, I know, some of you just finished filing your 2008 tax returns at the October 15 final deadline. You were thinking that once your return was filed that you would have a break from the unpleasant thought of taxes for at least six months. But with all the federal tax law changes enacted over the past year and all the tax proposals pending, including tax provisions of health care reform and the Obama Administration’s other tax proposals, it is hard to keep up with which provisions are in and which are out. One thing is sure though, year-end tax planning is more important than ever in 2009.

Tax planning is completed near the end of the year for strategic reasons. First, it’s relatively easy to know where you stand currently and where you will end up in terms of your income and allowable deductions. With this information in hand, the impact of different alternatives and strategies can be quantified and the best course chosen. Second, almost all strategies for minimizing your 2009 tax bill must be implemented prior to the end of the year.

Just to give one simple example, for many taxpayers, it is advantageous to pay the 4th quarter state estimated tax payment prior to December 31, 2009, even though it is not due until January 15 of next year. The reason is that, if paid before the end of the year, it is deductible as an itemized deduction on the 2009 tax return. On the other hand, for taxpayers subject to the alternative minimum tax (AMT), there is no tax benefit to making the payment prior to the end of the year because state income taxes are not deductible in determining the AMT. The point is, without proper planning prior to the end of the year, there is no way to know what strategy makes sense in your particular situation and the ability to take advantage of most opportunities will be lost. This is just as true for your business as it is for you individually.

For clients of Watkins Meegan, a booklet will be sent shortly providing the tools needed to get organized to properly conduct year-end planning. The booklet also discusses some of the more relevant planning techniques and opportunities. For others, I urge you to contact your tax advisor to explore ways to minimize your taxes in 2009. When done properly, the unpleasant task of focusing on taxes now can reap substantial benefits next year when you file your 2009 tax return.

So yes…’tis the season…

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October 29. 2009 | Sean Roddy

Accounting in the Web 2.0 World

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October 22. 2009 | Mike Micholas

Welcome to Watkins Wire

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