Common Pitfalls of this Middle Child Ahh — the Statement of Cash Flows, the bane of every staff accountant. This article will describe some of the pitfalls of preparing the Statement of Cash Flows. But first, a bit of history. When I first entered public accounting as a staff accountant during the Accounting Principles Board (APB) era, the Statement of Cash Flows was not a required financial statement. Instead, a Statement of Changes in Financial Position was required under GAAP. This legacy statement focused primarily on changes in working capital rather than cash flows. To the best of my memory,
Read More »Heads Up -Choose Very Carefully Under U.S. GAAP, there are three methods of accounting for a company’s investment in equity securities: Fair value method Equity method Consolidation The method of accounting depends on the level of control or influence the acquiring company has over the investee’s operating and financial policies AND whether the securities acquired have readily determinable fair values. However, remember that the method used is not elective or optional but is a matter of GAAP. We will discuss consolidations, but this article will focus on the fair value and equity methods. When the Method is Appropriate Fair Value
Read More »Maybe Yes, Maybe No, It Ain’t Necessarily So If you wish to dive into an accounting topic akin to scrambled eggs, then accounting contingencies is a fine choice. It’s scattered, can be a bit messy, and cumbersome to bring it all together. Underlying Uncertainty In the Master Glossary of the FASB Codification, contingency is defined as “An existing condition, situation, or set of circumstances involving uncertainty as to possible gain (gain contingency) or loss (loss contingency) to an entity that will ultimately be resolved when one or more future events occur or fail to occur.” As can be seen, to
Read More »All Together Now Now that our firm has been through a few months of audit risk assessment under SAS 145, we felt it beneficial to identify key takeaways to keep in mind as we go forward. To give a frame of reference for our outline below, our clientele is concentrated in the construction industry, and we use Checkpoint Engage for our risk analysis. Hopefully, this outline will help bring the various pieces of the risk assessment process together. Risk of material misstatements (RMM). Remember that we, as auditors, are searching for areas of the financial statements that may be materially
Read More »Significant Refund Opportunity Created It’s a done deal! Tennessee has changed its franchise tax by removing the property measure. The bills making this change authorize refunds to certain taxpayers. Namely, those taxpayers who paid franchise tax based on the value of real or tangible property owned or rented in the state for all applicable open years (2020-2023). Effective for tax years ending on or after January 1, 2024, the legislation removes the property measure from the Tennessee franchise tax base. Additionally, taxpayers who paid franchise tax on the greater property measure can recalculate the tax using the apportioned net worth
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