News Articles

Leases: A portfolio approach

Published on May 21, 2018

Shifting application from an individual lease to a portfolio level offers practicality and cost minimization for companies adopting FASB’s new lease accounting standard. Here are tips for applying a portfolio approach: 

Assess the lease population. Materiality and volume are key characteristics of a lease population. Material individual leases are often specifically identifiable and have established data collection and governance processes. Examples are offices, stores, airplanes, or data centers. Depending on how a contract is executed, a single lease agreement may contain multiple identified leased assets, such as floors in a building or capacity in a data center. These types of leasing agreements benefit from existing processes and are favorably positioned to apply the guidance at a lease, or contract level. However, immaterial individual lease agreements, such as copiers, vehicles, and laptops, may not have robust processes because of the historic, off-balance-sheet accounting treatment. These types of lease agreements may have high volumes, which introduces additional operational complexity. Low-dollar, high-volume leasing agreements could benefit from the option to group leases into portfolios. 

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IRS Issues HSA Contribution Limits for 2019

Published on May 21, 2018

The IRS issued the calendar year 2019 inflation-adjusted figures for the annual contribution limits for health savings accounts (HSAs) and the minimum deductible amounts and maximum out-of-pocket expense amounts for high-deductible health plans (Rev. Proc. 2018-30). 

Under Sec. 223, individuals who participate in a high-deductible health plan (HDHP) are permitted a deduction for contributions to HSAs set up to help pay their medical expenses. The contribution deduction limit is subject to an annual inflation adjustment. 

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IRS Offers Automatic Method to Change Accounting for New Revenue Recognition Standard

Published on May 21, 2018

The Internal Revenue Service has released a new revenue procedure that provides a new automatic way that companies can use when changing their accounting method to conform to the Financial Accounting Standards Board’s new revenue recognition standard. 

In Revenue Procedure 2018-29, the IRS noted that under the new FASB standard, an entity must recognize revenue, for financial statement purposes, for goods and services promised to customers in an amount that reflects what the entity expects to receive in exchange for those goods and services. 

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Companies Foresee Major Impact from Lease Accounting Standard

Published on May 21, 2018

More than three-quarters of the top 100 U.S. companies with the biggest lease obligations expect to see a material impact on their balance sheet from the new lease accounting standard, according to a new report. 

The report, from the technology company LeaseAccelerator, analyzed a recent set of Securities and Exchange Commission filings related to the adoption of the leasing standard, also known as ASC 842, which takes effect for public companies at the end of this year. The SEC Staff Accounting Bulletin 74 requires public companies to disclose the effects of accounting standards such as the leasing standard and the recent revenue recognition standard that have been announced but not yet adopted. 

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Understanding the New Sec. 199A Business Income Deduction

Published on May 21, 2018

Understanding the New Sec. 199A Business Income Deduction 

Sec. 199A allows taxpayers other than corporations a deduction of 20% of qualified business income earned in a qualified trade or business, subject to certain limitations. 

(Source: AICPA - CPA Letter Daily - The Tax Adviser - May 2, 2018)

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A New World: The View from Noel Tagoe

Published on May 21, 2018

Given the technology landscape, the focus of finance professionals needs to shift from data collection and processing to the use of data. 

Digital technology has ushered us into a new business era. Huge volumes of data are being generated at record speed. Business is well placed to exploit this brave new world because it is supported by the right infrastructure for storing data cheaply, and for accessing, processing, and analyzing data at speed. 

To remain relevant, finance professionals should become familiar with technologies such as cloud computing, robotic process automation, cognitive computing, in-memory computing, advanced analytics, and visualization tools. 

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When Is an Entertainment an Expense?

Published on May 03, 2018

The tax rules related to meals and entertainment have changed, and left some uncertainty in the gap between the old law and the new. 

Before the Tax Cuts and Jobs Act, the deduction allowed for entertainment expenses was limited to 50 percent of the amount otherwise deductible. Under the TCJA, the deduction for entertainment is completely repealed. Prior to the act, a 50 percent deduction was allowed for expenses related to business meals that were not lavish or extravagant. The confusion results from the issue of whether such business meals fall under the entertainment umbrella, or are still deductible. 

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More Whistleblowing, But Also More Retaliation

Published on May 03, 2018

The rate at which workers are reporting misconduct is on the rise, but so are the instances of companies retaliating against those who report. 

For CFOs that are trying to instill a culture of ethics at their companies, the Ethics and Compliance Initiative (ECI) has good and bad news. Unfortunately, there’s more bad news than good. 

The good: fewer U.S. employees say that in the last 12 months they observed misconduct that violated their organization’s ethical standards or the law. The bad: “more employees feel pressure to cut corners than ever before,” according to a survey by ECI. 

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Job Disruption Is Quickly Coming to Accounting, Too

Published on May 03, 2018

Never before have the fundamental assumptions about the U.S. job market looked so precarious. Automation, artificial intelligence, and robotics, among other technologies, are changing the skills and the skill level required of employees in many industries, including retail, transportation, and manufacturing. 

The accounting profession is experiencing similar changes, and the pace and pressure of that change is exploding into a major disruption. Robotics is expected to eliminate 40 percent of basic accounting work by 2020. We’re in the early stages of the big data and artificial intelligence revolution in accounting, which already is being wholeheartedly embraced at the larger firms. Blockchain, which may develop as the most significant disruptor of all, is only in its infancy. As blockchain gains traction, it promises to provide a viable replacement for the traditional third-party verifier of transactions, radically altering both the concept of audit and the role of auditors in ways that are only beginning to emerge. 

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Artificial IntelligenceI (AI) for Small Business: Is It Possible?

Published on May 03, 2018

Large companies have been practicing the art of end-to-end automated accounting for some time. Software manages transactions and accounts from start to finish, and the advanced AI-fueled solutions are even handling tasks like paying an invoice automatically. Because of this, corporate accountants are doing higher-level work, helping companies be more profitable and efficient. Many wonder if this type of accounting is probable, or even possible for small businesses. 

But before we get ahead of ourselves — do small businesses even need the automated continuous accounting capability of large enterprises? 

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