Not-for-profit risk alert for 2017 is available

May 25, 2017, 8:59 pm

Cover of 2017 risk alert from the AICPA, used under fair use since I’m urging you to buy their product.

The 2017 risk alert for non-profits is available from the AICPA.

Highlighted updates this year include:

  • AUS 2016-14 – New financial statement presentation
  • ASU 2016-02 – Leases
  • SAS 132 – Going concern

If you don’t feel overwhelmed, you haven’t been paying close enough attention to recent pronouncements. If so, the risk alert will help you catch up.

If you are feeling overwhelmed, the risk alert is a great first step in getting comfortable.


Overtime rules on hold after federal judge issues nationwide injunction

November 28, 2016, 7:13 am
Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

…places a hold on the new rules regarding…

Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

 

A federal judge in Texas issued an injunction putting on hold the new Department of Labor rule increasing the threshold for paying overtime. The judge concluded there was a reasonable likelihood (I don’t quite appreciate the technical description so will use casual wording) that the lawsuit by 21 states and a lot of businesses would succeed. He also concluded the rule could cause irreparable financial harm. Thus, he issued the injunction, which applies nationwide.

Read the rest of this entry »


Perhaps reporting under GAAP is not reporting the numbers investors need

July 25, 2016, 9:51 am
Image courtesy DollarPhotoClub

Image courtesy DollarPhotoClub

(Cross post from my other blog, Attestation Update. I usually post comments on accounting theory there. This issues carries over directly to the nonprofit community. Consider the ongoing discussion on the mis-focus on ‘overhead’ and the need for some sort of outcome measures for the charity world and you can see how this applies.)

Consider this idea: perhaps GAAP-based accounting numbers aren’t giving stock investors all the information they need.

What is wrong with this picture?

In April, Netflix announced their earnings fell short of analysts’ expectations. Usually that would drop the stock price. What happened?

Nexflix stock jumped 18%.

Huh?

What could cause that? The market supposedly has incorporated the consensus into the price. Missing the expectation should drop the price.

Consider this: At the same time, Netflix announced their new-subscribers were 4.9 million instead of the expectation of 4.0M.

That means they will have stronger earnings for the next several quarters than was expected the day before the announcement. Thus, the stock price rose.

Investors looked at the new subscriber tally as a better indicator of future earnings and thus future stock price than this quarter’s GAAP net income. New subscribers is more important than EPS.

If you wonder are wondering why GAAP EPS isn’t the driving force in that story, here is a brain stretcher for you:

“The End of Accounting”

Professors Baruch Lev and Feng Gu point to The End of Accounting and the Path Forward for Investors and Managers in their June 21 Wall Street Journal article.

You can find the book at Amazon here. It is a bit steep, $32 in hardback and $26 in Kindle format, which is really high for an e-book. I already have a copy on my e-reader. Started reading it yesterday.

The professors suggest that reported earnings under GAAP are losing relevance for investors as we move further and further away from an industrial economy. When know-how, processes, patents, using the internet, and other intangibles are the source of income, GAAP doesn’t report useful information for figuring out future earnings.

By the way, keep in mind that providing historical information to readers of the financial statements to allow them to make estimates of future earnings and cash flows of the company is, like, sorta’, kinda’, the purpose of GAAP financial statements.

The problem with GAAP

Some drawbacks in looking at GAAP numbers, according to the professors:

Read the rest of this entry »


July 25, 2016, 9:26 am
Image courtesy DollarPhotoClub

Image courtesy DollarPhotoClub

 

Oops. Sorry. I posted this without a title.

Reposted it, but with a title. You can find the article here. Sorry for the confusion.


Price cut on print books

February 4, 2015, 8:27 am

I’ve dropped the prices for the print copies of my books available at Amazon, Barnes & Noble, and iTunes store.

Here is what you can find on-line:

tragedy-cover

 Tragedy of Fraud – Insider Trading Edition

Story of Scott London’s fall from regional audit partner at KPMG to prison inmate because of his insider trading.

Read the rest of this entry »


An illustration why interpreting functional allocation information is difficult: the Wounded Warrior Project financials

October 24, 2014, 8:33 am

Apparently there is conflict going around on how to interpret the functional expense allocation information for Wounded Warrior Project.

All their info is laid out in their audited financial statements, which you can find here. Their annual report, audited financial statements, and 990s for the last eight years are all available on their website. Good on them for making all that info readily available. That is an example for all charities to follow.

How can three different calculations all be correct?

Read the rest of this entry »


“Top 10 questions that Ministers, Missionaries, and Church Treasurers Ask Tax Preparers”

October 14, 2014, 7:00 am

Corey Pfaffe, CPA, provides answers to those top 10 questions at MinistryCPA.

The questions, with links to each answer, can be found here.

You can download a superb 12 page PDF of the full set of answers here.

If you are a pastor, missionary, church treasurer, or on the finance staff of a charity, I recommend you check out Prof. Pfaffe’s superb explanations. Get professional advice to apply the information to your situation or if you need to go beyond the very straightforward answers.

There is a bonus question: Read the rest of this entry »