September, 2014 | RKL LLP
Posted on: September 30th, 2014

Welcome to the Team: Darkes, Peachey & Wilbert, CPA Joins RKL

RKL is pleased to announce that Carlisle-based Darkes, Peachey & Wilbert, CPA (DPW) has joined the firm in a merger effective Wednesday, October 1. The merger continues to grow RKL’s presence in the Greater Capital Region while providing DPW clients access to a wider range of tax, accounting and business consulting capabilities.dpw

DPW Founding Partner Bruce K. Darkes, CPA, has joined the firm as a Partner in RKL’s Tax Services Group. In addition, we’re pleased to welcome Jeremy D. Peachy, CPA, and Karen Wilbert, CPA, as Managers in the Tax Services Group.

“DPW has built an outstanding reputation throughout the region,” commented Edward W. Monborne, CEO. “We’re looking forward to working together with them to continue to build upon RKL’s brand of personalized services and unmatched capabilities and expertise.”

“Joining the RKL team means our clients will continue to work closely with their trusted advisors, while gaining access to a wider range of specialized capabilities that are unique to RKL,” commented Darkes. 

DPW’s office at 900 Cavalry Road, Carlisle will remain open as a satellite location to RKL’s Capital Region office in Downtown Harrisburg’s Strawberry Square.

Learn more about Bruce K. Darkes, CPA, or view our RKL Capital Region video.

 

 

 

 

 

Posted on: September 30th, 2014

The Right Stuff: Three Factors to Consider When Hiring a New CFO

However inconvenient or unwelcome, the departure of your CFO may be an opportunity to take a fresh look at what you need from this position.

However inconvenient or unwelcome, the departure of your CFO may be an opportunity to take a fresh look at what you need from this position.

Whether planned or unforeseen, the departure of a CFO can be upending for even the strongest of organizations. There are the immediate needs – ensuring the company’s day-to-day accounting activities and normal business operations are not disrupted. And there are the more complex, long-term objectives – how do we find a candidate that fits our company’s needs, culture and vision for the future?

While it may be unwelcome or inconvenient, the departure of a CFO presents an opportunity to assess your current and future needs for internal financial expertise. With the right approach and resources, this can be a constructive process to ensure your next CFO is the ideal fit for your organization. Where to start? Here are three questions to consider.

  1. What resources do we need during the transition process? For most companies, the recruitment and selection process for an executive-level hire can take weeks, if not significantly longer. In the meantime, there are employees to manage, accounting activities to complete and relationships with lenders and outside parties to maintain. Now is the time to do an assessment of your immediate needs and put a short-term, tactical plan in place to keep things running smoothly. In addition to getting valuable input from your management team and any employees in your finance department, you may want to reach out to your CPA for additional resources – ranging from bookkeeping assistance to an interim CFO to see you through this transition.
  2. What are we looking for from our new CFO? Sometimes, the reaction can be “we need to fill this position as soon as possible.” Having advised many of our clients throughout this process, I always emphasize that now is the time to take a fresh look. Consider factors such as business volume, service offerings, operating locations, organizational design,  debt structure, accounting complexity, and regulatory and compliance needs . Chances are, what you need today and in the foreseeable future from this position differs vastly from what you needed when you hired your previous CFO. Consider collaborating with your internal management team as well as your CPA to develop a written job description for the ideal candidate.
  3. How can we recruit and select the right candidate? The recruitment and screening process should be geared toward candidates who best meet the requirements of the written job description based on your company’s identified needs. With his or her knowledge of the technical requirements of the job – as well as your industry and the financial complexity of your business – your CPA can be a valuable resource during the interview stage. Additionally, it’s likely your CPA is well connected to professionals in the industry who may be a great fit for your open position.

While it may bring its fair share of challenges, the departure of a CFO can also represent a significant opportunity for your company. Take your time, tune in to your needs and don’t be reluctant to ask for outside advice and assistance. By doing so, you’re likely to come out of this transition stronger and better positioned for a successful future.

stonerContributed by John S. Stoner, CPA, CVA, partner and leader of RKL Business Consulting Services Group in the Lancaster office. John provides a wide range of business consulting services, including business valuation, financial analysis, litigation support, merger/acquisition assistance and business succession planning to business clients.

 

Posted on: September 25th, 2014

FASB Issues Guidance to Improve Financial Reporting for Going Concern Uncertainties

The FASB recently issued guidance which is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures.

ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40) is effective for annual and interim periods ending after December 15, 2016, with early adoption permitted.

Background of the ASU

Under U.S. generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent.  This is commonly referred to as the going concern basis of accounting.

However, even if an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.  U.S. auditing standards (GAAS) and federal securities law require that an auditor evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time not to exceed one year beyond the date of the issuance of the financial statements being audited.  GAAS also requires the auditor to evaluate the possible financial statement effects, including footnote disclosures on uncertainties about the entity’s ability to continue as a going concern for a reasonable period of time.  GAAP, however, does not currently provide any guidance about going concern issues for an entity or related financial statement and footnote disclosures.

The FASB believes that this ASU closes the gap which currently exists between the auditing requirements and the lack of guidance in GAAP.

Details of the ASU

In connection with the preparation of the financial statements for each annual or interim period, management should evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date financial statements are issued, or available to be issued.

Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date the financial statements are issued, or available to be issued.  Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that is probable that the entity will be unable to meet its obligations as they become due within one year after the date of financial statement issuance.  Probable in this context, is defined as an event that is likely to occur.

If management identifies conditions or events that raise going concern doubts, the next step is to consider whether future plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt.  The mitigating effect of these future plans should only be considered to the extent that (1) it is probable the future plans will be implemented and (2) it is probable the future plans will have a mitigating effect.

Required Disclosures

If management’s plans alleviate the substantial doubt about the entity’s ability to continue as a going concern, the entity should disclose the following information in its financial statements:

  1.  Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern.
  2. Management’s evaluation of the significance of these conditions or events in relation to the entity’s ability to meet its obligations.
  3. Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

If management’s plans do not alleviate the substantial doubt about the entity’s ability to continue as a going concern, the entity should include a statement in the footnotes indicating there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued.  Additionally, the following information should be disclosed in the financial statements:

  1.  Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern.
  2. Management’s evaluation of the significance of these conditions or events in relation to the entity’s ability to meet its obligations.
  3. Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

Practical Considerations

Presently, similar disclosures are included in the footnotes if a substantial doubt about going concern exists.  However, before this guidance, management did not have an explicit requirement for their responsibility to assess and disclose going concern uncertainties.  Additionally, this standard provides specific guidance on when and how to disclose the uncertainties.  As described above, this guidance closes the loop that was missing from the current accounting standards, but which did exist in the auditing standards.

Have questions about this guidance? RKL is here to help. Contact your RKL advisor or one of our local offices for details and assistance in assessing the impact of adoption.

New Goodwill Accounting Guidance from PCCContributed by Michael P. Jones, CPA, a manager in RKL’s Audit Services Group. Mike specializes in serving the audit and accounting needs of commercial, not-for-profit and governmental organizations. 

Posted on: September 16th, 2014

Streamline the Audit Process with Electronic Working Papers

employee benefit plan audit

Moving toward a paperless audit process benefits both you and your audit engagement team.

In today’s accounting environment, most firms and their clients have embraced a paperless work flow to increase efficiency in the audit process. While it’s become second nature for many companies to submit their documents electronically, those who are still submitting paper copies can benefit from moving toward an electronic process – and can feel confident that their information is still secure as it’s transmitted and stored.

Thinking about going paperless? While it certainly helps streamline work for your engagement team, you’re likely to experience some benefits as well, including less back-and-forth between you and your service provider. Our goal is to reduce the number of interruptions, deliver the high standard for quality that RKL is known for and provide convenient ways to transmit your electronic data in a secure manner.

What types of files should I submit?

Original PDFs or Excel files are the most optimal files to submit.  Text files are also an acceptable option as we’re able to utilize our technology to convert these files into a workable Excel format.  Reports that are printed and scanned through a copier are not ideal as they are not easily converted to Excel and the information is not searchable.

How should I submit my work papers?

The most ideal way to transmit work papers to RKL’s Audit Services Team is via LeapFile, a secure online portal that allows you to send and retrieve files. LeapFile offers the highest level of data security so you can rest assured that sensitive documents such as employee benefit statements, payroll information and tax return information are protected. To get started, simply reach out to your RKL advisor and he or she will provide directions on how to exchange information securely via LeapFile.

Many clients prefer to provide electronic work papers via email or an electronic storage device such as a USB drive or CD/DVD and RKL will gladly accept files via these methods. However, it’s important to note the possible risks that each poses: a misplaced, unencrypted USB drive or a CD/DVD can get into the wrong hands, or a computer virus can open your data up to potential security threats. If choosing a USB drive, be sure to select an encrypted version for better data security.

Have questions about going paperless?  Your engagement team is here to help answer your questions and lend insight into how to make your next audit go as smoothly as possible. Contact your RKL advisor today.

PCC Accounting Financial ReportingContributed by D. Hunter Mink, a manager in RKL’s Audit Services Group. Hunter is responsible for the planning and supervision of audit engagements for clients in various industries, including engineering, construction, manufacturing/distribution and higher education. 

Posted on: September 3rd, 2014

Five Practical Questions to Ask Yourself before Joining a Nonprofit Board

Board service is a serious commitment that requires careful consideration.

Board service is a serious commitment that requires careful consideration.

Serving on the board of directors for a community benefit organization can be a very rewarding experience. For most, the investment of time, talent and treasure pays dividends in the satisfaction that comes from contributing to the greater good. However, as with any arrangement that will require your time and attention, it’s only practical that you have a clear picture of what to expect as a volunteer leader of any organization.

Considering a nonprofit board? A little due diligence can go a long way in matching your expectations with reality. Here are a few questions you’ll want to address:

  1. Does the organization’s mission and vision “jive” with me on a deeper level? The best board members are those who have a genuine passion for seeing the mission of the organization fulfilled. Take the time to do your homework and review the organization’s mission and vision carefully to clarify its ultimate goal and how the organization views itself in the community.
  2. Is the organization financially sound? As a board member, you have a fiduciary duty to the organization. Ask to review the audit and management letter of the most recent tax year as well as the current Form 990. If the organization is showing losses, you should inquire further: What is the nature of the losses? Does the organization have a strategy in place to stem these losses? What are the requirements of board members as it relates to fundraising?
  3. Are you expected to make a financial contribution to the organization? This may be the most uncomfortable question on the list, but it makes sense to enter into your board service with eyes wide open. Today, many organizations have a minimum expected financial contribution for their board members, ranging from as little as one dollar to thousands of dollars. If you don’t have the financial means to give to an organization, make that clear upfront. Most organizations will not turn away volunteer time and will find other ways you can contribute to the organization.
  4. What is the expected time commitment? Set up a meeting with the executive director and the board president to make sure you understand your expected role and the time commitment that it requires. How frequently will the board meet? Will you be expected to join a sub-committee? Is volunteer time expected?
  5. Is the board covered by insurance? Nonprofit boards should carry Directors and Officers Insurance – often called “D&O.” This insurance is offered as protection against a breach of duty by the directors and officers. D&O will pay for actual or alleged wrongdoings such as employment issues, failure to provide services and mismanagement of assets. D&O does not pay for bodily injury or property damage. Volunteer service is not a defense for improper acts.

Take the time to do your homework before making a commitment. Doing so will ensure a mutually rewarding experience for all involved.

To learn more about RKL’s wide range of services aimed at helping community benefit organizations succeed, visit our Not-for-Profit Services Group or contact Douglas L. Berman, CPA, at (717) 843-3804 or dberman@rklcpa.com.

smallContributed by Ruthann J. Woll, CPA, a manager in RKL’s Tax Services Group and member of our Not-for-Profit Services Group. Ruthann has 17 years experience in tax planning and compliance and specializes in serving individual and not-for-profit clients. 

 

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