 HARDING, SHYMANSKI & COMPANY Certified Public Accountants and Consultants
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| Upcoming Seminars | |
September 21 - Contracting Issues in Evansville, Indiana. More details to come!
September 23 - Tri-State Indiana Chapter of CFMA Annual CPE Program in Evansville. Call Scott Watters at (812) 425-9131 for more information.
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| Construction and Real Estate Industry | |
Because Harding, Shymanski & Company, P.S.C. is committed to providing quality service to our construction and real estate clients, we have selected a team of dedicated professionals to serve as your industry's consultants. These individuals understand the language and key issues unique to your industry and possess the drive and determination to help you manage your company on a proactive basis. |
| Proposed Revenue Recognition Rules Would Significantly Affect Contractors & Users of Construction Financial Statements |
On June 24, 2010, the Financial Accounting Standards Board (FASB) issued its highly anticipated Exposure Draft, Revenue from Contracts with Customers. At present, construction contractors generally follow the guidance contained in ASC 605-35 (formerly known as SOP 81-1); however, if the provisions of this Exposure Draft are adopted, these changes could have a significant and undesirable impact on the financial statements of contractors.
Currently, the economic unit of measure in ASC 605-35 is the entire contract, which means the contract is not further subdivided for the purpose of determining how revenue should be recognized. It also presumes ratable revenue recognition during the entire construction period.
While the Exposure Draft permits ratable recognition of revenue, the contractor must demonstrate it meets specific criteria to qualify for ratable recognition of revenue. In practice, most contracts will continue to qualify for ratable revenue recognition, but some will not.
Under ASC 605-35, most contractors use "costs incurred" to measure revenue, hence the recognition of revenue is aligned with costs. By contrast, in the Exposure Draft, revenue is recognized as "performance obligations" are satisfied, which in some cases will not be tied to costs incurred.
Because the performance obligation becomes the economic unit of measure, if a contractor anticipates a loss in fulfilling a performance obligation, that estimated loss is accrued as soon as it is identified - even if there may be substantial estimated profit in the fulfillment of other performance obligations.
Finally, the Exposure Draft prescribes new disclosure requirements to assist financial statement users in understanding revenue recognition transactions (e.g., the reporting entity must provide a reconciliation of changes in net open contract positions from the last reporting date to the current reporting date).
For additional information contact Paul Esche, CPA, at (812) 491-1335 or pesche@hsccpa.com. SOURCE: CFMA website |
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| Indiana Enacts New Employer Credit |
Indiana has created a temporary new employer tax credit available against the corporate and personal income tax and the insurance premiums tax. The credit amount is equal to ten percent of the wages paid by the new Indiana business to qualified employees during a 24-month period.
The credit may be claimed by a business that after December 31, 2009:
1. Either (a) locates or relocates the operations of a business enterprise in Indiana, (b) incorporates or otherwise first organizes in Indiana, or (c) expands the entity's operation of a business enterprise in Indiana;
2. Employs at least ten qualified employees;
3. Makes an application to the Indiana Economic Development Corporation (IEDC); and
4. Is issued a certificate of approval by the IEDC.
It should be noted that a "new Indiana business" includes an existing business that expands operations. A "Qualified Employee" is an individual who is a full-time employee, a resident of Indiana, and not more than a five percent shareholder/ partner in the business. The term does not include rehired individuals or individuals employed to fill positions vacated as a result of layoffs during the past two years. The IEDC will verify whether the business is employing at least ten qualified employees in each month of the 24-month period for which the credit applies. In doing so, the IEDC may consider the applicant's employment levels in previous years to determine if the applicant is hiring new individuals or rehiring individuals. Based upon this criteria and the definition of qualified employee, it appears that the IEDC will look back two years to see where employment levels were, and only certify the business if the new hires exceed the employment level before any layoffs during that timeframe. For more information please contact John Rittichier, CPA, at (812) 491-1307 or jrittichier@hsccpa.com. |
| Effective internal controls are your best weapon against fraud, and it is management's responsibility to know they are in place. |
In the Association of Certified Fraud Examiners' (ACFE) 2010 Report to the Nations on Occupational Fraud and Abuse, fraud experts were asked which issues were considered to be the primary factors that allowed occupational fraud to occur, and a lack of internal controls such as segregation of duties was cited most often. Management override of existing internal controls came in second, lack of management review came in third, and poor tone at the top was fourth.
The study found again, as in the past, that occupational fraud is most likely to be detected by tips from fellow employees than by any other means, and that Fraud Hotlines were the control associated with the greatest reduction in median loss. However, of the companies reporting fraud, only 15% of small businesses had a Hotline set-up for tips versus 64% of large companies. Internal audits were second in detecting fraud, followed by management review. The fourth most frequent method of fraud detection reported was when the victim organization happened to stumble onto the fraud or was notified of it by an outside party, such as a customer. Priscilla Capes, CPA, AAP, CFE, Consulting Manager at Harding, Shymanski & Company, P.S.C., has earned her Certified Fraud Examiner (CFE) designation from the Association of Certified Fraud Examiners (ACFE). The ACFE's Board of Regents awards this designation only to select professionals who meet a stringent set of criteria, including strict character, experience, and educations requirements. CFEs are responsible for resolving a wide range of allegations of fraud and white-color crime. For more information, contact Priscilla Capes at (502) 584-4142. |
| Data Loss is Expensive | |
The average cost to recreate just 20MB of lost sales/ marketing data costs is $17k and 19 days; 20MB of accounting data costs $19k and takes 21 days; and 20 MB of lost engineering data costs $98k and 42 days to recreate.
Why backup online:
Online backups are the easiest and surest way to protect your data.
Backing up to an offsite Data Center ensures that you can recover your data even in the event of a physical disaster, theft or loss.
Online backups eliminate many of the error prone steps associated with traditional backup methods like tape. Users can restore 'point in time' versions of files without loading tapes one after the other.
The importance of data backup is not always top of mind. A local solution to consider is Sitco Business Solutions. They can be reached at (812) 473-3600. |
| Upcoming RSM MCREN Conference and annual AGC of America conference | |
Four of HSC's Construction team members will be speaking at the 2010 RSM McGladrey Construction and Real Estate Network (RSM MCREN) Conference in Las Vegas in October of this year. Alan Stabenfeldt, David Papariella, Randy Schulz, and Priscilla Capes will be serving on various panels at the MCREN conference.
New this year, the RSM MCREN conference date (October 20) is coordinated with the annual AGC of America conference for the convenience of attendees considering attending both conferences. RSM MCREN will host a reception at Caesars Palace on October 20th to include those attending the AGC/ CFMA 14th Annual Construction Financial Management Conference.
Mark your calendar and plan to attend!
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Harding, Shymanski & Company, P.S.C. provides accounting, tax, and consulting services to clients from offices in Evansville, Indiana, and Louisville, Kentucky.
We are committed to quality. Adding value to the services we provide is our most important goal. Our unwavering dedication and commitment to quality resonate throughout every aspect of our work.
Call us today! (800) 880-7800 in Evansville and (502) 584-4142 in Louisville
www.hsccpa.com |
| Disclaimer |
The information contained in this email is for general guidance on matters of interest only. The publication does not, and is not intended to provide legal, tax or accounting advice. |
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