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UHY LLP Michigan Practice
April 2017
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SOCIAL ENGINEERING OVER THE PHONE 
In the wake of all the cyberattacks, data breaches and technology related identity thefts, fraudsters are continuing to come up with new ways to scam us. The latest? Phone scams. Here are three examples:
- The "can you hear me" scam. The sole purpose of this scam is to get you on the phone and to say the word "yes". Criminals then record the conversation and use your voice to authorize fraudulent charges. They may ask something as simple as "can you hear me"? You answer "yes" and that's all it really takes.
- Information verification scam, where unfamiliar phone numbers call from various area codes asking you to verify personal information (email address, name, title, etc.) with the aim of targeting you at a later date.
- Computer virus repair scam, which is probably the most common of the three. The scammer claims to be calling from a large computer or software company and alerts you that your computer is vulnerable and needs to be fixed immediately with the end goal of installing malicious programs onto your computer.
The best way to prevent yourself from becoming a victim of one of these scams is to allow unknown numbers or numbers that you don't recognize to go to your voicemail. If someone needs to get in touch with you, they will leave a message or contact you in some other way. If the call turns out to be legitimate, you can always call them right back. But never give out any information about you or others, unless you are certain about whom you are talking to.
UHY Advisors can help assess your risk and develop the training and awareness program you need to avoid falling victim to these scams. Contact your professional in Detroit 313 964 1040, Farmington Hills 248 355 0280 or Sterling Heights 586 254 8141.
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INVENTORY AND NET REALIZABLE VALUE CHANGES NOW IN EFFECT By Michelle Moore, CPA In 2015, the Financial Accounting Standards Board issued Accounting Standards Update Simplifying the Measurement of Inventory (ASU 2015-11). This standard simplifies the subsequent measurement of inventory by replacing the "lower of cost or market" test with a new "lower of cost and net realizable value test." However, entities that use the LIFO or retail inventory methods, will continue applying their current impairment models.
Current standards require inventory to be measured at the "lower of cost or market," with the calculation of market taking a "ceiling" and "floor" into account. With this consideration market could be either net realizable value (ceiling), replacement cost, or net realizable value less a normal profit margin (floor). The new guidance looks to reduce the multiple possible outcomes and more closely align with International Financial Reporting Standards by comparing inventory cost to only one measure, net realizable value.
This new guidance does not change the existing calculation used to find net realizable value, which is defined as the "estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation," nor does it change any other areas of the accounting for inventory.
Example - "Lower of Cost or Market" vs. "Lower of Cost and Net Realizable Value"
On September 1, 2017, a distributor purchased 500 units for $250 each and listed them at a selling price of $300. All 500 units were held in inventory as of the year ended December 31, 2017. On November 1, 2017, the manufacturer that built the units reduced their selling price to $200 per unit. With this price reduction, the distributor reduced their selling price to $275 in order to match their competitor's pricing. Assuming there were no costs for completion, transportation, or disposal, the cost of inventory would be calculated as follows:
Current Standard - "Lower of Cost or Market"
Net realizable value (ceiling) = $275
Replacement cost = $200
Net realizable value less a normal profit margin (floor) = $200
Normal profit = $275 - $200 = $75
Normal profit % = $75/$275 = 27.27%
27.27% x $275 = $75
$275 - $75 = $200
In the above example the replacement cost would be the market value as it falls between the upper and lower limit. There would be a lower of cost or market adjustment of $50.
New Standard - " Lower of Cost and Net Realizable Value"
Using the same values as the above example, inventory would be valued at the lower of cost ($250) and net realizable value ($275). As cost is lower, no inventory adjustment would be recorded.
This guidance is effective for interim and annual periods beginning after December 15, 2016 for all public entities. For private entities, the guidance is in effect for all annual periods beginning after December 15, 2016 and interim periods during the fiscal years beginning after December 15, 2017. This guidance should be applied prospectively and can be early adopted. During the period of adoption, all entities must disclose the nature and reason for the change in accounting principle.
For more information regarding the new inventory standard, please contact your professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040, or visit us on the web at www.uhy-us.com.
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THE IRS WILL NEVER CALL YOU, OR WILL THEY?
All taxpayers should be aware that the IRS has implemented a new program that allows private debt collection agencies to call to collect past due taxes. This may be confusing to many taxpayers since there have been a bevy of warnings circulating that warn of scams where a fraudster calls identifying themselves as a representative of the IRS.
In the past, it was easy to distinguish between scammers and the IRS because we've heard numerous times that the IRS doesn't call you. The IRS certainly wouldn't stalk, harass or leave threatening voicemails.
Now it seems that private debt collectors will be legally making those calls, and it appears that there is no program designed to protect taxpayers from scammers or to differentiate the real collectors from the fake.
WHY NOW?
Congress passed a law in 2015 requiring the IRS to restart the program (which ceased in 2009). The program will be implemented when the IRS no longer has sufficient resources to pursue specific collections. The new program could affect any taxpayer, as scammers will not differentiate between those who owe taxes vs. those who don't. Keep in mind that if you were to receive a collections call, it would likely not happen until later this year.
HOW DO I TELL IF IT'S A SCAM?
The IRS will give taxpayers and their representative written notice that the accounts are being transferred to the private collection agencies. The agencies will send a second, separate letter to the taxpayer and their representative confirming this transfer.
Additionally, there are only four firms that are authorized by the IRS: CBE Group of Cedar Falls, Iowa, Conserve of Fairport, New York, Performant of Livermore, California, and Pioneer of Horseheads, New York.
Check with your tax advisor regarding any phone calls soliciting personal information related to your taxes. If you don't have reason to believe you owe any taxes, there's a good chance it's a scammer. You can reach the Detroit office at 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040.
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Our firm provides the information in this newsletter as tax information and general business or economic information or analysis for educational purposes, and none of the information contained herein is intended to serve as a solicitation of any service or product. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of "UHY Advisors." UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. and UHY LLP are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. "UHY" is the brand name for the UHY international network. Any services described herein are provided by UHY Advisors and/or UHY LLP (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.
Published by UHY LLP News. Copyright � 2017 UHY LLP. All rights reserved. |
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