Viewing posts categorised under: Audit
18Oct
Put your audit in reverse to save sales and use tax
Audit

 

It’s a safe bet that state tax authorities will let you know if you haven’t paid enough sales and use taxes, but what are the odds that you’ll be notified if you’ve paid too much? The chances are slim — so slim that many businesses use reverse audits to find overpayments so they can seek reimbursements.

Take all of your exemptions

In most states, businesses are exempt from sales tax on equipment used in manufacturing or recycling, and many states don’t require them to pay taxes on the utilities and chemicals used in these processes, either. In some states, custom software, computers and peripherals are exempt if they’re used for research and development projects.

This is just a sampling of sales and use tax exemptions that might be available. Unless you’re diligent about claiming exemptions, you may be missing out on some to which you’re entitled.

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04Oct
Ready for the new not-for-profit accounting standard?
Audit

 

A new accounting standard goes into effect starting in 2018 for churches, charities and other not-for-profit entities. Here’s a summary of the major changes.

Net asset classifications

The existing rules require nonprofit organizations to classify their net assets as either unrestricted, temporarily restricted or permanently restricted. But under Accounting Standards Update (ASU) No. 2016-14, Not-for Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, there will be only two classes: net assets with donor restrictions and net assets without donor restrictions.

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28Mar
Cooking the books
Audit

 

What’s the most costly type of white collar crime? On average, a company is likely to lose more money from a scheme in which the financial statements are falsified or manipulated than from any other type of occupational fraud incident. The costs frequently include more than just the loss of assets — victimized companies also may suffer lost shareholder value, lower employee morale, premature tax liabilities and reputational damage. Let’s take a closer look at what’s at stake when employees “cook the books.”

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14Mar
Use qualified auditors for your employee benefit plans
Audit

 

Employee benefit plans with 100 or more participants must generally provide an audit report when filing IRS Form 5500 each year. Plan administrators have fiduciary responsibilities to hire independent qualified public accountants to perform quality audits.

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02Mar
What to do if your nonprofit receives an IRS audit letter
Audit

 

In recent years, the IRS has increased its scrutiny — including actual audits — of not-for-profits. Do you know what to do if your organization receives an audit letter?

What is an audit?

An audit begins with the initial contact from the IRS and continues until a closing letter is issued. Before closing an audit, an officer of your nonprofit, your CPA and the IRS agent will discuss the agent’s conclusions at a closing conference. Both the conference and letter will explain your appeal rights.

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19Oct
Financial analytics provide the foundation for your audit … and beyond
Audit

 

An auditor does significant legwork before starting field work. During the audit planning phase, he or she reviews the preliminary financials and compares the current year’s results to last year and industry benchmarks. Here’s a closer look at what happens behind the scenes — and why you might want to implement a similar approach internally.

Horizontal comparisons

Preliminary analytics start with a horizontal comparison. That is, auditors compare internally prepared financial statements for the current year to last year’s audited results. Usually, changes are shown as a dollar amount and percentage.

The amount of change that warrants additional attention depends on the “materiality” threshold the auditor sets. For example, an auditor of a small business may decide to inquire about any line item that changes by, say, $10,000 or 10% and then possibly incorporate additional testing for questionable line items. A higher dollar amount threshold may apply for a larger company.

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07Oct
Beware of accounts deceivable
Audit

 

More than half of financial statement frauds involve sales and accounts receivable, according to the Committee of Sponsoring Organizations of the Treadway Commission. (COSO is a joint initiative of five private sector organizations that develops frameworks and guidance on enterprise risk management, internal control and fraud deterrence.) But why do fraudsters tend to target accounts receivable?

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16Sep
Nonprofit fraud isn’t worse — but it’s different
Audit

 

It’s a myth that not-for-profits as a group suffer disproportionately high losses due to occupational fraud. According to the Association of Certified Fraud Examiners’ (ACFE’s) 2016 Report to the Nations on Occupational Fraud and Abuse, surveyed nonprofits lost a median amount of $100,000, compared with $150,000 for all organizations.

Yet nonprofits have special vulnerabilities to fraud. Knowing such weaknesses can help you take action to prevent crooked employees from exploiting them.

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08Sep
How to minimize surprises during physical inventory counts
Audit

 

Counting inventories of raw materials, work in progress, finished goods, and parts and supplies is necessary for accurate recordkeeping, but it can be tedious. There’s almost always a variance between what’s on the shelves and what’s in your perpetual inventory system or general ledger. A relatively small difference shouldn’t give rise to panic. But a variance that exceeds 3% to 5% is a cause for concern. Here are some ideas for minimizing discrepancies.

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02Sep
Nonprofits need audits — even when they aren’t required
Audit

 

Some not-for-profits are required to hire an outside CPA to audit their books. Even if external audits aren’t mandated, however, your organization should consider them. Audits can provide assurance to stakeholders that you’re operating with integrity and within acceptable accounting guidelines.

Mandate or not

Generally, nonprofits that expend more than $750,000 in federal funding over the course of a fiscal year must submit to independent audits. States impose their own guidelines. Some require nonprofits that receive a certain level of state funding to submit independent audits to the state agency that provided the funding.

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