Accounting & Audit
On March 30, the Financial Accounting Standards Board (FASB) published an updated accounting standard on events that trigger an impairment test under U.S. Generally Accepted Accounting Principles (GAAP). This simplified alternative may provide relief to private companies and not-for-profit entities that have been adversely affected by the COVID-19 pandemic. Here’s what you should know. Simplified…
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An Audit committee faces many challenges in 2021. As the economy rebounds from the COVID-19 pandemic, there are new dimensions to the oversight roles and responsibilities of the audit committee. Consider taking these following four steps to fortify your committee’s effectiveness. 1. Focus on fundamentals Once you’ve wrapped up the financial reporting process for fiscal…
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The statement of cash flows essentially tells you about cash entering and leaving a business. It’s arguably the most misunderstood and underappreciated part of a company’s annual report. After all, a business that reports positive net income on its income statements sometimes doesn’t have enough cash in the bank to pay its bills. Reviewing the…
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The use of audit analytical procedures can help during the planning and review stages of the audit. But analytics can have an even bigger impact when these procedures are used to supplement substantive testing during fieldwork. Definition of “analytics” Auditors use analytical procedures to evaluate financial information by assessing relationships among financial and nonfinancial data.…
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Your company’s financial statements should be transparent about any restrictions on cash. Are your reporting practices in compliance with the current accounting guidance for restricted cash? The basics Restricted cash is a separate category of “cash and cash equivalents” that isn’t available for general business operations or investments. There are many types of restricted cash.…
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Many businesses have experienced severe cash flow problems during the COVID-19 pandemic. As a result, some may have delayed or missed loan payments. Instead of filing for bankruptcy in court, delinquent debtors may reach out to lenders about restructuring their loans. Restructuring vs. Chapter 11 Out-of-court debt restructuring is a process by which a public…
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Does your business need a loan? Before contacting your bank, it’s important to gather all relevant financial information to prove your business is creditworthy. By anticipating information requests, you can expedite the loan application process and improve your chances of approval. Lenders love GAAP U.S. Generally Accepted Accounting Principles (GAAP) is a collection of specific…
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The footnotes to your company’s financial statements give investors and lenders insight into account balances, accounting practices and potential risk factors — knowledge that’s vital to making well-informed business and investment decisions. Here are four important issues that you should cover in your footnote disclosures. 1. Unreported or contingent liabilities A company’s balance sheet might…
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Businesses and nonprofit entities capitalize machines, furniture, buildings, and other property, plant and equipment (PPE) assets on their balance sheets. Here’s a refresher on some common questions about how to properly report these long-lived assets under U.S. Generally Accepted Accounting Principles (GAAP). What’s included in book value? PPE is reported on the balance sheet at…
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Auditing standards require a year-end risk assessment. One potential source of risk may be a small business’s reliance on the owner and other critical members of its management team. If a so-called “key person” unexpectedly becomes incapacitated or dies, it could disrupt day-to-day operations, alarm customers, lenders and suppliers, and drain working capital reserves. Common…
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