Steve Cook is the managing member of Cook, Gola and Company, PLLC, Certified Public Accountants with offices in San Antonio and Austin. www.cookgola.com
From the August 30, 2011, Wall Street Journal, “Like a muscle, our brains appear to get fatigued after working for sustained periods of time, particularly if we have to concentrate intensely or deal with a repetitive task, says Michael Posner, an emeritus professor at the University of Oregon who studies attention.”
The article which was very interesting pointed out that sometimes a walk in the park is more beneficial than a big gulp of coffee. The idea is that coffee and other caffeine based products amps up the intensity level which reduces our ability to concentrate. Getting away from the task at hand for a short period both clears and refreshes the mind.
This appears to be sound advice indeed. Generally, I feel more alert after lunch (a small lunch). I probably do my best work between 1:30 and 3:30 each day. But I need my coffee!
I like coffee. I have developed a taste for it over the years. I even have favorites……and it isn’t your favorite grocery store’s brand. Personally I like Costa Rican Peabody and Jamaican Blue Mountain. A little Kenyan roast is also good in the morning. But the best coffee, especially after dinner, is Kona. Real Kona coffee is wooonderful…..and expensive. Don’t get the blends, they are rip-offs!
All this leads me to conclude that a walk in the park with a cup of your favorite coffee may offer the optimal in relaxing pick me up.
Showing posts with label AUDIT. Show all posts
Showing posts with label AUDIT. Show all posts
Tuesday, August 30, 2011
Wednesday, November 17, 2010
WHY THE INCREASE IN AUDIT COSTS?
Time. It all comes down to the amount of time a firm and its employees must spend gathering support and documentation. An increase in audit hours leads to an increase in overall audit costs due to the per hour rate that most firms institute. Why the increased support and documentation? Two words: new standards.
These new accounting and auditing standards are often difficult to interpret and can be even harder to apply. Some of the more wide-known changes include:
• Greater responsibility related to the detection of material fraud
• Gaining a better understanding of the design and operation of a client’s internal controls
• Obtaining specialized knowledge regarding fair value measurements
• Determining the best answer when presented with conflicting guidance in professional literature
What can firms (who require audits) do to assist the auditors and decrease audit costs? The following list provides a few basic rules to follow to make an audit as smooth as butter (butter? Maybe crunchy peanut butter):
• Ask your auditors for a list outlining what documents they will need. Some likely suspects:
o Articles of incorporation
o Debt agreements
o Significant leases
o Minutes of the Board of Directors
o IRS filings
• Designate sufficient personnel to the audit. For example:
o CFO
o Controller
o Accounts receivable manager
o Accounts payable manager
o Internal auditor
• Hold a meeting to introduce the audit firm to any personnel they may need to have contact with.
• Develop a joint audit plan that identifies deadlines and the materials needed at those deadlines.
Instituting these simple steps can greatly reduce confusion, excessive communications, and thus audit hours. For further questions regarding the audit process and how to simplify it, contact your local Certified Public Accounting firm.
These new accounting and auditing standards are often difficult to interpret and can be even harder to apply. Some of the more wide-known changes include:
• Greater responsibility related to the detection of material fraud
• Gaining a better understanding of the design and operation of a client’s internal controls
• Obtaining specialized knowledge regarding fair value measurements
• Determining the best answer when presented with conflicting guidance in professional literature
What can firms (who require audits) do to assist the auditors and decrease audit costs? The following list provides a few basic rules to follow to make an audit as smooth as butter (butter? Maybe crunchy peanut butter):
• Ask your auditors for a list outlining what documents they will need. Some likely suspects:
o Articles of incorporation
o Debt agreements
o Significant leases
o Minutes of the Board of Directors
o IRS filings
• Designate sufficient personnel to the audit. For example:
o CFO
o Controller
o Accounts receivable manager
o Accounts payable manager
o Internal auditor
• Hold a meeting to introduce the audit firm to any personnel they may need to have contact with.
• Develop a joint audit plan that identifies deadlines and the materials needed at those deadlines.
Instituting these simple steps can greatly reduce confusion, excessive communications, and thus audit hours. For further questions regarding the audit process and how to simplify it, contact your local Certified Public Accounting firm.
Tuesday, August 31, 2010
IRS Scrutiny of Small Nonprofits
Recent activity by the federal government suggests that increased scrutiny will be placed on nonprofit entities. This increased scrutiny includes an increase in the number of audits. Many smaller nonprofits may shrug off this recent development as an issue that does not apply to their organization. The assumption, “we’re too small to be noticed”, would be wrong.
The IRS is currently beefing up their Tax Exempt and Governmental Entities (TE/GE) Division with 155 new employees. 100 of these will work in examinations. What does this mean for your organization? You have a greater chance of receiving an inquiry or being audited. The TE/GE Division expect to conduct around 500 audits of randomly selected exempt organizations.
So, rather than sitting back on your haunches and waiting to see if your entity is unlucky enough to draw the short straw, get proactive! Be audit ready. Below are a few practical measures to consider now.
Organizational documents. Articles, bylaws, determination letters, and other formal documentation will be requested during the audit. Make sure you can put your hands on these and that your organization is operating within the standards set forth in the documentation.
Minutes of meetings. Make sure the minutes reflect all actions of the organization’s governing body and of any committee having the power to bind the organization.
Payroll information. For all employees, make sure you have an employee file containing W-2s, copies of the Social Security card and driver’s license, and insurance documentation. If you have any contract labor, make sure that the contract labor classification is defensible. For descriptions on employment status, see the February 2010 issue of The PPC Nonprofit Update.
Financial records. Ensure that you have good record of all financial statements, receipts, invoices, check registers, bank statements, expense reports, and any other financial documentation that supports your books.
Nonprofits of ALL sizes should be aware of the potential for an IRS audit. Be prepared by following the above suggestions
The IRS is currently beefing up their Tax Exempt and Governmental Entities (TE/GE) Division with 155 new employees. 100 of these will work in examinations. What does this mean for your organization? You have a greater chance of receiving an inquiry or being audited. The TE/GE Division expect to conduct around 500 audits of randomly selected exempt organizations.
So, rather than sitting back on your haunches and waiting to see if your entity is unlucky enough to draw the short straw, get proactive! Be audit ready. Below are a few practical measures to consider now.
Organizational documents. Articles, bylaws, determination letters, and other formal documentation will be requested during the audit. Make sure you can put your hands on these and that your organization is operating within the standards set forth in the documentation.
Minutes of meetings. Make sure the minutes reflect all actions of the organization’s governing body and of any committee having the power to bind the organization.
Payroll information. For all employees, make sure you have an employee file containing W-2s, copies of the Social Security card and driver’s license, and insurance documentation. If you have any contract labor, make sure that the contract labor classification is defensible. For descriptions on employment status, see the February 2010 issue of The PPC Nonprofit Update.
Financial records. Ensure that you have good record of all financial statements, receipts, invoices, check registers, bank statements, expense reports, and any other financial documentation that supports your books.
Nonprofits of ALL sizes should be aware of the potential for an IRS audit. Be prepared by following the above suggestions
Thursday, March 11, 2010
REDUCE YOUR AUDIT RISK
Tax season is in full throttle and many of you may be in the process of compiling the information needed to file your return. As much as you may want to speed through this process, it’s important to slow down and make sure you’re not raising any red flags with the IRS. Here are some tips to get you through tax season and reduce your chance of being audited.
-Don’t use round numbers for deductions. This indicates that you are estimating rather than keeping accurate records.
-Record your income accurately. If you are paid $2,150 from a client and you round that down to $2,000 while the client reports the correct amount, you will likely catch the attention of the IRS.
-Pay estimated taxes on time and keep them current.
-Pay attention to notices from the IRS. If you wait a while to respond, the IRS may already be knocking on your door.
-Do not borrow from the taxes your employees have been paying. This money is withheld for a reason. Send the payroll taxes in a timely manner.
-Be wary of classifying expenses as “miscellaneous”. If you do use this category, make sure you have good documentation.
-Avoid the twelve notorious tax scams, otherwise known as the “Dirty Dozen”. These include:
Phishing
Hiding income offshore
Filing false or misleading forms
Abuse of charitable organizations and deductions
Return preparer fraud
Frivolous arguments
False claims for refund and requests for abatement
Abusive retirement plans
Disguised corporate ownership
Zero wages
Misuse of trusts
Fuel tax credit scams
--LeAnn Carlson is the Audit Manager for Cook & Associates, a full service public accounting firm operating from offices in San Marcos and San Antonio, TX.
-Don’t use round numbers for deductions. This indicates that you are estimating rather than keeping accurate records.
-Record your income accurately. If you are paid $2,150 from a client and you round that down to $2,000 while the client reports the correct amount, you will likely catch the attention of the IRS.
-Pay estimated taxes on time and keep them current.
-Pay attention to notices from the IRS. If you wait a while to respond, the IRS may already be knocking on your door.
-Do not borrow from the taxes your employees have been paying. This money is withheld for a reason. Send the payroll taxes in a timely manner.
-Be wary of classifying expenses as “miscellaneous”. If you do use this category, make sure you have good documentation.
-Avoid the twelve notorious tax scams, otherwise known as the “Dirty Dozen”. These include:
Phishing
Hiding income offshore
Filing false or misleading forms
Abuse of charitable organizations and deductions
Return preparer fraud
Frivolous arguments
False claims for refund and requests for abatement
Abusive retirement plans
Disguised corporate ownership
Zero wages
Misuse of trusts
Fuel tax credit scams
--LeAnn Carlson is the Audit Manager for Cook & Associates, a full service public accounting firm operating from offices in San Marcos and San Antonio, TX.
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