August 2013
ASSURANCE & ADVISORY ____________________________________________________________ FASB Exposure Draft on Going Concern
TAX ____________________________________________________________ Treasury, IRS Announce Extension for Certain FATCA-Related Deadlines
BUSINESS RISK & TECHNOLOGY SERVICES ____________________________________________________________ Frustrated with Your Accounting Software? Maybe It’s Not the Software
Contents August 2013
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ASSURANCE & ADVISORY 2 FA SB E X P O SUR E D R A F T O N G OI NG C O N C E R N In June 2013, the FASB issued an exposure draft, which would require management to assess going concern.
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TAX 3 T R E A SUR Y, IRS A N N OU N C E E X T E N S IO N F OR C E R TA I N FAT C A - R E L AT E D D E A D L I N E S Treasury and the IRS, July 12, announced revised timelines for Foreign Account Tax Compliance Act (FATCA) withholding, new account opening procedures, due diligence transition rules on pre-existing obligations, reporting U.S. accounts, and registration deadlines.
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BUSINESS RISK & TECHNOLOGY SERVICES 4 F RUS T R AT E D W I T H YOUR AC C OU N T I NG S OF T WA R E ? M AY BE I T ’S N O T T HE S OF T WA R E CFOs and Controllers often complain about their ERP Software, saying it’s not a good fit, it’s slow, or that they can’t get the kind of reporting they want out of it.
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ASSURANCE & ADVISORY
FASB EXPOSURE DRAFT ON GOING CONCERN BY SUZIE DORAN | PARTNER
SDoran@SingerLewak.com | 310.477.3924
SUMMARY: In June 2013, the FASB issued an exposure draft, which would require management to assess going concern. If the company is determined by management to have met either (i) the more likely than not assessment that it will be unable to meet its obligations within 12 months after the financial statement date or (ii) known or probable that the company will be unable to meet its obligations under the ordinary course of business within 24 months after the financial statement date, then, management would need to disclose additional information about going concern in the financial statements. SEC filers would be required to analyze if there is substantial doubt about the company’s ability to continue as a going concern, which would result in required disclosures that would use terms such as “going concern” and the findings supporting the “substantial doubt” conclusion. Comments regarding the exposure draft are due by September 24, 2013. B AC KG RO UN D: FASB proposed ASU, “Presentation of Financial Statements, Disclosure of Uncertainties about an Entity’s Going Concern Presumption” to give guidance on
• Internal matters such as substantial dependence on success of proposed project and a need to significantly revise operations management’s responsibilities on evaluation and disclosing going concern uncertainties. Without specific guidance on disclosures regarding going concern, divergent practices exist between companies. For each reporting period, management is expected to analyze going concern for a period of 24 months from the balance sheet date. An SEC filer is also expected to evaluate if there is substantial doubt regarding going concern for the same period.
• External matters such as litigation and loss of a key supplier, customer, or patent FINANCIAL STATE ME NT DISCLOSURE S: The following are required disclosures: • Primary conditions and events that resulted in the company being unable to meet obligations • Potential impact of those conditions and events on the company • Management’s evaluation of the significance of those conditions and events
The proposed ASU gives the following as examples of conditions and events that may indicate going concern:
• Mitigating conditions and events
• Negative trends in operating metrics such as operating losses and negative working capital
NE X T STE PS:
• Indications of financial difficulties such as defaulting on loans, inability to get credit from suppliers and a history of restructuring debt or getting new capital
• Management’s plans to address the company’s inability to meet its obligations Comments are due by September 24, 2103. An effective date will be determined after all feedback has been considered. SUZIE DORAN CAN BE REACHED AT SDORAN@SINGERLEWAK.COM OR 310.477.3924 August 2013
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TA X
TREASURY, IRS ANNOUNCE EXTENSION FOR CERTAIN FATCA-RELATED DEADLINES Treasury and the IRS, July 12, announced revised timelines for Foreign Account Tax Compliance Act (FATCA) withholding, new account opening procedures, due diligence transition rules on pre-existing obligations, reporting U.S. accounts, and registration deadlines. A senior Treasury official said that the additional time was intended to allow for more jurisdictions to sign up for intergovernmental agreements (IGAs) prior to the FATCA withholding deadline. Notice 2013-43 gives withholding agents an additional six months to begin withholding on withholdable payments made to foreign financial institutions (FFIs) and non-financial foreign entities (NFFEs). Specifically, a withholding agent will be required to begin FATCA withholding on withholdable payments made after June 30, 2014 on payments that are not considered grandfathered obligations. Previously, the final regulations required withholding on payments after December 31, 2013. The notice also provides that the
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The jurisdiction will be treated as having an IGA in effect if it is listed on Treasury’s website as having the IGA in effect even where the jurisdiction has signed but not yet brought the IGA into force. definition of a grandfathered obligation will be revised to include obligations outstanding on July 1, 2014. The timeline for foreign financial institutions to register on the registration portal is also extended under the notice for six months and is expected to open on August 19, 2013.
A senior Treasury official said that the additional time was intended to allow for more jurisdictions to sign up for intergovernmental agreements (IGAs) prior to the FATCA withholding deadline.
Notice 2013-43 does not affect the timing in the final regulations for withholding of gross proceeds, passthru payments, and payments of U.S. source fixed, determinable, annual and periodic (FDAP) income with respect to offshore obligations by persons not acting in an intermediary capacity. Notice 2013-43 will be published in Internal Revenue Bulletin 2013-31 on July 29, 2013. The text of Notice 2013-43 is available at http://link.reuters.com/red69t
ENTERPRISE RISK MANAGEMENT SERVICES
YOUR ACCOUNTING SOFTWARE: FRUSTRATED? MAYBE IT’S NOT THE SOFTWARE BY BOB GREEN | LEAD PARTNER: BUSINESS RISK & TECHNOLOGY SERVICES BGreen@SingerLewak.com
CFO’s and Controllers often complain about their Accounting Software (and/or their “ERP” Software), saying it’s not a good fit, it is slow, or they can’t get the kind of reporting they want out of it. Although we are very active with helping clients evaluate and select new software and implementation partners, we urge CFO’s and Controllers to consider whether it is the existing software that is the root of the frustrations - or is it the way it was setup and trained-on that is causing the angst? It’s certainly easy enough to blame the software product for the inefficiencies a business faces with reporting, transaction processing and the like. However, businesses may be well served by considering that perhaps their ERP product isn’t as bad as they think; rather, they might consider whether their original implementation vendor did them a disservice by poor configuration and training. The success in ERP comes more from the “little things” – like vendors listening to needs. This can be just as important as the software competently manag-
ing the important functional requirements. Software frustrations can come from so many angles. Some avoidable. Prioritizing a business’ real software requirements and needs may not have occurred when the original implementation vendor did an installation. Or, perhaps the buyer didn’t offer up enough of a budget, or a competent internal project leader to get the job done right. In that case, the vendor should have been candid enough to tell you that your success will be diminished without proper investment and resources. (Oh, sorry. That would mean that they might lose the sale of the software. Keep that in mind…) We’re suggesting that CFO’s and Controllers consider whether it’s really the software that is the root
of their frustrations when seeking to upgrade to a new ERP solution. Clearly, many cases call for an upgrade. But, many upgrades are also unnecessary – and could have been avoided with better training, configuration and listening by the original implementation vendor. The investment in improving the business processes and modifying software configurations of existing software is often far less expensive – and often more efficient and effective – than upgrading to new software. We’re here to help objectively, independently, and without bias. We do NOT sell ERP/accounting software – but we work in this area every day by helping our clients evaluate, upgrade, procure, manage and – optimize it. Call or email me below. Our team of CPA’s and technologists have hands-on business and technology experience – and are ready to help. BOB GREEN CAN BE REACHED AT BGREEN@SINGERLEWAK.COM OR 818.999.3924
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