ASSURANCE & ADVISORY ____________________________________________________________ CFO Essentials Briefing: SEC Issues Guidance on the Implementation of the JOBS Act
TAX ____________________________________________________________ IRS Wants You to Take Advantage of Tax Credits and Tax Relief
ENTERPRISE RISK MANAGEMENT SERVICES ____________________________________________________________ ERP Software Implementations Consider Among the “7 Habits” to Ensure Success
From the Managing Partner
KINGS WIN! KINGS WIN!
Contents June 2012
FROM THE MANAGING PARTNER 2 K I NG S W I N! K I NG S W I N! What a great day we had last week for Los Angeles and all of Southern California (in fact all of California), with the Los Angeles Kings winning the Stanley Cup. Viewed as only having an outside chance as the season began in October, and playing that way through the first half of the season, there is a lot we can learn from the Kings’ victory. ______________________________________________________________________________________________________________________________________________________
ASSURANCE & ADVISORY 3 C F O E S SE N T I A L S BR IE F I NG : SE C IS SUE S GUIDA N C E O N T HE IMP L E ME N TAT IO N OF T HE JOB S AC T On May 3, the staff of the SEC updated its FAQ, Generally Applicable Questions on Title I of the JOBS Act. The following is a brief summary of some of the key provisions. ______________________________________________________________________________________________________________________________________________________
TAX 5 IRS WA N T S YOU T O TA K E A D VA N TAG E OF TA X C R E D I T S A N D TA X R E L IE F The Internal Revenue Service is encouraging the small business owners to take advantage of particularly two tax credits and a tax relief program currently available (IR-2012-56). The two tax credits are the expanded Work Opportunity Tax Credit (WOTC) for veterans and small employer health insurance premium tax credit. ______________________________________________________________________________________________________________________________________________________
ENTERPRISE RISK MANAGEMENT SERVICES 6 E R P S OF T WA R E IMP L E ME N TAT IO N S – C O N S ID E R A MO NG T HE “7 H A BI T S” T O E N SUR E SUC C E S S CFOs, you are well aware of the emotional response that the letters “ERP” can bring to executives and board members. The response is often not pleasant. That does not have to be the case. If there is one thing we can confirm from our years of experience with ERP selection and implementation project management, it is that more often successes are assured from ERP upgrades/projects when you use the “begin with the end in mind” strategy (thank you Steven Covey).
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F R O M T H E M A N AG I N G PA R T N E R
KINGS WIN! KINGS WIN! BY DAVID KRAJANOWSKI | CO-MANAGING PARTNER email@example.com | 949.261.8600
What a great day we had last week for Los Angeles and all of Southern California (in fact all of California), with the Los Angeles Kings winning the Stanley Cup. Viewed as only having an outside chance as the season began in October, and playing that way through the first half of the season, there is a lot we can learn from the Kings’ victory. Perseverance – With no championship title for the Kings’ Franchise in 45 years, it would be easy to accept what has been, and accept the future as predicted. A look at the Kings’ history reveals a team constantly trying to reinvent itself as the economics of the team, the technology, the players and the environment changed. While ultimate success was elusive, the vision, objectives, strategies and tactics were constantly reviewed with enthusiasm that the next year would be “the year.” A “never say die” attitude is key. If you always do what you have always done, you will always get what you always got (a fact many, many teams and businesses today still don’t get). Commitment to the Team Concept – Once determined by own-
ership/management, there has to be a complete buy-in by everyone in the organization. Those not buying-in or not having the skills to buy-in have to be moved out to make room for those that do. A team-based organization will always bring in the skills needed and strive to develop the chemistry to build the right team. There has to be compassion for those performing in the organization, as well as those displaced for the greater good. Accountability – Those remaining may have the skill or buy-in, but just aren’t performing. Just as the Kings changed out coaches and players as they adapted to the changing environment of their competitors as the season progressed, you too must constantly reassess your team and readjust on a timely basis before complacency sets in, taking the whole team down. The Kings were not afraid to pull the trigger, picking up an asset after careful consideration. Self-Policing & Sense of Pride – As the season wore on, the Kings players took on the responsibility of policing themselves and holding each other account-
able outside of ownership and management. They came to each other’s defense and showed the competition that they could take the hard hits and hit back harder. They could win offensively or defensively depending on the night. Peaking at the Right Time – The Kings never lost sight of the ultimate goal: making the playoffs. Winning a fight to lose a game was not the goal. Once in the playoffs, anything can happen, even after coming in 8th place and dealing with constant reseeding each round forcing you to always play the best team left. Pick your battles carefully as a new fight is just around the corner. Attitude – Once the Kings started their incredible winning streak on the road, their attitude already had their competition on their heels. You could sense it. The best defense is often the best offense. Do you feel this in your organization? What needs to change? Thank you Kings for the experience and the reminder of what it takes to WIN!
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ASSURANCE & ADVISORY
CFO ESSENTIALS BRIEFING: SEC ISSUES GUIDANCE ON THE IMPLEMENTATION OF THE JOBS ACT BY JIM PITRAT, CPA | CO-MANAGING PARTNER firstname.lastname@example.org | 310.477.3924
On May 3, the staff of the SEC updated its FAQ, Generally Applicable Questions on Title I of the JOBS Act. The following is a brief summary of some of the key provisions: • Generally, all non-convertible debt securities issued over the prior three-year period must be counted against the $1 billion debt limit, in determining whether a company has lost its EGC status. -- The Staff will not object if a company does not count debt securities in which securities issued in a private placement and therefore subject to restrictions on resale are exchanged for newly registered non-convertible debt securities having terms identical to the original restricted securities. • The Staff at the SEC believes view that Asset Backed Securities issuers do not qualify for EGC status. • The Staff of the SEC generally believes that investment com-
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• If a predecessor company did not qualify as an EGC because its first sale of common equity securities occurred on or before December 8, 2011, the successor company also would not qualify.
panies also do not qualify as EGCs, but a business development company may qualify as an EGC. • Even if gross revenues exceeded $1 billion in prior years, a company could qualify as an EGC, even if gross revenues exceeded $1 billion in the most recent year. • The Staff believes that it would be appropriate for financial institutions to use the same approach in calculating gross revenue as that used by financial institutions to determine their status as a “smaller reporting company.”
• Staff comment letters and issuer responses thereto on confidential draft submissions will be publicly released on EDGAR no earlier than 20 business days following the effective date of the registration statement • The Staff will not object if an EGC presents the ratio of earnings to fixed charges in a registration statement for the same number of years for which it is required to provide selected financial data under the JOBS Act’s. • EGCs must comply with XBRL. • The effective date for the definition of an EGC applies only to whether the first sale of common equity securities pursuant to an effective regis-
tration statement occurred on or before December 8, 2011. A company, therefore, otherwise eligible for EGC treatment would not be disqualified if it issued only debt securities on
Even if gross revenues exceeded $1 billion in prior years, a company could qualify as an EGC, even if gross revenues exceeded $1 billion in the most recent year or before that date. • An EGC not qualifying as a smaller reporting company is required to include three years of audited financial statements in its Form 10-K. • An entity that has lost its EGC status because of a disqualifying event established by
the JOBS Act may not regain its EGC status. • The Staff will deem the EGCs to be public entities (i.e., because they qualify as “issuers” under Section 2(a) of the Sarbanes-Oxley Act), and thus not excluded from compliance with the provisions of the FASB ASC applicable to public entities. • If an EGC initially chooses to take advantage of the extended transition period for complying with new or revised financial accounting standards, the Staff will not object if the entity later decides to opt out of the extended adoption and transition period. • If an EGC discovers a material error in its financial statements after initial submission of a draft registration statement on a confidential basis, then the EGC may elect to submit a
confidential draft amendment to the registration statement that corrects the error. • While EGCs are required to furnish only the disclosures concerning executive compensation that are required of smaller reporting companies, EGCs are not permitted to follow the provisions applicable to smaller reporting companies in management’s discussion and analysis (MD&A), which limits the discussion to the latest two years. The discussions in filings on Form 10-K, would have to cover the three-year period. This PCEB constitutes a summary of some key provisions of the FAQ addendum, and not a full analysis. We recommend a full and thorough review of the FAQ.
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IRS WANTS YOU TO TAKE ADVANTAGE OF TAX CREDITS AND TAX RELIEF The Internal Revenue Service is encouraging the small business owners to take advantage of particularly two tax credits and a tax relief program currently available (IR-2012-56). The two tax credits are the expanded Work Opportunity Tax Credit (WOTC) for veterans and small employer health insurance premium tax credit. The tax relief program encouraged by the IRS is the Voluntary Classification Settlement Program (VCSP) for inadvertently classifying employees as independent contractors in prior periods. WOTC is designed to encourage employers to hire individuals including veterans belonging to specific targeted groups. The Vow to Hire Heroes Act of 2011 expanded this credit so that employers are encouraged to hire more veterans. Under the Act, employers may take advantage of this credit for hiring newly eligible veterans after November 21, 2011 and before January 1, 2013. The employers who hire the veterans must file certification forms with their state workforce agencies within 28 days after the veterans begin working. The maximum credit is $9,600 per 5 | SingerLewak
veteran ($6,240 for tax-exempt organizations). The other credit is small employer health insurance premium tax credit that is available to small employers paying at least half of the premiums for health insurance coverage for their employees under qualifying arrangements. The Patient Protection and Affordable Care Act of 2010 enacted this credit in order to encourage the small employers in providing the health insurance coverage to their employees. The maximum credit available is 35% of premiums paid by the small businesses (25% for tax-exempt organizations) from 2010 to 2013. The maximum credit will then increase to 50% after 2013. Lastly, the Voluntary Classification Settlement Program (VCSP) is available for employers who inadvertently classified their employees as independent con-
tractors in prior periods. This program was initiated by the Internal Revenue Service back in September 2011. By entering into this program, employers may correctly classify their workers as employees and settle on the delinquent employment taxes with the Internal Revenue Service in favorable terms, including audit protection on these taxes for prior years.
WOTC is designed to encourage employers to hire individuals including veterans belonging to specific targeted groups As your tax and business advisors, we want to make sure that you are aware of the planning opportunities that are currently available. Please feel free to contact any of our tax professionals with any questions you have regarding this or any other tax issues.
ENTERPRISE RISK MANAGEMENT SERVICES
ERP SOFTWARE IMPLEMENTATIONS – CONSIDER AMONG THE “7 HABITS” TO ENSURE SUCCESS BY BOB GREEN, CPA.CITP | PARTNER, PRACTICE LEADER email@example.com
CFOs, you are well aware of the emotional response that the letters “ERP” can bring to executives and board members. The response is often not pleasant. That does not have to be the case. If there is one thing we can confirm from our years of experience with ERP selection and implementation project management, it is that more often successes are assured from ERP upgrades/ projects when you use the “begin with the end in mind” strategy (thank you Steven Covey).
We strongly recommend that the leadership or steering committee first develop key objectives as to what is to be achieved, and how success of these objectives will be measured This sounds simple, but it takes strategic leadership and mindful management of an ERP upgrade
we recommend people consider when taking on a critical ERP upgrade project.
project team’s activities - to achieve. Simply, when you take on an ERP upgrade, we strongly recommend that the leadership or steering committee first develop key objectives as to what is to be achieved, and how success of these objectives will be measured. Then, more specifics need to be developed re: what the “end” will look like, from a reporting and process improvement perspective. And, consider the specific information needs and data fields that will be critical for capture in the ERP solution, as well as how they will be used in assessment of the business’ performance. These are but a few of many things that
Consider the specific information needs and data fields that will be critical for capture in the ERP solution, as well as how they will be used in assessment of the business’ performance WHAT’S AHEAD: Next month we’ll hit on a deeper discussion about these recommended activities, and by September we’ll be sharing these and some ERP success stories in our CFO Essentials Roundtables – stay tuned!
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