Accounting Updates, Reporting Best Practices and Tax Extenders at Summer CPE Day– June 30, 2015 by Tracy Monroe

Cohen & Company hosted another successful CPE day, where we were able to provide our clients’ financial staff with valuable information to use in the everyday operations of their companies.

I touched on the state of the tax code; it’s no surprise that currently practitioners and taxpayers alike have more questions than answers. While we don’t know what the rules will be for 2015, we do believe an extenders package is yet again in our future, determining the fate of critical areas such as bonus depreciation and the R&D tax credit for at least one more year. I gave a sneak peek at Ohio’s new biennial budget due July 1, 2015, which is expected to include lowering the individual tax rate to under 5%. Part of the necessary discussion about taxes in general included, of course, what tax reform may look like from both sides of the aisle, and when we may see it. All conjecture at this point, but certainly an interesting discussion.

Below I’ve briefly summarized the other presentations from the day. Feel free to download presentation materials to learn more or keep an eye on our blog for more coverage on some of these topics in the coming weeks.

After months of pouring over the complex Repair and Maintenance regulations, Lisa Loychik, CPA, of Cohen & Company took the audience through some key areas, such as determining a Unit of Property (UOP), addressing RABI rules, replacing IRC Section 110 language in leases with more favorable terms, and opportunities related to tenant improvements. She also looked at real-world examples the firm saw during this past tax season, such as how to apply the regulations to multi-tenant buildings.

Craig Miller, CPA, CGFM, MBA, of Duffy + Duffy Cost Segregation Services shared with attendees his answers to the critical question: “What amount of unclaimed depreciation am I sitting on?” He focused on how the IRS-sanctioned engineered cost segregation study can be used to shorten the life of depreciation on many common building assets, such as carpet and padding or light fixtures. The result for both building owners and tenants can be a powerful tax-savings tool.

Jami Blake, CPA, and Tina Dzik, CPA, MBA, of Cohen & Company provided updates on recent ASUs issued and their impact. They covered ASU 2014-18: Accounting for Identifiable Intangible Assets in a Business Combination; ASU 2014-15: Presentation of Financial Statements – Going Concern; and, perhaps the most significant, ASU 2014-09: Revenue from Contracts with Customers. ASU 2014-09 affects all entities and removes inconsistencies in revenue recognition, providing more comparability between industries. Although not effective for some time, this standard will have significant impact on financial reporting and the way in which business is conducted and contracts are written.Jami and Tina also discussed the Simplification Initiative launched by the FASB in June 2014 to simplify accounting standards in targeted areas — both related to completed projects as well as projects currently in exposure draft form.

Justin Thomas, CPA, of Cohen & Company presented on internal financial reporting best practices, particularly identifying the most common weaknesses found when conducting due diligence for middle-market companies. He noted areas such as heavy customer concentration, outdated ERP systems, and not keeping up on state and local filing requirements can all serve as red flags during a transaction and ultimately can hurt the value of the deal.

Last but not least, Benesch attorney Michael Stovsky discussed a variety of information technology (IT) issues. He covered issues from our country’s lack of a comprehensive body of law surrounding privacy and security (noting that well over 90% of breaches happen daily to small and mid-sized businesses) and the need for boards of directors for companies of all sizes to have D&O insurance, to the do’s and don’ts of entering into contracts with IT vendors. His message on contracts: don’t forget to negotiate. Remember that you are not obligated to sign on the vendor’s dotted line. Negotiate your own terms and conditions before closing the deal.

Cohen & Company is not rendering legal, accounting or other professional advice. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts and circumstances.