Monthly Archives: August 2015

Building an Effective Board of Directors

Pam WilliamsAugust 31, 20150 Comment

by Rebecca Lunn hands raised

For many organizations, the board of directors is one of their most important tools. A good board of directors can steer the organization in the right direction by adopting comprehensive governance and financial management policies, and ensuring the prudent use of all assets. However, in order to provide sound financial oversight, board members must have a certain level of financial literacy to properly understand the organization’s financial statements.

L&C audit partner, Pam Williams, notes that a board member orientation including information on the financial statements and accounting and audit processes, as well as mission and operational matters, is a good way to educate new board members. An effective board should also have at least one member with a financial background. The organization could even consider having the board member with financial expertise, or the organization’s CFO or Controller, conduct an annual training session for the full board.

Audit partner Karen Stanley states, “You will often rely on the financial experts on the board and outside consultants, such as the organization’s CPA, to interpret the statements for you. But it’s important to remember that everyone has a duty of care to the board.” Perhaps most importantly, board members should be encouraged to ask questions when trends or budget versus actual comparisons appear unreasonable. A simple task, such as reviewing the board financial packets prior to the meeting, can help a board member increase their financial knowledge and be more prepared to ask questions during the board meetings. By taking steps such as these, board members can increase their level of financial expertise in order to fulfill their role and responsibility to the organization.

Additional information can be found online here and here. Please also feel free to contact our office with any questions you have!

Rebecca is an audit senior with Langdon & Company LLP. She has experience working with various non-profits, across many industries.

There is an App for that

Pam WilliamsAugust 24, 20150 Comment

by Dwayne Murphy

Are expense reports frustrating to fill out? Can’t find that receipt you need? Keeping up with travel expenses can be a nightmare but with our technology today and smartphone capability, keeping up with travel expenses can be, and should be easy. There are a number of apps that will make the difficulty of expense tracking and reporting a thing of the past. Below is a brief description of just a few of the very many apps that that are available to help track and report expenses.

Tripit

Automated travel management app that requires little or no data entry. For example it gathers all of the information from the confirmation (e.g. airline, hotel, car rental & restaurant confirmations) when you email it to the app.
Organizes everything by day, trip and time and forms an itinerary that you can access and share with others.
Edit plans manually and sync with your calendar.
There is a free version and a paid version with the paid version including extra benefits such as flight tracking and reward program tracking.

BizXpense Tracker

This paid app records all of your expenses and provides a running total for each business trip you take and also has the ability to track time as well
Easy mileage tracking by entering total distance or start and stop odometer reading and will remember odometer readings for your next trip.
Remembers total mileage from previous trips and will pre-fill mileage when locations are entered.
Create and manage categories and sub-categories and mark as “reimbursed” or “submitted”.
Print finished expense reports in multiple formats.

Expensify

This free app lets you snap a quick picture of your receipt and select which report it goes on then Expensify does the rest.
Tracks your mileage through your phone’s GPS and allows time entry as well.
Easy report submission by use of email or the option to save to a PDF.
Integrates with any accounting, payroll, CRM or ERP solution including QuickBooks and ADP.

We all have enough to worry about and expense reports should not be one of them. There are plenty of apps out there to make life easier and hopefully the list above can give you an idea of which one will be the perfect fit for you.

Dwayne ([email protected]) is an audit senior with Langdon & Company LLP. He works with a variety of non-profit clients

How to Prepare for an Audit

Pam WilliamsAugust 17, 20150 Comment

by Lee Byrd

For many organizations, an audit is an annual process that requires the Organization’s personnel to devote additional time and effort above and beyond their day-to-day responsibilities. It can be tiresome and unwelcome to those assigned with task of handling the audit. However, there are many ways in which an Organization can prepare for an audit which could lead to less time the auditor’s spend on site, decreased stress around deadlines, and an overall more efficient audit process.

PBC List – PBC stands for “Prepared By Client” and this is a schedule of initial audit requests provided by the auditor, which are to be prepared by Organization personnel. Because the auditor’s schedule is often tight, it is essential that the items on the PBC List are prepared and ready for the auditor prior to the start of fieldwork. Items that are not completed timely could cause significant delays in the audit process.
Prepare throughout the year – If the Organization has been audited before, personnel likely have an idea of key information or schedules that will be requested by the auditor. Rather than waiting until the PBC List is received, it may be helpful to update these schedules periodically throughout the year. Such items include investment, debt or fixed asset rollforwards which must be prepared from underlying data and records. As these schedules are updated, be sure to keep those supporting documents in a file or folder to provide the auditor at year-end with the audit package.
Organization – Keeping your audit files and underlying support organized will be key to aiding the audit efficiency. Items from the PBC List should be accumulated in folders and labeled according to the PBC List numbering, if possible. This will aid the auditor in identifying and processing the information quickly. Additionally, having supporting documentation such as invoices and deposits filed in an orderly manner will allow Organization personnel to quickly pull support requested by the audit throughout fieldwork. The less time it takes to provide the auditor requested documentation, the less time the auditor must spend on site.
Designated Personnel – While it is important to delegate preparation of audit schedules and accumulation of other requested support to financial personnel throughout the organization, it is important to designate an individual, such as a controller or CFO, as the audit contact. This individual will be responsible for communicating deadlines and any delays to the audit team. More importantly, this individual should review all schedules and support prepared by other personnel prior to providing that information to the audit team. Ensuring that provided information is complete and accurate will prevent duplication of effort and audit findings.
Information is Key – Know what has happened within the organization during the year. The auditor will ask about significant events, variances from prior year, and variances from budget, just to name a few. Providing clear, concise explanations for these variances will allow the auditor to document appropriately. Additionally, any information that can be provided to the auditor prior to the start of fieldwork will allow the auditor to develop expectations and may reduce the number of variance inquiries made throughout the audit.
Communication – Your chosen auditor should always be open to communication from their clients, whether during the actual engagement or throughout the year. Be sure to reach out with questions so that issues can be resolved prior to the start of the audit. Additionally, if you feel that you will not have the requested information prepared by the designated date, notify the auditor immediately so that scheduling and deadlines can be addressed as soon as possible.

It is equally important to the audit firm and the Organization for the audit to be as efficient and seamless as possible. The above suggestions should aid in creating a pleasant audit experience for all parties involved.

Langdon & Company LLP’s audit team is here to help. Contact us with questions regarding your audit engagement. Lee Byrd ([email protected]) is an Audit Manager at our Firm and has over 7 years of experience with a variety of clients.

How to Amend a 1040

Pam WilliamsAugust 10, 20150 Comment

by Susan Dean

Have you discovered an error after filing your personal income tax return? Did you forget to report income or claim deductions? Have you received a “corrected” tax reporting document such as a Corrected Form 1099? What should you do if you fall into one of these categories? Depending on the circumstances, you may need to amend your tax return.

To amend your Form 1040, U.S. Individual Inco from Susan me Tax Return, you should file a Form 1040X, Amended U.S. Individual Income Tax Return. Form 1040X will become your new tax return, changing your original return to include any new information.

Page one of Form 1040X is a summary of your 1040 information, both as previously filed and what you are currently reporting. Column A reports the “Original amount” as reported on a prior Form 1040 (or prior 1040X). This is the amount(s) you are updating or “amending.” Column C reports the “Corrected amount” or the amount that should have been reported on the original return, the amount you are updating. That leaves Column B. Column B shows the “Net change” between Column A and Column C. Column B reports the difference in what was reported (Column A) and what should have been reported (Column C). Form 1040X gives a visual comparison of your 1040, both before and after the change(s). The form shows the increase or decrease to your taxable income and/or tax liability.

When filing an amended tax return, you must explain the reason for the amendment. This explanation is reported on Part III, Explanation of changes. In this section you should communicate to the Internal Revenue Service (IRS) why you are filing Form 1040X. The reason can vary from receiving a late or corrected Form 1099; forgetting to claim a deductible charitable contribution or business expense; reporting additional taxable income; or changing the originally filed filing status. No matter the reason, the IRS wants to know why you are amending and what form(s) and line numbers have changed as well as any supporting schedules that have been affected by the change(s).

Once you have completed Form 1040X by reporting the corrected information, explained the reason for the change(s) and attached any necessary forms and/or schedules, you are ready to sign and file your amended return. Depending on the change in your overall taxable income and/or tax liability, you may owe additional tax to the IRS or you could be due a tax refund. The state you live in and the outcome of your tax liability determines where you file your amended return. Before mailing your amended return, please confirm the correct address in the current year Form 1040X instructions.

Please note if you are amending your federal income tax return, you also may need to amend your state income tax return. Refer to your state income tax return form instructions on when and how to amend your state income tax return or contact your personal certified public accountant.

For more information on amending your Form 1040, please refer to the IRS website and their section on Amended Tax Return Frequently Asked Questions. If you think you may need to amend your personal income tax return and would like further advice on amending or would like to request assistance in amending your personal tax return, please contact our office.

Susan ([email protected]) is a Tax Manager working primarily with closely-held family businesses and corporations.