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PRESS RELEASE: NC Deferring Interest

Rachel OwensApril 1, 20200 Comment

FOR IMMEDIATE RELEASE Contact: Joseph Kyzer<mailto:[email protected]>

Tuesday, March 31, 2020

North Carolina Leaders Announce Shared Support for Deferring Interest on Income Tax Until July 15

Raleigh, N.C. – North Carolina leaders announced shared bipartisan support for deferring the accrual of interest on state income taxes filed before July 15, 2020, in a joint statement released by General Assembly lawmakers and Governor Cooper on Tuesday.

View on SpeakerMoore.com<http://speakermoore.com/north-carolina-leaders-announce-shared-support-deferring-interest-income-tax-july-15/>

The deadline for state and federal tax filings were recently delayed to July 15, 2020, and penalties for late payments were also waived.

However, the North Carolina General Assembly and Governor must approve legislation to defer accrual of interest on income taxes, an action that state leaders announced shared support for approving retroactively on Tuesday.

State Senate Democratic Leader Dan Blue (D-Wake), Senate Leader Phil Berger (R-Rockingham), House Speaker Tim Moore (R-Cleveland), and House Democratic Leader Darren Jackson (D-Wake) released a joint statement with Governor Cooper on Tuesday.

“One of the biggest questions we are getting on economic issues is whether families and businesses will be responsible for paying interest on their income taxes now that the filing deadline is delayed,” the five state leaders said in a joint statement Tuesday.

“Today, we can announce our shared support for retroactively waiving the accrual of those interest payments to provide further tax relief for North Carolinians amid the COVID-19 crisis, an important step to offer certainty and recovery assistance for millions of our state’s residents.”

Under North Carolina law, the liability for failure to pay estimated income tax on time is the accrual of interest. The Secretary of the Department of Revenue is not authorized to waive interest and the agency is required to charge interest on any unpaid tax.

Therefore, the General Assembly and Governor must approve legislation to ensure taxpayers are not liable for such interest between April 15, 2020, and July 15, 2020, the extended deadline.

____________________________________________________________________________________

NORTH CAROLINA GENERAL ASSEMBLY

Legislative Building | 16 West Jones Street | Raleigh, NC 27601 | 919-733-4111

What Can We Do For You?

Pam WilliamsApril 24, 20170 Comment

By Lee Byrd

Small business owners and nonprofit executives often wear many hats while managing their organization. Whether it’s day-to-day accounting or oversight of an internal accounting department, an accounting firm offers many services that will allow you to focus on the core strategies of your business. Here at Langdon & Company LLP, we offer a wide range of services from basic bookkeeping to acting in a CFO role to financial statement audits and tax return preparation. Often times you will find that the cost of hiring an accounting firm to perform these services is less than hiring an employee.

Bookkeeping Services

Many small organizations do not have the need or financial resources to hire a full-time employee to perform the day-to-day bookkeeping tasks. In such ca service ses, it may be helpful to seek the aid of an accounting firm that can provide services such as accounts payable and receivable, billing, payroll, bank reconciliations, general ledger entries and monthly financial reports. You will gain the knowledge of an experienced bookkeeper with access to CPAs within the firm at a cost effective rate.

CFO Services

Do you need the expertise of a Chief Financial Officer but can’t bear to add such a salary to your already tight budget? A CPA firm can offer the expertise of a CFO in tasks such as creating budgets, preparing financial statements, analysis of financial data, or review of your organization’s internal accounting personnel offering a greater segregation of duties. These services can be provided on a periodic basis, such as monthly or quarterly, or on a project by project basis, as needed throughout the year.

Audit and Attest Services

Whether it is at the request of a lender or required by the organization’s by-laws, many organizations feel the need for a higher level of review of the financial statements. CPA firms offer attest services that will provide the level of assurance needed. An Audit provides the highest level of assurance that the fina audit ncial statements are free from material misstatement and includes the auditor obtaining an understanding of the client’s internal controls and assessing fraud risks. An audit is also the most costly level of attest service. While less costly, a Review is substantially narrower in scope than an audit and provides only limited assurance. A review consists mostly of inquiry and analytical procedures. If the audit or review services do not meet the needs of the organization, CPA firms also offer Agreed Upon Procedure (AUP) services. An AUP is an engagement in which an auditor is engaged to carry out procedures of an audit nature to which the auditor, the client, and any appropriate third party have agreed and to report on factual findings.

Tax and Consulting

In addition to day-to-day booking or more extensive oversight services, accounting firms also advise clients on financial strategies, such as lowering tax burdens, providing suggestions on a business plan, or suggestions on the most effective way to comply with third party regulations. CPAs can also assist with the preparation of state and federal tax returns.

Langdon & Company LLP is a full-service CPA firm committed to providing quality customer service in the highest professional manner. Contact us to see how we can help you!

Lee ([email protected]) is an Audit Manager with Langdon & Company LLP. She works with many not-for-profit and healthcare organizations.

The Game Plan of an Audit

Pam WilliamsOctober 27, 20150 Comment

by Steve Schulz history-telecom-audit

Last week while talking to my brother on the phone he asked me what I did as an auditor. I began explaining what the purpose of an audit was, what some basic procedures were, and what different issues raised during an audit when he stopped me and said he had no idea what I was talking about. I sat there in silence for a second and realized there has to be a better way to explain to someone with no knowledge of accounting what I did day in and day out; then it hit me. As huge football fans, I could compare the two with ease – the players/team were the entity, each play was like a new transaction, and the officials were like the auditors. I called him back and went on to explain the following:

Having the necessary personnel – Having the necessary personnel is essential for both the engagement team and the entity. First and foremost, the audit staff must be independent and possess the proper level of training and knowledge to carry out the engagement(s) at hand. The entity also needs to have the appropriate staff able to handle daily processes that oversee the internal controls and maintain records of transactions. In comparison to football, officials must be unbiased, knowledgeable, and properly trained to work their assigned position. Each side of the ball will need the correct number of players and the offense will need to be in the proper formation before any play can be run. In all respects, failure to have the proper personnel may result in unfavorable conditions that gather insufficient audit evidence used to determine an opinion.

Building off of a strong pre-season – During the pre-season, teams, officials, and the league must prepare efficiently and effectively in order for things to run smoothly during the year. In audit this is similar to the planning stages. When planning the engagement, the audit team will come up with a strategy to understand the scope, timing, and direction of the audit; much like a team devises a game plan going into each game.

The players and the officials – Officials monitor each play just like auditors test the transactions of entities. During fieldwork, auditors will examine different accounts, test controls, and perform other procedures required to meet the needs of the game plan formulated during planning. If the results of the auditor’s test dictate that more testing is necessary, the auditor will need to carry out further procedures to get a better look into the area being tested. In comparison, officials on the field will use their training, judgement, and experience to call plays as accurately as possible however, sometimes they will need to investigate the issue further and will go to the replay system for help. This gives the referee the opportunity to get a closer look at the play and make a more accurate ruling, similar to further audit procedures.

Making the right call – Understanding that not all transactions are perfect, auditors must determine what differences or errors are material and force the auditor to alter their opinion on either the controls or financial statements. Likewise, officials are tasked to make sure that every game is played fairly. Some things, like a holding penalty, will not determine whether a game was played, as a whole, fairly or not but major issues might. An example of this would be like playing with deflated footballs. This would cause an unfair advantage and may cause the contest to come under question and possibly a forfeit. In short, a holding penalty would be the equivalent of a five dollar difference between the receipt and what was recorded in the books while playing with deflated footballs would be the equivalent of a material misstatement.

Langdon & Company LLP has lots of professionals and football fans alike that would be happy to answer any of your audit questions. Please contact our office for more information.

Steve ([email protected]) is a staff auditor with Langdon & Company LLP. He focuses primarily on healthcare and nonprofit organizations.

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.

SSARS 21: Statement on Standards for Accounting and Review Services: Clarification and Recodification

Pam WilliamsApril 20, 20150 Comment

by Lee Byrd

Representing the most significant changes to the compilation and review literature in decades, the AICPA Accounting and Review Services Committee recently issued Statement on Standards for Accounting and Review Services (SSARS) No. 21. The guidance aids in drawing a definitive line between preparation and reporting services and is composed of four sections as follows:

Section 60 – General Principles for Engagements Performed in Accordance With Statements on Standards for Accounting and Review Services, provides a foundation for the other three sections and guides professionals on their responsibilities related to engagements performed in accordance with SSARS.
Section 70 – Preparation of Financial Statements, applies when an accountant is engaged to prepare financial statements but is not engaged to perform an audit, review or a compliation on those financial statements. Professional judgment should be used in determining the type of engagement requested by the client (i.e. whether the CPA is engaged to prepare financial statements or simply assist in their preparation). A report is not required for a preparation engagement but the CPA should include a legend on each page of the financial statements stating, “no assurance is provided.”
Section 80 – Compilation Engagements, applies when an accountant is engaged to perform a compilation engagement. The guidance provides new compilation report language, distinguishing this report from an assurance engagement report for audit or review services. CPAs may add additional paragraphs for explanatory purposes.
Section 90 – Review of Financial Statements, applies when an accountant is engaged to perform a review of financial statements. The accountants’ review report has been updated to require the use of headings in the report and the name of the city and state of the CPA’s issuing office.

Successful business group. CPAs are required to begin using SSARS 21 for financial statements with periods ending December 15, 2015 and thereafter; however, the standard allows for early implementation. The standard also requires a signed engagement letter for all SSARSs engagements, signed by both the CPA and management or those charged with governance. Additionally, while audit, review and compilation engagements require participation in a peer review program, preparation services do not fall within any of the aforementioned categories and therefore, are not subject to peer review.

Langdon & Company LLP‘s accountants are very familiar with this new standard and would be happy to answer any questions you may have. Please contact our office for additional information.

Lee Byrd ([email protected]) is an Audit Manager at our Firm and has over 7 years of experience with a variety of clients.

The Fine Line: Debt vs. Equity

Pam WilliamsSeptember 22, 20140 Comment

by Bennett Strickland

Distinguishing between debt and equity has long been debated in the accounting world and is one of the most complex issues in practice today. Take an instrument like mandatorily redeemable preferred stock for example. Is it classified as a liability or as equity? This clearly affects reported amounts of liabilities and equity, and also things such as the debt-to-equity ratio and the asset-to-equity ratio.

debt equity The line between liabilities and equity is also critical in measuring income. So companies began to take advantage of manipulating their debt and equity and therefore manipulating their net income. Neither changes in the values of a company’s outstanding equity instruments or transactions between a company and its owners, affect reported income. Whereas, interest payments and at least some changes in the values of liabilities actually do affect reported income.

A lot of companies will try and classify their equity as debt and some may get away with it. However, the consequences can be substantial if the IRS deems that the company needs to reclassify. In Laidlow Transportation Inc. v. commissioner (TC Memo 1998-332), the taxpayer’s tax liability was increased by more than $55 million after the IRS made the company reclassify their debt as equity. So when companies are walking the fine line of debt versus equity they must ask themselves, is it worth it?

The staff at Langdon & Company LLP are all too familiar with such an issue and would be happy to help your company decide which classification is proper. Please contact our office for more information.

Bennett ([email protected]) is an auditor at Langdon & Company LLP. He primarily focuses on healthcare and nonprofit organizations.

Small Actions with Big Impacts: Internal Controls for Nonprofits

Pam WilliamsAugust 27, 20140 Comment

by Rebecca Lunn

Given the small size or small budget of many nonprofits, some organizations may find it tempting to skimp on the internal controls of the entity. However, there are many controls that are inexpensive or easy to implement that can create a big impact in your organization. balance pai

For example, although your organization may lack employees, you can involve individuals outside the accounting function, such as the receptionist, in tasks such as opening the mail or logging invoices, to increase segregation of duties. Limiting the number of people with access to checks, limiting check signers, and simply marking invoices “paid” can also strengthen controls around cash disbursements. Developing written policies, such as a code of conduct or capitalization policy, can provide a guideline for employees to follow, creating consistency across the organization. Also, even though it may seem like an unnecessary expense, often using a payroll service to process regular payroll and prepare tax filings is often the most efficient and cost-effective manner for ensuring all laws and regulations are met. Lastly, if your nonprofit has a board of directors, it is important to report the financial position to the board on a periodic basis. This will allow the board to take any necessary actions when things are not operating as planned. Also, keeping detailed board minutes will ensure that formal approval is documented for important decisions affecting the organization. These steps are just a few of the numerous ways implementing simple controls can strengthen your organization.

If your nonprofit needs assistance in developing stronger internal controls, or improving upon existing controls, please contact our firm for more information on how we can help.

Rebecca Lunn ([email protected]) is an Senior Accountant at Langdon & Company LLP. She specializes in financial and compliance auditing for governments and nonprofit organizations.

Does your Nonprofit Need an Audit?

Pam WilliamsJuly 29, 20140 Comment

b audit y Brittany Powell

The National Council of Nonprofits’ Audit Guide (“Audit Guide”) can provide your organization with a starting point for making the decision on whether or not your nonprofit organization needs an audit.

As the Audit Guide points out in its “Does your nonprofit need to have an independent audit?” section, nonprofits may be required to have an audit for various reasons including, but not limited to, compliance with specific grant agreements or loan covenants. Additionally, a nonprofit organization may be required to have a Yellow Book or Single Audit depending on its level of Federal or State expenditures. A nonprofit with federal expenditures equal to or exceeding $500,000 is required to have a Single Audit. As discussed in our February 10, 2014 blog post, this threshold will increase to $750,000 beginning with fiscal years beginning on or after December 26, 2014. This Audit Guide provides a summary for each state’s audit requirements. North Carolina requires “a non-governmental entity that receives $500,000 or more annually in state funds” to submit a Yellow Book audit.

However, an audit may not be necessary or cost effective for all nonprofit organizations. A review, while substantially less in scope than an audit, provides limited assurance over an entity’s financial statements. Therefore, a review can be a viable, less costly alternative to an audit for some nonprofit organizations.

If you are considering an audit or review for your nonprofit, contact someone at our office to help you determine the engagement type that best fits your organization’s needs. See the Audit Services & Consulting section of our website for more information about audits, reviews, and other services we provide.

Brittany Powell is a Senior Accountant with Langdon & Company LLP. She specializes in audit, serving a wide variety of nonprofit organizations.

SNF’s will pay for Medicare’s Solvency

Pam WilliamsAugust 28, 20130 Comment

According to an annual report, the Medicare Part A Trust Fund will be depleted by 2026. This is a two year improvement over last year’s forecast. The authors of the report credit the improvement to lower projected spending in most service categories, especially skilled nursing facilities.

Langdon & Company LLP provides services to many long term care providers in the southeast. In addition to cost report preparation and consultation, services include audit, accounting, financial reporting, tax planning and preparation.

Private Companies– Consolidation Accounting Requirements Relief May Be on the Way!

Michael MillerJuly 24, 20130 Comment

Back in 2009, a little accounting interpretation called FIN 46 struck fear in the hearts of many a small business and the accountants that serve them. FIN 46 (FASB Interpretation No. 46(R)) required companies with variable interest entities (VIE) to consolidate their financial statements. Oftentimes related party lease arrangements were considered to be VIE’s and thus were required to be consolidated or not comply with Generally Accepted Accounting Standards.

Continue reading Private Companies– Consolidation Accounting Requirements Relief May Be on the Way!