Tag Archives: small business

Accounting Changes for Goodwill

Pam WilliamsSeptember 12, 20140 Comment

by Dwayne Murphy

The Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2014-02 is giving private companies another option when it comes to accounting for goodwill. Effective for new goodwill recognized in annual periods beginning after December 31, 2014 (early adoption is permitted). Private companies will be able to subsequently amortize goodwill on a straight-line basis over a period of ten years, or less if the company is able to demonstrate that a lower useful life is better suited. Before this update U.S. GAAP did not allow any amortization of goodwill.

FASB Accounting Standards Update (ASU) 2014-02 also permits private companies to use a simplified impairment model, which allows them to test for impairment only when a triggering event occurs that would indicate that the fair value of a company (or a reporting unit) may have fallen below its carrying amount. If the accounting alternative election is made, an additional election of whether to test goodwill for impairment at either the company level or the reporting unit level must be made. Before this update U.S. GAAP required that testing of impairment be done at least annually and in some cases more frequently if certain conditions were met.

These changes should be beneficial to private companies as it allows for amortization expense and it lessens the burden of not having to test for impairment every year.

For public companies and not-for-profit companies the FASB is still considering the following alternatives for goodwill accounting at their last meeting on March 26, 2014:

Same alternative as listed above for private companies.
Amortize goodwill with impairment tests over its useful life, not to exceed a maximum number of years.
The direct write-off of goodwill at the acquisition date.
A nonamortization approach that uses a simplified impairment test.

Dwayne Murphy ([email protected]) is a Senior Accountant with Langdon & Company LLP. He specializes in audit, serving a wide variety of 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.

Accounting Services Requirements

Pam WilliamsAugust 11, 20140 Comment

by Russell Barker

The accounting services department at Langdon and Company LLP utilizes a customized approach to serve many companies by providing varied aspects of a “backoffice” accounting department. We can perform the following functions: accounts receivable, accounts payable, invoicing, payroll and financial reporting. We communicate with the client to ensure that we have the needed documentation to properly record transactions. We process transactions on a monthly or quarterly basis for general ledger processing based on the clients’ needs. We also provide payroll services and offer direct deposit. To efficiently and effectively perform these functions, great communication is required. There is supporting information and documentation that is needed.

Typically, for a small business items such as bank statements, invoices, billing records, loan records, amortization schedules, credit card statements, etc. are required in order post to the general ledger. For payroll, employee information, hours and pay rate is needed. In order to properly maintain fixed asset records, invoices and applicable financing records are needed.

With the client providing all appropriate documentation on a monthly basis and L&C recording proper transactions, this will enable our year end process to be more efficient, precise and timely in order for the tax department prepare the clients tax returns in a timely fashion.

Russell Barker is a QuickBooks Pro Advisor in the Accounting Services department at Langdon & Company LLP. He specializes in periodic reviews for a variety of physician’s practices.

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!