July 22, 2018

Accounting News Roundup: Awful Clients and Lease Accounting Procrastination | 03.29.17

accounting-news-leases-clients-spiders

Aren’t you glad there are so many insects for me to eat?

Awful clients

If you’re still cranking out 1040s, bless your heart. Clients that show up from now until mid-April, will more or less take this form:

There are the shoeboxers, who haul in shoeboxes or cartons brimming with every wayward item they received during the year, usually at the last minute. The people who bring the most stuff tend to provide the least necessary information. They’ll include receipts for buying their kid a Happy Meal at McDonald’s but forget the W-2 they received electronically. Shoeboxers can get stressed out and a little combative.

You just know that Happy Meal/W-2 story is true.

I think most accountants who still have clients that roll in with shoeboxes should either a) fire them or b) keep portable incinerators right by their desks as an implicit threat. I really don’t know how else these people will learn that the shoebox method is NOT okay.

The only other solution is for IBM to build a receptacle attachment for Watson that could eat the receipts and spit out a tax return. And now that I’ve written that, how is this not at the top of their priorities? Even the chintziest accountant would spring for the IBM Watson Receipt Eater 2000 if it guaranteed to make their life easier 2-4 weeks a year.

Lease accounting procrastination

The new lease accounting standard goes into effect for public companies in 2019 and in 2020 for private ones, but most of them seem pretty chill about preparing for it.

Twenty-two percent of the biggest businesses have started the transition, compared to 17 percent of the smallest. A bigger percentage of the largest companies have at least started writing new accounting procedures and policies and developed a project plan to deal with gaps found in their diagnostic work.

I think we can all agree that, with basically 2 years to go, the 22% of “the biggest businesses” and 17% “of the smallest” are the overachievers in the group. I wouldn’t be surprised if December 2018 gets here and 25-40% of all companies still hadn’t looked at the text of the new standard.

Bad busy seasons

Perhaps I’ve mentioned this before, but I think you can apply the Anna Karenia principle to busy seasons. That is, all good busy seasons are alike, while all bad busy seasons are bad in their own way. I don’t know how the busy season for the Grant Thornton team on U.S. Concrete went, but this Wall Street Journal article has some clues:

[CFO] Joseph Tusa, Jr. resigned Friday, according to a company filing. U.S. Concrete also said it dismissed its auditor, Grant Thornton LLP, replacing it with Ernst & Young LLP.

The move comes nearly comes three weeks after the Texas company said there was a lapse regarding “the completeness and accuracy of computations relating to income tax accounts and disclosures.”

U.S. Concrete had the same problem last year and amended its 2015 annual report. Grant Thornton also issued an “adverse opinion” regarding the company’s internal controls over financial reporting for both 2016 and 2015.

Or maybe everything has been fine this whole time and this resignation and firing all came as a huge surprise.

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Related articles

Non-Profits Are Feeling the Pain

WSJ has a Monday piece “Once-Robust Charity Sector Hit With Mergers, Closings” (the Recession Forces Nonprofits to Consolidate) that may be found here. It tells the story of a “homeless” woman with terminal lung cancer and a charity no longer able to afford to help her out. Sad.

When one charity’s COO says “we’ve had funding cut after funding cut, and we never know when the next shoe is going to drop,” that is a bad sign.

Hit by a drop in donations and government funding in the wake of a deep recession, nonprofits—from arts councils to food banks—are undergoing a painful restructuring, including mergers, acquisitions, collaborations, cutbacks and closings.

“Like in the animal kingdom, at some point, the weaker organizations will not be able to survive,” says Diana Aviv, chief executive of Independent Sector, a coalition of 600 nonprofits.

I saw that on the Discovery Channel and it wasn’t pretty.

Note: the Service says the value of your blood is not deductible as a charitable donation but cars are. As of 2005, cars are only deductible at FMV, not Blue Book. Damn you, fair value, foiled by the free market again!

Blame the Service for tightening its charitable donation rules at the worst possible time? Not sure on that one. While you’re reluctant to donate your $200 Toyota (ha) to charity because you could have claimed $2,000 under old rules, find some comfort in the fact that (alleged) terrorist “non profits” can not file for 2 years and somehow get away with it. You wonder why I advocate fixing the system from the ground up?

You can text $10 to Haiti but what about the “Economic Homeless” here in America? asks Young Money.

If this were a survey and you asked me “What do you think the IRS could do to encourage charitable donations?” I would answer “Tax breaks. It isn’t the Treasury’s job to distribute bailouts.” Yet they continue to behave as though it is their duty.

See the problem yet?

Hallelujah! Church Accounting Miracles!

I had no idea how much a minister can make but now I do. Wait a minute, this just tells me how to bypass Service rules by writing checks in the church’s name. I might totally be in the wrong line of work.

Free Church Accounting (I’m not kidding) brings us a question from “Sharon” of Corsicana, Texas:

How much money does a minister have to make in order for money to be reported?

I started my church back up after 12 years vacancy. I do not have very many members. Right now we are 3 active members and other people stop in from time to time. I do not actually receive money. Since the church is striving I use the money to pay the light bill, get the grass moved.


Answer:

According to the IRS website, “Earnings of $400 or more are subject to self-employment taxes.” (that includes qualifying ministers)

If you are a church employee, income of $108.28 or more is subject to SE tax.

It would be better for you, if you opened a checking account in the church’s name and paid expenses out of it. If that’s not possible, just make sure and keep all of the receipts that show where the church funds are going.

Fascinating! I took the preliminary “Are You a Tax-Exempt Church” quiz on their website and failed miserably so I guess I’d make an awful 501(c)(3) but that’s probably for the best.

There are ways to fail at this of course, like the Spokane, WA priest who couldn’t keep his arms and legs (and other parts) inside of the vehicle at all times, financial mismanagement in the University of North Carolina system, and JDA favorite the University of Colorado’s wild credit card user with horrible hair.

I would never imply that more regulation is the answer; I’m merely pointing out that there’s a bit of work to be done in identifying non-profit fraud. Seriously, how can one detect fraud when the core basis of fund accounting is an imbalance between “expenses” and expenditures?

The Church of Jr Deputy Accountant Scientist? I’m down.