Simple English - Simply Better

I was glad to read an article by Kathleen Hoffelder recently about a growing trend in financial reporting.  Plain English is finally taking its place as an approved language for use in financial statements.  If you're going to say something, make it easy to understand.  Even though you may know what you're talking about, if your audience doesn't, you're not helping anybody.  I've made it my business to make accounting and finance easier to understand for years.  That's why I called my company Clear Financial Solutions.  I'm glad that the American Institute of CPAs is actively saying this now.

In Miss Hoffelder's article, Brian Lane, former SEC director of the division of corporate finance, is reported to talk about the Management's Discussion and Analysis section as being the worst offender.  It's suggested that executives want to assure everyone that they know what they're talking about by making it difficult to know what they're talking about.  In addition, lawyers like to use language that often makes it even more difficult to understand the MDA section. I think it’s important that users be able to understand what companies are doing and what their plans are for the future. I fully endorse the efforts of the SEC to encourage the use of plain English in public filings.

Gathering Clouds Mean Good News for Small Business CFOs

Accountants and accounting firms are embracing the idea of cloud computing with good reason.  In addition to greater ease of access from more locations for more users and the outsourcing of a great deal of IT support, the use of cloud computing may help turn a great deal of accountants into "specialists" in their clients' fields.

Years of experience in a field may be replaced by the information in a cloud operated database of businesses in that field.  An accountant can get a real foothold into understanding and giving informed advice by comparing the his employer's statistics to those of a set of other businesses in the same industry.  This certainly won't replace name recognition and customer loyalty, but a new business taking advantage of a savvy CPA's skills will essentially be able to use the honed instincts of an older business and maybe even gain new market insight their competitors don't have.

Of course, an accountant who decides to use cloud computing may find himself pulled to actually specialize in an industry.  Rather than having to use a variety of software-as-a-service applications tailored for each of his clients (say one is a restaurant, another an optometrist, and another an electronics store), it's obviously more economical to subscribe to one app and look for clients in the one industry for which the app is designed.

As the server in the closet is replaced by the cloud server, the local business CPA may be replaced by a globalized, small to medium business CPA.  If an Austin accountant works for a few optometrists already and is geared up for more, there's no reason he shouldn't take on another optometrist in Seattle.  Any file at all can be accessed and modified by multiple users in different locations.  There's no redundancy, no confusion about which is the latest version of the budget.  Pretty soon it may be a requirement for any accountant who wants to keep his feet on the ground to get his head in the cloud.

Article: Wal-Mart: Tip of Bribery Iceberg

Bribery seems to be a large budget item for Wal-Mart when conducting business abroad.

See the article here.

Voyager 1 Spacecraft Boldly Going

  NASA announced on Monday that Voyager 1 has entered a region of our solar system that we didn't know existed.  This region is unique due to the interaction of magnetic fields there.  Since stars' cores are tremendous masses of incredibly hot, spinning metal, they produce powerful magnetic fields that extend billions and even trillions of miles.  This newly discovered layer on the outskirts of our solar system is made by the Sun's magnetic field connecting to the larger, interstellar magnetic field.  Charged particles that hit this region get accelerated, so particles from our solar system are sent out, and particles from the galaxy at large are able to enter.

It's taken 35 years for Voyagers 1 and 2 to get this far, and it looks as though they'll break out of the Sun's influence relatively soon.  NASA is not yet sure, though, whether that will be a matter of months or years.  The Voyager probes have been running longer than any other spacecraft NASA has launched and will be the first man-made objects to leave the solar system.  The completely unanticipated discovery of this "magnetic highway" is an exciting reminder that we can't be sure what's out there in the universe until we go and see it.  Who knows what discoveries Voyager 1 will have for us when it finally leaves the heliosphere behind?

Read more here.

COSO Chair Previews New Internal Control Framework

www.accountingtoday.com

David Landsittel, the chairman of the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, wants auditors to get ready for the expanded internal control framework that he anticipates will be approved next year.

Speaking at an auditing conference at Baruch College's Zicklin School of Business in New York on Thursday, co-sponsored by the NASBA Center for the Public Trust, he said the new framework has been updated to reflect the current business environment. COSO has also formalized the fundamental concepts in the 1992 framework underlying the five components as 17 principles.

See the whole article here.

FASB Expected to Participate in New IASB Accounting Standards Group

The U.S. Financial Accounting Standards Board is expected to be one of the standard-setters participating in a multilateral group that will be advising the International Accounting Standards Board, but it will be among at least a dozen standard-setters from around the world participating in the group.



You can see the article here.

IRS Increases Standard Mileage Rates a Penny in 2013

The Internal Revenue Service has raised the standard mileage rates by 1 cent per mile for next year when calculating the deductible costs of operating an automobile for business, charitable, medical or moving purposes.





You can see the article here.

Calendar Year End Prep

Preparing for Year End

Now is the time for calendar year-end companies to begin preparing to meet their year-end reporting
requirements. Several parallel efforts should be initiated as the year begins to wind down. These are:

•  Identify transactions that require current value accounting or derivatives treatment

•  Perform preliminary ratio analysis and cash forecasting so that year end transactions can be timed to present a positive balance sheet or income statement.

•  Review legal documents and transaction documentation

•  Prepare questionnaires and templates necessary to update non accounting information in your
annual report, such as beneficial ownership and director information.

•  Reconcile balance sheet accounts and prepare roll forward schedules and gather the
documentation supporting transactions.

The key to a smooth year end reporting process is preparation and planning. For example, if your
company entered into a transaction during the year that requires fair value accounting, begin gathering
the executed transaction documents, the fair value inputs and resources, such as a valuation expert,
now.

Clear Financial Solutions, Inc. can assist you with these tasks. Call us today for a free one hour consultation.