Changes Coming To The CPA Exam
Jun 09, 2016
For every CPA, the CPA Exam is a rite of passage, one of the first milestones on the path to a career in accounting. Long hours of study and prep work and the stress of the test itself are rewarded with the joy and/or relief of passing scores on all parts of the exam.
If you or anyone you know is planning to enter the field of public accounting, be aware changes are coming to the Uniform CPA Examination in April 2017, the first major update to the exam since 2011. Periodically, the AICPA conducts a practice analysis, seeking input from state boards of accountancy, state CPA societies, public accounting firms, and other stakeholders to assess whether the test is able to measure the skills and knowledge needed by newly licensed CPAs. This analysis determined that due to the automation and outsourcing of routine accounting tasks, greater critical-thinking skills were needed of new hires.
The four basic content areas of the exam – Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation – are not changing. How those areas are tested, however, will be. There will be fewer multiple-choice questions, and a greater emphasis on task-based simulations that better assess higher-order critical-thinking skills. Because of this, total test time will be increased from 14 to 16 hours.
To aid new candidates with preparation for the exam, an array of preparation and support materials reflecting the new exam format are being rolled out. The current Content Specification Outline and Skill Specification Outline are being replaced by new “blueprints” that will contain about 600 tasks across the four exam areas that will align with the skills expected of new accountants. AICPA.org will offer a sample of the new exam at aicpa.org/nextcpaexam, as well as a LinkedIn group for exam candidates.
Based on historical trends in advance of previous changes to the exam, the AICPA expects a surge of exam candidates in 2016. Forty total testing days will be added – ten each quarter beginning in April 2016.
Jake Freppel, Senior Accountant
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Is Your Business Plagued By Payment Issues?
May 31, 2016
Most small business owners love what they do. However, finances can become limited when customers don’t pay their bills on time. One or two delayed payments or a non paying customers can be enough to negatively affect your business operations. Understanding what may be occurring and being proactive may help you maintain steady ground with your accounts receivable.
Purchase Order Predicaments
Not all customers use purchase orders, but those which do rely on them to coordinate ordering and accounts payable functions. If there’s a mix-up involving a purchase order and your invoice doesn’t match up with the customer’s purchase order, your invoice could end up on the “problem” pile instead of the “pay” pile. Be proactive by verifying that the purchase order numbers on your invoices are correct before they are sent.
Strapped for Cash
Lack of money is a common excuse for not paying. One reason your customer may not be able to pay you is because your customer’s customers haven’t paid their bills. Regardless of the reason, be the squeaky wheel and keep communicating with your past due customers.
You can help reduce your exposure to customer cash shortfalls by tightening your credit requirements.
Disputes, Dilemmas, and Other Disappointments
Misships, damaged goods, late deliveries. Plenty of things can go wrong during the fulfillment process. Rather than make a phone call, customers may just “file” your invoice at the bottom of the pile.
Follow-up e-mails or phone calls to find out if your customers are satisfied will help smooth any ruffled feathers and could improve how quickly you get paid.
Vanishing Invoices
“We never received your invoice” is a weak excuse, but you still have to find a way around it. Once again, early follow-up is key. Paperless billing and the potential to monitor whether e-mailed invoices have been opened can also help eradicate this excuse.
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Laying the Groundwork for a Business Sale
May 26, 2016
Are you considering selling your small business? To ensure a successful and profitable outcome, now may be the right time to prepare for such transaction in advance.
After you’ve built your business from the ground up, being objective about its value can be difficult. Knowing what similar businesses have sold for recently can provide significant guidance. If you require a clear idea, you may consider having a certified accountant complete a business valuation.
Next, it is important to give some thought to an appropriate type of buyer – your ideal candidate. Is it a key person who currently works for your company? A competitor? Someone who just wants to buy a good business and run it but isn’t a current employee or competitor? An investor who wants to make a profit but isn’t interested in the day-to-day operations of the company? The sales price you desire will be dependent on the type of buyer being targeted.
At this point, you will also want to think about your future participation in the business after it is sold. Consider the role you’d be willing and able to play, if any, during the transition to new ownership.
Make It Attractive Before putting your company on the market, you’ll want to focus on its profitability. Taking steps to enhance the bottom line — even if it means paying more income taxes — may allow you to command a higher price for the business.
On the asset side, now is the time to identify any equipment, furniture, fixtures, or machinery that is no longer useful and consider selling or otherwise disposing of these items. That way, you’ll be able to present a leaner business to potential buyers.
It’s What You Keep Selling your company for a fair price is important, but so is securing all available tax advantages. Will you be structuring the sale as an asset sale or will you be selling your company stock? Each has different tax implications. With smart planning, you’ll be in a better position not only to command top dollar for your company, but also to minimize taxes on the sale.
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IRS Changes Call First Policy for Audits
May 19, 2016
Most taxpayers are familiar with the IRS’ promise of not calling first. The IRS offers this assurance in an effort to combat scammers making unsolicited calls claiming to be IRS officials. However, this pledge has not been entirely accurate and lends to an explanation.
T
he IRS made such declaration with regard to phone calls made for the collection of taxes or requests for personal information. However, until recently the Internal Revenue Manual suggested the preferable way to schedule in-person field examinations was to make initial contact through phone calls. The IRS felt it was clear their previous assurance of not calling first related only to collection calls while calls to schedule audits were a completely different function. Unfortunately, the distinction is not as obvious to a taxpayer receiving a cold call from someone claiming to be from the IRS. Distinguishing between the two scenarios may be difficult. In an effort to avoid confusion, the IRS is changing their policy and will now send a notification of audit through the U.S. mail and will follow-up with a subsequent call to schedule an appointment.
This change in policy is the result of various complaints from attendees of a public forum held by the Taxpayer Advocate Service on May 5, 2016. The complaints argued taxpayers has received phone calls from the IRS to schedule audits, which contradicted the IRS’ assurance of never calling first. In response to these complaints, the IRS issued a statement that “in an abundance of caution and in light of pervasive phone scams seeking to extort money from taxpayers, the IRS has decided to adjust this policy for in-person field exams.”
This change in policy means the IRS will no longer make initial contact through phone calls, but will instead only contact taxpayers via for follow-up communication. An IRS Consumer Alertreminds taxpayers that the IRS will never do any of the following over the phone:
- Demand immediate payment
- Request you to verify your identity or ask for personal and financial information
- Ask for credit or debit card numbers
- Require the use of a specific payment method for your taxes, such as prepaid debit card
- Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying
If you receive a phone call from someone claiming to be from the IRS that involves any of the above red flags, do not provide any information and hang up immediately. You can then call any of the professionals at William Vaughan Company and we will assist you in determining if you have any obligation to the IRS.
By: Mark Sawyer, CPA
Categories: Other Resources, Tax Compliance
Protecting Your Brand on Social Media
May 17, 2016
Thanks to social media, grandparents are posting photos on their grandchildren’s Facebook pages, shoppers are reading product reviews online before making a purchase, and disgruntled customers are sharing their displeasure with anyone who will read their review.
The benefits of social media to small businesses may be considerable. However, it has introduced potential risks. One of the most critical threats to any business is a negative review. Such adverse commentary can ruin a business’s reputation, which could be fatal.
How can you protect your business from damaging online attacks? Here are some suggestions:
Join the conversation. If you’ve been visible on social media, you’ll have more credibility if something erupts. However, battling a possible negative comment or two is not the only reason to have a social media presence. Social media has leveled the playing field by offering the opportunity to market and promote your business through direct engage with your customers. The mere convenience of smartphones and tablets make utilizing social media to your advantage effortless. Take the time to know where your clients or potential customers visit and make an effort to engage in conversations or even start one of your own.
Pay attention. Monitor the Internet for news about your brand. Routinely check online review sites (if appropriate) and social networking sites for references to your company. There are programs designed to help you determine when your brand or name is mentioned on social media platforms. Such “brand monitoring” helps you preserve your brand and the light in which people view your organization.
Be prepared. You can’t draft specific responses ahead of time, but you can identify your vulnerabilities and draft a response strategy. You’ll be well ahead of the game if you do this before a crisis strikes rather than during one. You’ll also be able to dial down your emotions and respond more objectively. There’s another upside to identifying your vulnerabilities ahead of time: You have an opportunity to eliminate them.
Respond. Make sure you have the facts straight before you do anything. However, things can escalate rapidly online. So if you’re going to respond, do so quickly and publicly. That said, not every attack warrants a public response. The complaint may not be legitimate or the person complaining may be a troublemaker, in which case responding may be a waste of time.
Social media has opened the door for many businesses to connect with a wide prospect base. While the benefits of social media can be significant there is always a risk. Take the time to research and review your social media strategy. Effectively communicate your stance on handling potential threats to your staff and make sure you have a plan in place before you explore the world of social media.
By: Jessica Sloan, Marketing Manager
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