Posts Tagged ‘Mike Bedel’

Is Your Accounting Department Dysfunctional?

By Mike Bedel, CPA, CGMA, MBA
Partner, Director of Audit & Assurance Services
mbedel@sponselcpagroup.com

Cash flow is the lifeblood of any business. That’s why the cornerstone of any company is an efficient accounting department and financial reporting system that promptly measures and reports the results of your operations.

Financial statements should be prepared on a regular, systemic basis, around the 15th of the month. Timely, accurate information is essential to your management team. Consistency of practice is crucial.

Is your accounting department meeting these demands? Failure to pay invoices on time or deliver accurate, comprehensive reports can severely harm your company’s reputation and result in late payment fees, decreased credit worthiness, issues with your suppliers, etc. Lack of consistency, planning, transparency and oversight can also quickly lead to untimely financial reporting and poor management information systems. The risk of fraud is also increased in an undisciplined accounting environment.

As a business owner, it’s vital that you determine the people, processes and discipline necessary to make your accounting function run as smoothly as possible. Your management team should be reviewing your financial statements and key performance metrics on a regular, MONTHLY basis! A business that is not doing this on a regular basis is setting itself up for a less than successful result!

If you’re experiencing accounting issues in your company, it’s time to step back and determine the source of the problem. And if you need a fresh set of eyes on your accounting function, Sponsel can help!  Is it your people? Is it your systems, or lack thereof? Or do you simply not know? Whether you’re seeking consultation or thinking about outsourcing your bookkeeping needs, we can offer support.

If we can assist you with achieving success in your business or personal affairs, please contact Mike Bedel at (317) 613-7852 or email mbedel@sponselcpagroup.com.

Does Your Enterprise Need to Pivot?

By Mike Bedel, CPA, MBA, CGMA
Partner, Director of Audit & Assurance Services
mbedel@sponselcpagroup.com

As the old adage goes, the definition of insanity is doing the same thing over and over again and expecting different results. People are hesitant to jump out of their comfort zones — especially when it comes to turning a profit — but pivoting in a different direction is sometimes the best way to improve your business.

Could your company use a boost? Let’s dive in and explore how you can switch things up and turn toward success!

Expand your market. Do you have a target audience in mind but can’t seem to reach it no matter how hard you try? Don’t get hung up on the same region or demographic. Broaden your horizons! Make your product or service available to a wider geographic area. Launch a virtual store on your website or try selling through different e-commerce channels. Now, in this digital age, there are countless ways to reach your audience. The sky is the limit!

Turn failure into success. One of the most compelling comeback stories in the history of business is the origin of Post-It Notes. This product, which became a staple of offices across the world, started as an accident. Spencer Silver, a researcher at 3M, was trying to create a form of permanent adhesive for airplanes, but he ended up producing a much weaker glue that easily peeled off. Silver’s determination to turn this failure into a success eventually led to the substance being used on those colorful pieces of paper we all love sticking to our desks and bulletin boards.

The lesson here is that if something doesn’t turn out as you intended or expected, don’t give up! Think of ways you can adapt your products or services to meet other demands, which leads to our third point …

Innovate, innovate, innovate! Don’t be afraid to reinvent your business. Whether you change your product line, delivery methods, messaging or the way you approach and interact with your customers and vendors, giving your company a makeover can make a massive impact in the marketplace. If you’re not hitting your stride, wipe the slate clean and make a fresh start. Get back to the drawing board and develop a new product or service. Don’t let setbacks get you down — think of them as opportunities for a comeback. Just get back up on the horse and ride toward a new frontier!

If we can assist you with achieving success in your business or personal affairs, please contact Mike Bedel at (317) 613-7852 or email mbedel@sponselcpagroup.com.

The Real Purpose of Your 401(k) Audit

Mike BedelBy Mike Bedel, CPA, MBA, CGMA
Partner, Director of Audit & Assurance Services

If your company’s 401(k) plan has more than 100 eligible participants, it is large enough that the U.S. Department of Labor requires an audit of your plan. This audit must be attached to your annual 5500 filing, but is often viewed as an unnecessary compliance cost by the 401(k) plan sponsor.

The true purpose, however, for the required audit of this employee benefit plan is to protect various stakeholders in the plan, especially the plan participants.

Many employees rely on their 401(k) plan to save for retirement. Many expert resources such as Forbes describe it as “the single best wealth accumulation vehicle available to the vast majority of Americans.”

However, most employees are not well-versed in how their 401(k) plan operates. As a result, they may not be aware if their personal accounts are not being appropriately credited for their contributions.

By taking the audit process seriously, the plan sponsor communicates that they understand the value their employees place on the wealth they’ve accumulated in their individual 401(k) accounts. When a plan sponsor makes decisions that minimize the role of the audit, they are perceived by their employees as not valuing the hard-earned money set aside over the years – or even as putting their own interests ahead of the employees’.

The Department of Labor and the Internal Revenue Service continue to emphasize the importance of fiduciary responsibility to those involved in the management of the retirement plans. They also stress the importance of a thorough and complete audit process as a significant means of oversight on the plan’s operations.

Additionally, the audit provides some protection to a fiduciary of the plan who is taking their role seriously. It is a way for them to act upon their responsibilities to protect the plan. And it serves to identify if the plan is operating outside of compliance with regulations from the DOL or IRS.

Sponsel CPA Group performs audits of defined contribution employee benefit plans, such as 401(k) plans. We take this responsibility very seriously and value the role we play in protecting the interest of all stakeholders for the plans we audit.

If you have questions about audits of 401(k) plans, please contact Mike Bedel at (317) 613-7852 or email mbedel@sponselcpagroup.com.

 

Changes to Auditing Standards for Going Concern

Mike BedelBy Mike Bedel, CPA, MBA, CGMA
Partner, Director of Audit & Assurance Services

The AICPA Auditing Standards Board (ASB) has updated their standards on the topic of Going Concern. Statement on Auditing Standards (SAS) No. 132 was issued in February 2017 under the title, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern.

The term “going concern” relates to the expectation that an entity will continue operations in the future. It is often taken for granted, or assumed, that the entity under audit will continue operations in the near future.

These new standards supersede previous guidance that existed for auditing standards, SAS No. 126 (under the same title), and follows recent pronouncements on the same topic by the International Auditing and Assurance Board. In 2014 Accounting Standards Update 2014-15 was issued to place the initial responsibility to identify a going concern on management, before the auditor is required to address the topic.

This most recent update is effective for audits of financial statements for the year ending December 31, 2017.

SAS No. 132 aligns the previous standards more closely with the responsibility placed on management by ASU 2014-15. It also aligns the auditing standards with standards recently issued by the Governmental Accounting Standards Board (GASB).

SAS No. 132, clarifies that the auditor is responsible to determine whether management has appropriately utilized a going concern basis of accounting and whether there are any substantial doubts about the entity’s ability to continue as a going concern in the near future.

SAS No. 132 also adds a requirement to evaluate the reliance upon third parties, owners or management in the organization’s plans to continue as a going concern.

For more information about the topic of Going Concern, please contact Mike Bedel at (317) 613-7852 or email mbedel@sponselcpagroup.com.

When You DON’T Need an Audit

Mike BedelBy Mike Bedel, CPA, MBA, CGMA
Partner, Director of Audit & Assurance Services
mbedel@sponselcpagroup.com

There are many compelling reasons to have an audit performed on your financial statements. But there are also many reasons to NOT have an audit.

As director of our audit and assurance services department, I often receive phone calls from clients and potential clients who begin the conversation with, “We need an audit for our organization.”

My response is to always ask, “Why?” Very often, I quickly find their organization does not really need an audit. Nearly always, some level of professional service is appropriate – but it is very often not an audit.

Here are some of the common scenarios that occur when leaders think their organization needs an audit – but really doesn’t.

  • Suspicion of Fraud. When the suspicion of fraud rises at an organization, one of the knee-jerk reactions from board members or management is to request a financial statement audit. However, an audit is not designed to detect fraud. In this situation, we recommend that clients engage our forensic accounting services. They specialize in detecting fraud.
  • Improving Efficiency. A growing organization will often come to a point where their governing board recognizes a need to review and improve the efficiency of their finance and accounting function. In this situation, a consulting engagement typically becomes the most efficient use of the organization’s resources to identify past issues with internal controls and recommend ways to improve them. While an audit does take the internal control environment into consideration as part of developing an opinion on the overall financial statements, it is not designed to provide an opinion on those internal controls or design an improved accounting process.
  • Valuation. When a transfer of ownership is being considered, sometimes the current or future owners will seek an audit to help substantiate the value of the organization or ownership shares. While an audit opinion will provide assurance on the overall financial statements for a historical period, the audited financial statements are not designed to determine the current or future value of the enterprise. In these cases, our valuation services are most useful to clients. Valuation is an area of accounting that requires very specific knowledge and experience; Sponsel CPA Group has its own outstanding team of valuation experts. An audit can be a useful resource to a valuation specialist, but the audit itself is not the answer to determining the value of an organization.
  • Other Levels of Service. Lenders, such as banks and other financial institutions, often require financial reporting for the financial statements when there is an outstanding loan. Depending on the size of the loan and the risk assessed by the lender, they are often satisfied with a lower level of service than an audit. Namely, a compilation or review of the financial statements is sufficient for lenders in many cases, and should cost less to the organization than a full audit.

Now is a good time to review what an audit IS designed for.

A financial statement audit is designed to provide assurance on a set of financial statements. In an audit, an independent CPA issues their opinion that the financial statements are free of material misstatement. This provides assurance for stakeholders such as owners, lenders, members and others that the financial information reported with the audit is reliable and allows them to manage their various risks.

Most often, we see that audits are required by significant lenders or by donors to non-profit organizations to provide them certainty that the financial results reported to them are reliable and can be used in their decision-making processes.

When an audit is appropriate, we are at the ready to help and serve our clients! Because we value our client relationships, however, we always seek to understand what is truly needed so that we are providing the best value to our clients and not selling them a service they don’t need.

If you think your organization needs an audit — or something different than an audit — please contact Mike Bedel at (317) 613-7852 or email mbedel@sponselcpagroup.com.

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