Tag Archives: accounting

acct

Steps to Streamline your Accounting Department

Streamlining accounting departments can be a daunting task and more often than not the simplest approach is overlooked. However, keeping it simple is generally the best course of action to take when trimming the fat.

In many accounting departments the day-in-day-out tasks were created a zillion years ago and have become a part of the fabric that tends to be outdated. The problem is no one asks why? If you are interested in improving efficiency and uncovering outdated or ineffective practices, consider conducting an “S.W.O.T.” analysis of your department.

The following is a list of tasks which perhaps served a purpose at some point but are now obsolete. If you have been tasked with improving the efficiency of the accounting department, take stock and ask if the assigned tasks are something your team should spend its time on. Is it adding to your bottom line or ultimately costing your company time and money?

• Saving return envelopes enclosed with invoices
For those “greener” folks go ahead and recycle these and use your own envelopes. You will waste more energy trying to file envelopes, only to couple them with bill payments.

• Stamping the received date on invoices that already have a received date
Some get a sense of satisfaction in the very act of stamping, but today we have accounting software to keep track of things like dates, so there’s no need to double-up on the task at hand.

• Requiring approvals for invoices with PO numbers
This adds a step and slows down the process. The only approval needed at this point is confirmation that the product or service has been accepted and/or completed.

• Requiring an exact three-way match
In an ideal world, the PO, the invoice and the receiving documents match dollar for dollar every time, but accounting professionals know that is not always the case. Investigating every single discrepancy without regard for the amount adds time and significant expense to the AP process. More often the time invested in the problem exceeds the amount of the discrepancy.

• Implement a variance or tolerance limit
Establish a variance limit where both AP and purchasing feel comfortable. Invoices that fail to comply with the three-way match but fall under the limit should move along in the process. , If this becomes an issue with a vendor, purchasing should contact that vendor to ensure they improve their invoicing practices.

• Requiring a review of voucher packages
Looking at the voucher package is a process that adds little to the overall AP process.

• Requiring approvals for all non-PO based invoices
This process is probably the one that causes the most headaches for the AP department. Consider establishing a “negative assurance” process for these types of invoices.

• Spending too much time tracking down approvals on every invoice
Set a dollar limit for invoices requiring approval. Email is also a great tool to get approval. Instruct managers that if you do not hear back on an approval by a certain point, the invoice will be paid.

• Requiring two signatures on checks
The two signature rule can be an effective practice, providing the signers review what they are signing. However, many organizations routinely require two signatures on far too may checks. Ask what value does this step add? Then consider excluding it or raising the dollar threshold.

• Over reporting
What people really want is the information that is relevant to them presented in a concise manner. Decide whether monthly versus weekly reporting works best and implement the most efficient reporting process for your business.

No one ever became a visionary in business by sitting back and being afraid to challenge the status quo. To streamline your process and reduce time consuming, inefficient practices ask questions and think systematically. It’s only when we step back to assess the situation that we can identify strengths and opportunities and eliminate weaknesses and threats.

taxes

REDW Among Fastest-Growing Accounting Firms

REDW LLC, one of the largest and most respected certified public accounting and business consulting firms in the Southwest, announced that AccountingToday.com named the company the fourth fastest-growing accounting firm in the U.S. during 2013. REDW was also recognized as the fifth largest accounting firm in the southwestern United States.

AccountingToday.com , is a leading provider of online business news for the tax and accounting community. The ranking follows Albuquerque-based REDW’s merger with Phoenix based firms Abalos & Associates PLLC, and Miller, Allen & Co., P.C. in late 2012. The combined firm, showed a 33.52% growth in 2013 with revenues of $26.45 million.

“Our Phoenix operations continue to grow following the successful mergers to create one great team of like-minded professionals,” said Sandy Abalos, Principal-in-Charge of the Phoenix office.. “Year one of the merger we focused on a seamless transition into a single entity, and with that overwhelmingly successful effort we expect even stronger benefits in 2014 as we focus on strategic organic growth and increased efficiencies between our Phoenix and Albuquerque offices.”

“REDW’s growth into Phoenix catapulted us to being ranked the fifth largest accounting firm in the southwestern United States and the fourth fastest growing accounting firm in the entire United States,” said Ron Rivera, REDW’s Managing Principal. “The talented team in Phoenix and the synergies and opportunities that the Phoenix office provides REDW as a whole will benefit our ability to continue our organic growth and will serve as a growth model as we look to expand into new markets. Ultimately, our growth is all about our clients as we strive to ensure we maintain the level of forward-thinking business advice that our clients expect from us to meet and exceed their ever-evolving needs.

The AccountingToday.com ranking is based on the percentage increase in income- not dollar amounts- to determine which firms experienced the greatest growth. To view the AccountingToday.com rankings, click here.

data.center

Established CFO Brings Tech Experience to IO

IO, a global leader in software-defined data centers, today announced Michael Berry has joined the company as Chief Financial Officer. Mr. Berry will be responsible for financial planning and analysis, accounting, operations, treasury activities and investor relations, and will report to CEO and Product Architect, George Slessman.

“I am very happy to have Mike join IO,” said Slessman. “His experience as a proven operational leader and technology executive will support IO’s growth and provide a solid financial and operational foundation for the organization.”

Berry joins IO from SolarWinds, a publicly held international provider of IT management software with approximately $300 million in annual revenue and over $3.5 billion in market capitalization where he was Executive Vice President and CFO.  He overhauled the company’s financial planning process and was instrumental in completing ten acquisitions and leading the maintenance renewal team to strong and consistent revenue growth. From a financial perspective, during Mr. Berry’s tenure the company achieved non-GAAP operating profit of greater than 50 percent for eleven straight quarters, and increased operating cash flow by 33% while growing total revenue by 28% on an annualized basis. Prior to SolarWinds, Berry was CFO at i2 (NASDAQ: ITWO), a publicly held, international provider of supply chain software and services. At i2, he rebuilt and scaled the finance and investor relations organizations, led the implementation of several financial planning systems, and played a key role in several strategic initiatives including the acquisition of i2 in January 2010 by JDA Software.

“I could not be more excited about joining IO,” said Michael Berry, IO’s new CFO. “Our leadership position in the foundation technology of the cloud, visionary leadership, marquis enterprise customers and disruptive technology, combined with my experience building the financial and operational foundation for proven technology companies, is a once in a lifetime opportunity.  It is truly a great fit that aligns very well with my personal and professional goals and objectives.”

Prior to his CFO experience, Berry served in various executive roles at The Reynolds and Reynolds Company, a provider of software and services to the retail automotive industry, most recently as Senior Vice President of Solutions Management, Development and Operations. He has also held executive management positions at Comdata Corporation and Travelers Express Co. (now MoneyGram International). Berry is currently a Member of the Board of Directors and Audit Committee Chairman for Rapid7, a privately-held security software company based in Boston, Mass.

Financial Statements

Momentum builds to soften accounting standards for private companies

Private companies say they need to stop being treated like public companies. And now the accounting world has begun to listen to their complaints.

The debate about whether to soften accounting standards for private companies has gone on for years, but this time it seems to be moving toward action, although slowly. But this past summer, the parent organization of the Financial Accounting Standards Board (FASB) created a new Private Company Council to discuss possible changes in the U.S. Generally Accepted Accounting Principles, better known as GAAP.

The theory behind the move is that the GAAP standards may not always be necessary for private companies, particularly small and medium-size businesses. The council will develop a framework for deciding whether the users of private company financial statements have unique needs and will look at ways to reduce the complexity and cost of preparing private company financial statements as is now the case under GAAP.

Private companies contend that since they don’t raise capital from the public, they shouldn’t have to meet the same expensive accounting standards that publicly traded companies do. In many cases, they are also much smaller than public companies.

Right now, the FASB is seeking feedback on possible changes that could be proposed by this new council.

“They’re only at the talking stage in these standards,” said Ralph Nefdt, managing partner in the Phoenix office of the accounting firm of Grant Thornton. “But it’s a very important debate for standard setters.”

At the same time, the American Institute of Certified Public Accountants has issued its own proposed Financial Reporting Framework that small and medium-size privately held businesses could use to prepare their financial statements when U.S. GAAP is not required. The AICPA is seeking comments on this proposal and expects to finish this framework by 2013.

In the case of the AICPA, a company’s management would have to decide whether or not to use the framework, and the institute would not have authority to require its use, said Ron Butler, Arizona managing partner for Ernst & Young.

“Auditors’ reports for financial statements prepared under the proposed framework would indicate that they were prepared on a non-GAAP basis,” Butler said.

Among major concerns about softening standards for statements is that many companies might report a very different financial performance under the new framework. And whether lenders, creditors and other users of financial statements would accept statements prepared under the AICPA’s proposed framework remains to be seen. “Many contracts, regulations and laws require the use of U.S. GAAP,” Butler said.

In other words there might be risks for businesses in using the AICPA framework because banks and investors might not accept anything other than GAAP standards. Some accountants might also resist the change.

But the AICPA’s plans could bring changes sooner. “This new framework could speed up the processes where an accounting change could occur,” said Richard Goldenson, managing partner of CliftonLarsonAllen’s southwest region based in Phoenix.

He also said that the framework could simplify standards for small and medium-size businesses but not reduce them: “The accounting principles comprising the framework for small and medium-size entities are intended to be the most appropriate for the preparation of the financial statements based on the needs of the financial statement users. Financial institutions in many cases do not require GAAP-based statements.”

Many small and medium-size businesses could realize cost savings because often they do not have the resources and expert staff to implement complex accounting requirements.

Some of the other key features of the AICPA proposal:
    It would be a principles-based framework, available for incorporated businesses and unincorporated.
    It is based on accounting principles commonly used or previously used for financial reporting.
    Historical cost would be the primary measurement basis.
    Fewer disclosures would be required than under U.S. GAAP.
    Fewer adjustments may be needed to reconcile tax return income with book income.
    It is intended to be used regarding issues that face small and medium-size businesses.

If the framework moves ahead as proposed, accountants, companies and regulators would have to go through an education process so that financial reports would be carefully executed. A company that wants to use the framework would need substantial lead time to switch over.

104351920

CFOs Believe Economy Will Not Improve During the Next Six Months

Fifty-four percent of CFOs in the U.S. do not foresee any changes in the health of the economy during the next six months, according to a survey by Grant Thornton LLP. Still, most CFOs surveyed are optimistic about maintaining (45 percent) or increasing (37 percent) their headcount over the next six months.

According to the survey, the biggest barrier to employee and company financial growth is the cost of employee benefits, with 56 percent identifying healthcare and pensions as the prime culprits. Furthermore, as the cost of healthcare grows, 77 percent of those surveyed anticipate company and employee contributions to increase over the next year. Yet benefits such as life insurance and disability are expected to remain mostly unchanged.

“With the economy in a fragile recovery, CFOs are most concerned about rising healthcare costs when it comes to compensation and benefits,” said Ralph Nefdt, office managing partner of Grant Thornton LLP’s Phoenix office. “Most companies will continue to see a significant increase in healthcare costs unless they have taken proactive steps to promote wellness and better utilization of healthcare benefits, which can help ease the increase of these costs.”

The survey also shows that 45 percent of those surveyed believe that deficit reduction is the number one initiative to improve overall economic optimism, while 27 percent believe job creation is the solution. In addition, 46 percent said that a tax incentive is not the solution. Even so, 30 percent of those surveyed believe a direct tax incentive for hiring new workers would increase the likelihood of expanding their workforce.

“CFOs are in a prime position to judge the health of the economy, as they have an inside look at their companies’ hiring practices as it relates to financial health of the organization,” added Nefdt. “It remains to be seen how upcoming events, such as the Presidential Election, will impact that outlook.”

About the Survey
Grant Thornton conducted the CFO Survey between June 21 and July 24, with 400 CFOs and comptrollers participating. The survey has a confidence interval of +/- 4.9 percent at a 95 percent confidence level.

Brad Preber - Managing Partner - Grant Thornton

First Job: Brad Preber, Managing Partner Grant Thornton

Brad Preber, Managing Partner of Grant Thornton, discusses his first job selling seeds door-to-door, his mentors and what he learned along the way.


Brad Preber

Title: Managing Partner
Company: Grant Thornton

Describe your very first job.
When I was a teenager, I found an ad in the back of a magazine promoting the door-to-door sale of seeds. You earned points that you could convert into prizes or
cash. I used the money I earned selling seeds to my neighbors to buy a lawn mower that I then used to start lawn care business.

What did you learn from that first job?
I learned what it takes to sell and promote yourself. I experienced the courage it took to knock on someone’s door and the feeling of optimism that came when they actually did what I wanted them to do.

Describe your first job in your industry.
It was a summer job I took doing some bookkeeping for construction companies. I collected the transaction records, recorded them into the accounting books, and prepared financial statements.

What were your salaries in your first job and first industry job?
Selling the seeds was a point system and the points were converted into prizes or cash. I was paid $300 a month for doing bookkeeping for the construction company. I also had an opportunity to apply for scholarship money from the company. I was a broke college student so any extra money helped.

Who is your biggest mentor?
I don’t really have a single individual that I see as a mentor. Instead, I looked to teachers, coaches, and friends’ parents for guidance. I took small pieces of each of them into consideration for what I wanted to be when I grew up. They combined to become big portion of what I am today.

What lessons did you take from your high school coaches?
It’s very clear that the principle of the seven Ps — Proper Planning and Preparation Prevents Pretty Poor Performance — is as applicable to life as it is to football. Like football, it takes a team to be successful in business. You have to know your role, set goals for the team, and execute strategies to achieve them.

What advice would you give someone entering your industry today?
The good news is that there are still plenty of jobs to be had in accounting and finance. One thing most people don’t recognize is that there are rarely any home runs in this business. It’s a series of small steps and steady improvement over a long career that allows you to advance and move into ownership.

If you weren’t doing this, what would you be doing instead?
If I had the time and the capital to pull it off, I would have become an artist. If I didn’t have the capital to pull it off, I would have become a fly-fishing guide.

Arizona Business Magazine March/April 2012

Entrepreneurs

Entrepreneurs: Three Key Things To Consider Before Starting Your Business

Three key things for entrepreneurs to consider before starting their own business


The benefit of a challenging economy has been the inspiration for new business. As individuals find themselves out of a job they may have held for decades, they are no longer taking their talents elsewhere. Instead they are choosing to create their own jobs; and in the process, jobs for others.

On a recent visit to the W.P. Carey School of Business at Arizona State University, I had the honor of meeting a group of enthusiastic future entrepreneurs. Growing up during a time of uncertainty has inspired these students to explore the possibilities of starting their own businesses.

Whether you are a college student with a great idea or a professional seeking to take control of your fate, there are three key things for entrepreneurs to consider before starting your own business and venturing into the world of entrepreneurship.

Do something you’re passionate about

Being in control does not mean more free time. Starting your own business will consume the majority of your time and energy. But if you are passionate about what you do, it won’t feel like work. And when you love what you do, you are more likely to be successful. Think about what you know, what you like and where you may be able to fill a need or provide a benefit to others. This line of thinking most often leads to great ideas that can ultimately become great companies.

The right person for the job

Entrepreneurs wear many hats, especially during the start-up phase. In the beginning, you may be the receptionist, janitor, most valuable employee and CEO — often simultaneously. At a certain point, though, you will be ready to hire full-time employees or need to contract expert help. Running a small operation makes it essential to surround yourself with strong people that fill your weaknesses. While you may be a very knowledgeable about your industry, it does not mean you understand how to execute marketing, public relations or finance.

When hiring, take the time to find people with the right experiences and qualifications to fit your needs. Also, consider personalities, work environments and schedules. As you begin building your team, you want to do your best to find people that you can work well with and will help grow the organization. Finally, consider the qualifications of the team as you reach out to secure potential investors.

Understand the numbers

Entrepreneurs tend to be great idea people or visionaries, but successful entrepreneurs know and understand the financial side of things. If you are still in school and think you may want to launch your own business someday, consider majoring in accounting. If you graduated already, consider taking a few accounting courses. If the thought of accounting repels you, partner with someone or hire someone who understands accounting to serve as a trusted financial adviser. Knowing the numbers and how they are calculated can help to eliminate the risk of fraud. It will also boost your credibility when talking to potential investors because they will realize you know the ins and outs of your company.

Starting a new business is a risk, but the rewards can be great. Taking charge of your own destiny and being your own boss can be empowering and challenging. In the end, having passion for what you do, the determination to make it happen and the dedication to see it through will be what sets you apart from others.

For more information about becoming an entrepreneur, visit fswfunding.com.