Tag Archives: Ralph Nefdt

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.

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Grant Thornton Give Back Day

On Thursday, Nov. 15, nearly 800 current and retired partners and managing directors from Grant Thornton LLP offices across the globe gathered in the Valley during their annual meeting, which was held at the Fairmont Scottsdale Princess, to help give back to the local area community. During the day, the firm made a check presentation of $12,000 to Kitchen on the Street, a non-profit organization that provides food for children who are not guaranteed a meal during weekends. In addition, the partners supplied and assembled emergency food kits for 500 local families in need this holiday season, also through Kitchen on the Street.

“Hunger is a growing crisis for 17 million children in the United States,” said Ralph Nefdt, Grant Thornton’s local office managing partner. “One in four American children struggles with food insecurity, which results in academic developmental issues that present both immediate and long-term challenges. These issues not only affect the child experiencing food insecurity, but the entire community.”

A leader in this community, events like this are just some of the many outreach programs supported through Grant Thornton C.A.R.E.S. (Community Awareness and Responsibility Expressed through Service), a program designed to demonstrate leadership not only in its industry, but also in its community. Through the program, nicknamed GT CARES, employees contribute time, money and expertise to local civic organizations, charities, universities and professional associations.

Grant Thornton

Women At Grant Thornton Initiative Create An Environment Where Females Can Thrive

Stella(r) Leadership

For Stella Shanovich, an audit partner at Grant Thornton in Phoenix, her team is anything but a Good Ol’ Boys’ network or a Women-Only Club. It’s a group of men and women focused on building a dynamic, talented team.

“However, while inclusivity is key, it is also important to understand women and men are different in the ways we lead, communicate and build relationships,” says Shanovich, who became Grant Thornton’s first female partner in the Phoenix office in 2008. “These differences are neither wrong nor right — just different.”

It is the celebration of these differences that has helped Grant Thornton thrive in the valley over these past eight years.

A chief collaboration is “Women at Grant Thornton.”

The initiative, which Shanovich has headed on both a local and national level, focuses on:

  • Ensuring a culture that enhances retention and recruitment of women;
  • Enhancing personal development in client serving areas;
  • Increasing awareness of women’s successes;
  • Increasing the number of women in leadership roles within the organization.

Shanovich and her team connect this mission statement to one or more of the firm’s strategic drivers, including revenue growth, talent development, operational excellence, client service and branding, when considering an event or program for the initiative. Her team identifies the specific audience for each individual effort — be it females, males, seniors, staff, partners and managers or even newcomers.

The result? Five signature education programs:

  • Centered Leadership, which focuses on developing leaders through the way they think, act and communicate to achieve impact;
  • Executive Presence, which focuses on image in the business world;
  • Networking, which focuses on techniques for building productive and mutually-beneficial relationships;
  • Rainmaking, which focuses on cultivating relationships into business opportunities;
  • Conflict Cure, which focuses on awareness through recognizing one’s conflict style as well as how to constructively defuse conflict.

Shanovich and her team have also participated in, or sponsored, women-in-business panel discussions, negotiation skills training, work-life integration seminars and dress-for-success events.

According to Ralph Nefdt, Grant Thornton’s Phoenix office managing partner, the Women at Grant Thornton program helped senior management truly understand that to develop great leaders, it must develop a culture of flexibility. this realization has led to flexible work policies, back-up dependent care, adoption assistance, paid parental leave and more for all members of the team nationwide.

“Today, half of our leadership roles here in Phoenix are filled by females,” Nefdt says. “But the real power of the Women at Grant Thornton program lies in its ‘people focus,’ not simply its female focus.”

As such, the men at Grant Thornton are regularly invited and encouraged to participate in the various activities/events to enhance their skills as well.

“Arizona businesses deserve the benefit of a team dedicated to leveraging their talents to bring innovation and perspective,” Shanovich says. “We bring our clients collaborative individuals who believe in having a voice and being part of something different.”

For more information on Grant Thornton, visit www.grantthornton.com.

Arizona Business Magazine July/August 2012