September 2006 - Journal of Accountancy

  EXECUTIVE SUMMARY When individual clients receive an income tax refund, a bonus, an inheritance or another windfall or other extra cash, they have a number of options. The most prudent choices are investing, putting money in college savings or retirement accounts or paying off debts. By using the following

  EXECUTIVE SUMMARY Work and people now move easily across geographic lines, and qualified, licensed CPAs in good standing should be able to practice in more than one state or jurisdiction without undergoing a time-consuming, redundant licensing process in each. To allow CPAs a wider range of professional mobility and

Business valuation is not an area of accounting to be entered into lightly. Statistics show there are many litigation claims against CPAs in the valuation area, mostly due to a misunderstanding of what services the CPA was to perform as part of the engagement and the CPA’s lack of formal

Business valuation is a relatively new discipline. Financial valuation—the process of determining the value of a financial asset or liability—belonged first to those on Wall Street who focused on trading securities; the concept of business valuation, or valuing private companies, arrived on Main Street about 25 years ago by entering

The following articles highlight the diverse issues facing practitioners in the business valuation and forensic & litigation services (BV/FLS) areas. The wide range of topics—fair value, collaborative process in divorce and valuation, electronic discovery and fraud—underscore the complexity of this rapidly growing practice area.

  EXECUTIVE SUMMARY Section 529 college savings plans offer numerous advantages and have few disadvantages compared with other options. Their benefits include tax savings, estate planning benefits, high contribution limits and no income limitations. One of the few drawbacks to these plans is that investment products usually are chosen by

Small businesses are the most vulnerable to occupational fraud and abuse and suffer disproportionately larger losses as a result, according to the 2004 “Report to the Nation on Occupational Fraud and Abuse” prepared by the Association of Certified Fraud Examiners. Compounding the problem, small businesses are less likely to have

The founder and chairman of the Association of Certified Fraud Examiners, Joseph Wells, wrote an insightful series, The Fraud Beat, for the JofA on the basics of fraud investigation in small businesses. “Sherlock Holmes, CPA,” ( www.aicpa.org/pubs/jofa/aug2003/wells.htm and www.aicpa.org/pubs/jofa/sep2003/wells.htm ) explains what it takes to gather evidence, interview witnesses and

The private equity (PE) market (including venture capital, buy-out, mezzanine and similar longer-term, illiquid investments) has expanded exponentially over the past 10 years. U.S. GAAP requires private equity (PE) investments be stated at fair value. Given the nuances inherent in PE, there can be significant challenges in determining the fair

Electronic evidence often can provide vital information about the activities, motives and intent of individuals and businesses. Electronic documents thought to be deleted or lost by the user often can be recovered. In the case of electronic mail, casual and candid correspondence may be frozen in time. Additionally, the background

ecently, the Journal of Accountancy’s Geoffrey Pickard and CPA2Biz President and CEO Erik Asgeirsson chatted about the continued growth of the AICPA’s majority-owned subsidiary and what’s on the drawing board for the coming months. Here’s what they had to say. JofA: What does CPA2Biz have to offer AICPA members? Asgeirsson:

Note : Includes venture capital, LBO, mezzanine, turnaround and recapitalization-focused funds. Source: Thomson Venture Economics/National Venture Capital Association; Goldman Sachs for 2005 buyout data. Determining fair value requires managers to exercise judgment. While each manager’s judgment may result in different but supportable views on valuation, using common guidelines consistent with

When it comes to divorce, emotions and the desire to be litigious often run high. The toll on a divorcing family is both emotional and financial—and it can be devastating to both children and parents. An alternative to litigation in family breakups is called “collaborative divorce,” a process begun by

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Gathering data is a key element of a business valuation analysis—and you must assemble enough to analyze your subject company from all sides. Client data. Once you’ve gathered the audits, the tax returns, the business descriptions and marketing materials, you will realize—with apologies to Joni Mitchell—that “you’ve looked at the

In just a few short years “CPA/ABV” has become synonymous with competent, credible valuation service. The market recognizes practitioners with the credential as leaders in the valuation community. The AICPA’s new ABV Sponsor Program allows CPAs to obtain the ABV credential without taking the ABV examination. The CPA must be

Is having an opponent our way of life? Is litigation an efficient and responsible means of resolving disagreements? Is advocating for a client, to the detriment of the “other” side, acceptable? Or, is there a recipe for peaceful resolution of differences? What if the disagreeing parties agree to engage in

EXECUTIVE SUMMARY Since the advent of the Sarbanes-Oxley Act, companies no longer can rely on their external auditor as an internal control. They must report most errors the auditor finds as material misstatements and material weaknesses unless they can prove their own controls would have found the error. Balance sheet

Business valuation (BV) and forensic & litigation services (FLS) are the fastest-growing niche markets in the CPA profession. This special section highlights these niche practices and the issues practitioners are facing. CPAs looking for additional technical and practice management guidance on BV and FLS topics also can visit the AICPA’s

What is the primary focus of your practice? What is the size of your practice? Note : Multiple answers permitted. Source: December 2005 AICPA BV/FLS Membership Section survey. Practitioners can obtain guidance from many sources. The AICPA is currently developing valuation standards for its members; the other organizations already publish