Excel depreciation advice; risk management lessons learned

A recent Journal of Accountancy article by Kelly Williams, CPA, Ph.D., detailed eight ways to calculate depreciation in Excel. Williams, one of two CPA authors of the Technology Q&A feature, shares why it’s helpful to CPAs to have so many methods and which one she prefers. She also talks about Flash Fill as a preview to her Excel session at AICPA & CIMA ENGAGE 2021 in July.

In the second interview segment, Mark Beasley, CPA, Ph.D., says one key part of enterprise risk management (ERM) is breaking down silos. Beasley, the director of North Carolina State University’s ERM Initiative, joined the JofA podcast for a discussion of lessons that can be pulled from a recent survey on risk management. An article on the survey appeared on the website of FM magazine.

Also, listen to news on a proposed standard by FASB and an update on Paycheck Protection Program funding from the U.S. Small Business Administration.

What you’ll learn from this episode:

• What Williams calls her preferred way to calculate depreciation.
• Why the numerous ways to calculate depreciation in Excel can be beneficial to accountants.
• A preview of Williams’s session on Excel tips at AICPA & CIMA ENGAGE 2021 in July.
• Beasley’s key takeaways from the 12th edition of a survey on enterprise risk management.
• The percentage of organizations in the latest survey who say they have appointed a chief risk officer.
• Updates on several news topics affecting finance professionals: a proposed new standard on hedge accounting, PPP funding news, a primer for auditors on SPACs, and FAQs on the new CPA Evolution Model Curriculum.

Play the episode below or read the edited transcript:

To comment on this episode or to suggest an idea for another episode, contact Neil Amato, a JofA senior editor, at Neil.Amato@aicpa-cima.com.

Transcript:

Neil Amato: Welcome back to the Journal of Accountancy podcast. I’m senior editor Neil Amato. On today’s episode, our lead topic is not a Paul Simon song, but it is eight ways to calculate depreciation in Excel. That was a recent JofA headline, and it was Tech Q&A author Kelly Williams who wrote it. Kelly is a CPA and associate professor of accounting at Middle Tennessee State University, and she’s joining the podcast.

First, Kelly, your article in the most recent print issue of the Journal of Accountancy offers multiple ways to calculate depreciation in Excel. Do you have a favorite method among those ways?

Kelly Williams: Well, if you were to ask me which way I’d like to calculate depreciation outside of Excel, I’d definitely say straight line, because it’s the easiest. However, I tried to describe how to do each of those eight ways in Excel. And the great thing is, all those depreciation methods using Excel, they’re really all very easy because there’s a built-in function in order to calculate all of those methods.

Amato: Is it a good thing that there are eight ways, or would it be simpler if there were two or three? I’m an Excel rookie, to say the least, so that’s my nontechnical way of looking at it.

Williams: Well, that’s a good question. I do understand the concept of information overload. However, for most accountants, we know there’s a lot of depreciation methods out there, outside of Excel. Lots of different ways that you can calculate depreciation. Sometimes, it’s different for book purposes versus tax purposes. So in this case, I would say the fact that there are several built-in functions in Excel already available for use, I think that’s actually a really great thing. My hope is that there will be even more added in Excel going forward.

Amato: Tech Q&A is one of our magazine’s most popular features. What has it been like being the co-author along with CPA Byron Patrick? What has that taught you about the kinds of info our readers are seeking?

Williams: You know, I generally handle the Excel questions, and the things that I have primarily learned from a lot of the submissions with questions or comments is that most of the readers really want to be able to apply the information that we provide in Tech Q&A to their own work or their own projects. So they really want to be able to use that technology in a practical way, and I really love having the opportunity to be able to help them do just that.

Amato: Yeah, that seems like a good point. A lot of the stories that we write, that I write on a business and industry focus, they’ve got to be applicable lessons. It’s not just, ‘Hey, here’s the survey data,” but it’s how you can apply it to your businesses. So, back on Excel, you’ll be talking more Excel tips at ENGAGE in July. Do you want to give a short preview of that session?

Williams: Well, all of the tips that I’m going to be covering in the session — it’s not completely finalized. My main problem is there are just so many available in Excel, it’s really hard to choose. And I only have so much time to talk about it. One of the tips I will be talking about, Flash Fill — it’s one of those Excel features that I have come to categorize as smart Excel, kind of similar to smartphones. Excel has several features and just growing all the time, where they have a lot of features that will help you complete your work. Excel will actually do a lot of the work for you. And who couldn’t use help getting your work done even quicker?

What I try to teach my students and also what I’m hoping to convey at the conference this summer is basically if there’s a task that you could show a reasonably intelligent fifth-grader to do in a spreadsheet, Excel can probably do it for you. You just have to know where to look. So my goal will be that anyone that’s attending my session, if they can walk away with two or three tips that actually apply to their own work and they can use to help them complete tasks quicker and more efficiently, that is my goal. So I’m looking forward to that conference coming up.

Amato: That’s a great tease. Remember that phrase “Flash Fill.” There’s plenty more on the technology front in the Journal of Accountancy in the Tech Q&A feature. We’ll link to that calculation of depreciation article that we mentioned in the show notes for this episode, and again you can hear Kelly talk more Excel at ENGAGE in July. Kelly, thanks very much for being on.

Williams: Thanks, Neil. It was good to be here.

Amato: Mark Beasley is the KPMG professor of accounting at North Carolina State University’s Poole College of Management, and the director of the university’s ERM Initiative. Mark, enterprise risk management (ERM), has been a focus of yours over the years. You’ve worked with the AICPA on a survey, now in its 12th edition in 2021. What has the pandemic taught organizations about their enterprisewide risk management processes?

Mark Beasley: Thank you, Neil. It’s a pleasure to be here. I think the pandemic is teaching both executives and then their boards and other key stakeholders that, OK, risk events do happen. And sometimes they can have an enterprisewide impact — that being one, single, root-cause issue can have a multiplicative effect across all kinds of functions of the organization. And so I think it’s raised awareness of what has already been a reality, that risks emerge and they can happen pretty quickly, but have almost a holistic or in some cases, unfortunately, a catastrophic impact of how they do business, turning it literally upside down.

So I think there’s been a greater awareness that risk is something to think more proactively about. Because when it’s big, it can have an unbelievable impact. Unfortunately, in a lot of cases, not a great impact. But in some cases, some have made out pretty well with the pandemic. And I’d say also it’s led to a realization that as we manage risk, we learn how to do that, and now we can turn that into opportunity, which I think is really exciting.

Amato: The survey mentions business continuity in a few spots, and I’d like to focus on that in particular, because clearly it’s been an issue in 2020 and even into 2021. What do you think organizations have learned about their business continuity practices from the past 14, 15 months?

Beasley: Yeah, that’s a topic we’ve heard quite a bit [about] from our ERM Initiative Advisory Board. It’s like 50-something companies on there, and that’s been a topic on our agendas over the last few months. And what we’re hearing from them and what we’re observing is, a number of entities are realizing they need to elevate the governance surrounding business continuity to a much higher, enterprisewide level. What they comment on is, “Yeah, we had business continuity as a focus, but it tended to be somewhat siloed.” Heavily led in most cases out of the IT function, for example. So, IT had spent a lot of time making sure our systems have a 24/7 availability capability — that we have duplicate servers, backup systems in other geographic regions of the world to be able to restore our systems. But what they realized is they hadn’t thought about the non-IT part of the business.

What they’re realizing is we need to be thinking about business continuity more holistically and more at an enterprise level, bringing in multiple functions to think about continuity of our business and then have that governance sitting at a much higher level in the organization, so that it is more cross-functional. That’s what we’re hearing, that they’re realizing that while there were some good efforts, there were some gaps, because it wasn’t thinking across silos and bringing those functions together.

Amato: There certainly are some gaps. And you never want to say that the pandemic was good, because it was not. But, moving forward, how can organizations be better at filling those gaps when it comes to risk management?

Beasley: I think one of the positive sides of COVID in how organizations have just been forced to deal with a very complex risk is that they’ve realized their workforce is pretty agile — an ability to turn on a dime in some cases. They’ve also been able to quickly break down silos. So, enterprise risk management, we’re all about breaking down silos to get more cross-functional sharing of challenges and issues that could affect our businesses. And I think that as entities started managing the responses to the pandemic in March of 2020, they brought people together very quickly that maybe weren’t working that much together.

So, I think the enterprise view of cross-functional teams being suddenly created and meeting, sometimes, multiple times a day initially and then spreading that out but continuing to dialog, that they broke down siloed thinking and brought it more to a holistic level. And, I think we also saw a greater willingness to be transparent, in that when we were dealing with this, it was so unknown and it was sort of like, “We’re all here to help. So, tell us what’s hard, where are the risks, let’s deal with it together.” So there’s an element of transparency where entities are saying, “OK, now as we get beyond the pandemic, how do we preserve that culture of transparency and culture of sharing and cross-functional dialogue.” So I think we’re encouraging those entities that you had to pull together to be the risk response team for the pandemic, should some of that be preserved. You know, carry that forward, because I think that can be a huge advantage.

The other thing I’ll mention, too, is that as entities have responded to the challenges of the pandemic — and I’ll speak to N.C. State as an example. We were forced to do online education, 100%, overnight. So, now after time has gone by, we’re sort of figuring out how to do that better and better and better. Wow, now we have a whole new opportunity. So we’re actually exploring some new curriculum opportunities that will be more of a graduate level, that we’re saying, we can do this online, because we’re getting good that that. I think we were good at it; we’re getting better at it. I think entities are realizing that, too. They’ve sort of been forced to get digitally up to speed. Now, that they’ve done that, how do they stay more digitally savvy to be more competitive and create more opportunities.

Amato: Mark, thank you for the time today. The survey, as I mentioned, it’s got a lot more than the things we discussed. We will hyperlink to that survey in the show notes. And, Mark, thank you so much again for talking us about enterprise risk management.

Beasley: Thanks for the opportunity. Appreciate it.

Amato: In other news, the U.S. Small Business Administration has stopped accepting most new Paycheck Protection Program applications.

The SBA informed lenders on Tuesday, May 4 that the $292 billion PPP general fund was out of money and that the only remaining funds for PPP forgivable loans are set aside for those applications in review status or reserved for use by community financial institutions, which work primarily with businesses in underserved communities. In March, Congress extended the PPP application deadline two months to May 31, in part to give the SBA and lenders time to resolve error codes that were holding up nearly 200,000 applications in the SBA’s PPP platform.

A surge this year in the number of special-purpose acquisition companies has led to interest from investors and scrutiny from the SEC. The rise of SPACs has also led to new guidance from the Center for Audit Quality. That guidance provides ideas for auditors and audit committees to consider related to the initial public offerings and mergers that are tied to the creation of a SPAC.

The Financial Accounting Standards Board proposed a new standard designed to better align hedge accounting with an organization’s risk management strategy. Comments on that proposal can be submitted by July 5 on the FASB website.

Also, June will mark the launch of the CPA Evolution Model Curriculum. Academic-in-residence Jan Taylor-Morris, representing the AICPA & CIMA, goes over some frequently asked questions about the new curriculum in an article you can find on journalofaccountancy.com.

In this episode’s show notes, we’ll link to the topics mentioned, and you can visit the JofA website for the latest news. Thanks for listening to the Journal of Accountancy podcast.