News & Tech Tips

A winning combination: QuickBooks + your marketing platform

QuickBooks® is a popular business accounting software program. There are also a number of marketing platforms that businesses can use to stay in touch with customers. Using these tools in tandem may allow your organization to synchronize customer data and bridge the gap between the finance and marketing departments. This gives insight into customer purchasing habits that may help drive subsequent marketing campaigns.

Here’s an overview of the benefits of using QuickBooks with marketing platforms:

Consolidated view of the customer. Integrating sales figures into marketing allows your company to develop data-driven marketing campaigns. For example, if a customer’s purchasing activity increases, a targeted marketing campaign that offers volume discounts could lead to additional revenue. Likewise, this combination could help your business track analytics, such as return on investment and click-through rates, from marketing programs.

More timely, targeted messaging. A marketing platform can help segment your customer base. This can allow your business to deliver strategically timed messages that target a specific audience. For example, you could send new customers promotional emails based on recent purchases. Or you could offer discounts to reengage with existing customers who haven’t made a purchase in the last 90 days.

Enhanced engagement monitoring. A centralized view of a customer’s transactions and interactions with marketing emails can provide a window into their connection with your organization. This can identify satisfied customers and those who may take their business elsewhere. For example, if a customer opens every email and clicks on the links, that shows a high level of engagement. If a customer deletes emails without opening them, it may be cause for concern.

Refined marketing campaigns. Analyzing financial and marketing data together allows your business to monitor the impact of its marketing campaigns in real-time. For example, if the first email of a marketing campaign fails to generate revenue, you can pause the process and revisit your messaging. Conversely, if an email generates significant revenue, that information could justify investing more in subsequent emails with similar messaging.

Using QuickBooks with your marketing platform may provide your business with new perspectives and insight into your customers’ buying patterns, unmet needs and connection to your brand. It can also provide actionable intelligence to facilitate deeper, mutually beneficial relationships with new and existing customers. Contact us for help getting the most out of data from these tools at your organization.

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FASB approves updated rules for disclosing income taxes

On August 30, 2023, the Financial Accounting Standards Board (FASB) unanimously voted to finalize its proposed improvements to the disclosure rules for income taxes. Here’s what’s changing and when those changes are effective.

Rate reconciliation

Under the updated guidance, companies will be required to provide a breakout of amounts paid for taxes between federal, state, and foreign taxing jurisdictions, rather than a lump sum amount. Additionally, the rate reconciliation will require disaggregation into the following eight categories:

  1. State and local income tax, net of federal (national) income tax effect,
  2. Foreign tax effects,
  3. Enactment of new tax laws,
  4. Effect of cross-border tax laws,
  5. Tax credits,
  6. Valuation allowances,
  7. Nontaxable or non-deductible items, and
  8. Changes in unrecognized tax benefits.

These categories will be further disaggregated by jurisdiction and for amounts exceeding 5% of the amount computed by multiplying the income (or loss) from continuing operations before tax by the applicable statutory federal (national) income tax rate. The rate reconciliation table will need to disclose both dollar amounts and percentages. Currently, companies can disclose either the dollar amounts or the percentages.

However, the FASB clarified that the updated guidance won’t require country-by-country disclosures. This was a key misunderstanding that FASB members discussed when reviewing public comments on the proposal.

The FASB contends that the enhancements to the current rate reconciliation table will enable investors to better assess a company’s worldwide operations, related tax risks, tax planning, and operational opportunities, all of which affect its tax rate and prospects for future cash flows.

Time for change

For public companies, the changes will go into effect for fiscal years beginning after December 15, 2024. Interim reporting will be required for the following fiscal years (starting the first quarter of 2026). The standard will go into effect a year later for privately held companies. Early adoption is permitted.

Contact us for help understanding the changes to the disclosure rules for income taxes and how they’ll affect your company. We can help you implement changes to your procedures and systems to gather the appropriate data to comply with the new rules.

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FASB finalizes new crypto standard in record time

On September 6, the Financial Accounting Standards Board (FASB) unanimously voted to finalize new accounting rules on cryptocurrency assets — less than five months after the proposed standard was issued for public comment. Here’s what companies that hold these assets should know.

Need for change

The updated guidance is the first explicit accounting standard on crypto assets in U.S. Generally Accepted Accounting Principles (GAAP). It’s designed to help companies more accurately reflect the economics of such assets. The standard comes at a time of heightened regulatory scrutiny following a series of scandals and bankruptcies in the crypto sector. Volatility in the trillion-dollar crypto sector has caused practitioners to press the FASB to develop accounting rules.

Under current practice, cryptocurrency tokens are accounted for as intangible assets and reported on the balance sheet at historical cost. Those assets are deemed to be impaired when the price falls below historical cost. Impairment is based on the lowest observable value within a given reporting period, causing organizations to continuously monitor the value of these assets. If an asset’s price subsequently recovers, however, impairment losses can never be recovered.

Limited scope

The new standard will apply to well-known crypto assets that trade in active markets, such as Bitcoin and Ethereum. It will also be used for other types of crypto assets that don’t trade nearly as frequently (or perhaps at all). The guidance covers crypto assets that:

  • Are fungible,
  • Are deemed to be intangible (which excludes securities and fiat currencies),
  • Don’t provide the asset holder with enforceable rights to, or claims on, underlying goods, services or other assets,
  • Are created or reside on a distributed ledger based on technology that’s similar to blockchain technology,
  • Are secured through cryptography, and
  • Aren’t created or issued by the reporting entity or its related parties.

The term “fungible” is typically used for commodities or currencies. It refers to an item that can be freely traded or replaced with something of equal value. This condition is specifically designed to exclude non-fungible tokens (NFTs) from the scope of the new rules. In general, financial statement users have told the FASB that they don’t observe companies and nonprofit entities holding material amounts of NFTs, which may come in the form of art, music, in-game items, video clips and more.

Key requirements

The new rules will require crypto assets within the scope of the standard to be measured at fair value at the end of the reporting period. In addition, changes in value recognized in each reporting period will be reported as gains or losses in comprehensive income. Fair value represents the price that will be received if the company were to sell the crypto asset in an orderly transaction to a willing and knowledgeable buyer.

Under the guidance, companies will present crypto assets separately from other intangible assets on the balance sheet because they have different measurement requirements. Crypto assets will be more prominently displayed, providing investors with clear and transparent information about their fair value.

The guidance also calls for detailed disclosures on crypto holdings. For example, disclosures for Bitcoin will include the number of tokens held, the fair value and the cost basis. Organizations also must disclose information about restrictions in crypto holdings, what it would take to lift any restrictions and changes in those holdings.

Coming soon

The final standard will be published in the fourth quarter of 2023. It will go into effect for fiscal years beginning after December 15, 2024, including interim periods within those years, for all entities. Early adoption is permitted. Contact us to help understand how this guidance applies to your organization.

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How to Recognize and Avoid IRS Scams

The IRS is a major target for scammers, who use a variety of methods to trick taxpayers into giving up their personal and financial information. Here are some tips to help you recognize and avoid IRS scams:

  • Phone call scams: The IRS will never call you out of the blue to demand payment. If you receive a phone call from someone claiming to be from the IRS, hang up immediately. Do not give them any personal or financial information.
  • Email phishing scams: Phishing emails often look like they’re from the IRS, but they’re actually from scammers. These emails may contain links or attachments that can infect your computer with malware. If you receive an email from someone claiming to be from the IRS, don’t click on any links or open any attachments.
  • Protect your personal information: Identity theft is a major concern, so it’s important to protect your personal information. Don’t give out your Social Security number or other sensitive information unless you know who you’re giving it to.
  • Choose a trustworthy tax preparer: Tax preparer fraud is another way scammers can steal your money. Choose a tax preparer who is reputable and takes the security of their clients’ information seriously.
  • Beware of social media scams: Scammers may impersonate IRS agents or tax professionals on social media. Be careful about who you interact with on social media, and never give out personal or financial information.
  • Avoid ghost tax preparers: Ghost tax preparers do not sign the tax returns they prepare, which can lead to errors or fraud. Make sure your tax preparer signs your return and includes their Preparer Tax Identification Number (PTIN).
  • Verify IRS letters: Scammers may send fake IRS letters through the mail. If you receive a letter from the IRS, verify its authenticity by contacting the IRS directly.
  • Stay cautious of robocalls: Robocalls impersonating the IRS are becoming more common. The IRS does not initiate contact through pre-recorded calls. If you receive a robocall from someone claiming to be from the IRS, hang up and do not give them any personal or financial information.

By following these tips, you can help protect yourself from IRS scams. If you think you may have been a victim of an IRS scam, contact the IRS immediately.
Here are some additional tips to help you stay safe from IRS scams:

  • Only use official IRS websites and contact information.
  • Be suspicious of any communication that demands immediate payment or personal information.
  • Never give out your Social Security number or other sensitive information over the phone or through email.
  • Be careful about what information you share on social media.
  • Keep your computer and software up to date with the latest security patches.
  • Use a strong password and change it regularly.

By following these tips, you can help protect yourself from IRS scams and keep your financial information safe.

At Whalen CPAs, we are committed to safeguarding your financial well-being. It’s essential to stay informed and vigilant when it comes to IRS scams. If you ever encounter a suspicious communication or require assistance with any tax-related matter, don’t hesitate to contact our team of experts. Your financial security is our top priority.

Receivables: Quality counts

For many companies, a significant line item on the balance sheet is accounts receivable. But can you take the amount reported at face value, or could there be more to the story? It’s important to dig deeper to understand the quality of accounts receivable. Balances might include stale invoices, bad debts — and even fictitious entries.

Benchmarking receivables

A logical starting point for evaluating the quality of receivables is the days sales outstanding (DSO) ratio. This represents the average number of days you take to collect money after booking sales. It can be computed by dividing the average accounts receivable balance by annual sales and then multiplying the result by 365 days.

Companies that are diligent about managing receivables typically have lower DSO ratios than those that are lax about collections. Companies with relatively high DSO ratios may have accounts of the books that may be overdue by 31 to 90 days — or longer. If more than 20% of receivables are stale, it may indicate lax collection habits, a poor-quality customer base, or other serious issues.

The percentage of delinquent accounts is another critical number. You may decide to outsource these accounts to third-party collectors to eliminate the hassles of making collections calls and threatening legal actions to collect what you’re owed.

Diagnosing fraud symptoms

Accounts receivable also may be a convenient place to hide fraud because of the high volume of transactions involved. Warning signs that receivables are being targeted in a fraud scheme include:

• An increase in stale receivables,
• A higher percentage of write-offs compared to previous periods, and
• An increase in receivables as a percentage of sales or total assets.

In addition to creating phony invoices or customers, a dishonest worker may engage in lapping scams. This happens when a receivables clerk assigns payments to incorrect accounts to conceal systematic embezzlement.

Alternatively, a fraudster may send the customer an inflated invoice and then “skim” the difference after applying the legitimate amount to the customer’s account. Using separate employees for invoicing and recording payments helps reduce the likelihood that skimming will occur, unless two or more employees work together to steal from their employer.

Seeking outside help

Like any valuable asset, accounts receivable needs to be managed and safeguarded. Auditors evaluate receivables as part of their standard auditing procedures, including performing ratio analysis, sending confirmation letters, and reconciling bank deposits with customer receipts.

Contact us if you have concerns about your company’s receivables trends. In addition to conducting surprise audits, we can customize agreed-upon-procedures engagements or forensic accounting investigations that dig deeper.

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