The Senate by voice vote approved H.R. 4462, a bill that would allow donors to accelerate the income tax benefits of charitable cash contributions for the relief of victims of the earthquake in Haiti. The bill had previously been passed by the House on January 20 by voice. Accordingly, the bill is now cleared for signature by the President, which is expected this week.

The bill would allow individuals who make charitable contributions to aid Haitian earthquake victims to elect to claim an itemized charitable deduction on their 2009 tax return (instead of having to wait until next year to claim the deductions on their 2010 tax return). The election would apply only to Haitian relief contributions made in cash after Jan. 11, 2010, and before Mar. 1, 2010. If the election is made, Haiti relief donations would be deductible on the 2009 return, not the 2010 return. The bill also would relieve recordkeeping requirements for Haitian relief contributions. For these contributions, a telephone bill would satisfy the Code Sec. 170(f)(17) recordkeeping requirements if it shows the name of the donee organization, the date of the contribution, and the amount of the contribution.

By: Jim Keeslar, CPA

“Trust but verify.” Three simple words. Fourteen letters. Pretty basic, but oh, so important, especially in the times we find ourselves in. In the last five years we have seen greed topple some large corporations and some seemingly powerful individuals. Now during a prolonged recession, we at BCG & Co. have seen a significant uptick in fraud. And I am not talking about stories in the newspapers about someone somewhere else. I am talking about right here in Akron, Ohio! We have seen use of corporate credit cards for personal expenses, the altering of documents to support invalid expense reimbursements, checking account theft, the theft of corporate funds meant for retirement funding and fictitious numbers being reported to a bank. Five different fraud schemes in the last three months alone! Years ago, there was a time when we would go a year or two before investigating a potential fraud scheme. So why so much activity now? Well, the economy has put a great deal of additional pressure on individuals causing them to do things they wouldn’t have thought of before.

For more on this whole topic, I have to look no further than our own “fraud-buster”, Ray Dunkle, who is a Certified Fraud Examiner (Ray also provided me with the title for this article). Ray noted, “many people think, ‘it won’t happen to me.’ Then before you know it, you hear them saying, I can’t believe it! He has been a long-time employee, a great performer. I never thought he would steal from me!” Ray goes on to say, “you don’t hire people expecting them to steal from you. You have to have some trust, but you must also be skeptical”.

So as an employer or board member, what are you to do? Again, I turned to Ray. “First, and foremost, make sure the organization has adequate internal controls. Controls are not just for large companies and you can’t be too small for some form of controls. Proper internal controls can help deter and detect theft. An audit is helpful, but it doesn’t always detect fraud. We are seeing more companies that are implementing internal audit procedures—either themselves or contracting with firms such as ours. Controls are important, but you want to perform periodic tests of those controls to make sure they are functioning properly. Internal audit procedures will do just that.”

I asked Ray for a closing thought and he said, “You know, companies will spend money on fire insurance or general liability insurance hoping they will never need it. Companies need to understand that spending money to prevent fraud and to detect honest, but costly, mistakes is no different. Putting controls in place or having internal audit procedures performed on a periodic basis will have a cost associated with it. But just like a fire, if theft hits, it will be more costly than what you would pay to “insure” against it. I would also add, trust is not a control, but a feeling. It is ok to trust, but remember to verify!”

The economic downturn has only heightened the need for contractors to look for ways to save money and increase revenues. A top-to-bottom review of your operations may reveal some surprising areas where significant savings can be found.

Manage Equipment
Use More Efficiently
Fuel is probably a major expense for you, especially if you are involved in road, bridge, and other types of heavy construction. You can reduce fuel consumption by monitoring equipment idle times and managing fuel efficiency.

Remote asset management technology uses GPS hardware attached to each piece of field equipment to send data via a server or cell tower to a desktop computer in your main office. Your office staff gets real-time data on the equipments precise location, run times, idle times, and speed. Armed with this information, you can see how much fuel is being used and take steps to establish procedures that reduce idling times. Reducing idle times for equipment not only saves fuel, it often translates into increased job site productivity.

Using remote asset management technology can also save money on maintenance. For example, the system can automate the process of monitoring equipment maintenance schedules and help in scheduling timely maintenance on heavy equipment. Better scheduling reduces wear and tear and helps prevent equipment breakdowns.

Charge for Every Change Order
Tracking and charging for every change order lowers your cost of doing business. For every change your customer asks for, break down the costs and present the estimate before you begin any work. For each change order, use a standardized cost template. Be sure to capture all extra costs, including:

• Additional time to process paperwork, supervise the work, and complete additional accounting
• Costs associated with the use of equipment, tools, utilities, and temporary protection, such as fencing and barricades
• Gas and oil
• Insurance
• Clean-up

Record every change order in a log created for this purpose. Change orders should be identified by serial number, subject, and date received. Obtain the signatures of all parties involved before work begins.

Improve Material Handling
You can improve productivity by reducing the unnecessary handling of materials on the job. Implementing a measurement program that allows you to determine how many times material is double handled on a job is a critical first step in this process. Once you have the data, specific situations and conditions that create a high likelihood that material, supplies, and equipment will be double handled should be easier to identify.

Consider preparing a map of your job sites and designating specific locations for storing materials where they will be safe from theft or damage. It makes sense to locate these sites as close as possible to where the bulk of the projects work is being done and only move materials and equipment from the storage locations to places on the site where they will be used immediately.

Serving the Need, Not Checking the Box
[This article is for individuals associated with organizations having audit committees.]

Frequently, Audit Committees are thrown together more in a check the box response to a required procedure and less in a desire for strong corporate governance. As a result, Audit Committees often gather once a year only to hear an often routine report from the outside accountants. With the growing understanding of the importance of appropriate corporate governance, we thought our readers would appreciate knowing practical areas that Audit Committees should be considering:

Awareness the Audit Committee should be challenging their own awareness of:

• Ethics and the opportunity for fraud within their own organization,
• Fraud and fraud fighting procedures…procedures that may also uncover honest but costly mistakes,
• Organizational controls, their appropriateness and their effectiveness, and
• The organization’s prior experience with the detection of errors and fraud and the organization’s response to it.

Oversight - the Audit Committee should be taking an active role in directing:

• The monitoring of managements financial activities,
• The guidance of the internal audit function,
• The implementation of error/fraud prevention and detection programs, and
• The reporting of such activities to the Board and/or ownership.

Self-Assessment the committee should ensure that it is functioning as an audit committee and not as a passive body of listeners to an outside auditors report. Tools such as self assessments, formal written surveys and feedback from management and auditors can help ensure that the Audit Committee is effective and engaged.

Ready for your revival? The most important part of jumpstarting your committee is having everyone make a commitment to embrace changes for the good of your organization, changes that will protect and ensure the longevity of the entity. A first step can be finding an experienced facilitator who will lead the group into uncovering and addressing some key areas for improvement and who can assess the current committees knowledge and commitment to the points above. Effective retreats will study hypothetical ethical dilemmas and evaluate the committee members responses to them. They will also provide an overview of fraud and common methods used to commit it, summarize error and fraud prevention and detection techniques, identify specific industry risks and exercise brainstorming to address a response to the days findings. For more information on how to jumpstart your Audit Committee or how to develop a retreat customized to your organization contact me via phone (330) 572-8046 or email.

From the IRS:

The American Recovery and Reinvestment Act provides tax incentives for first-time homebuyers, people purchasing new cars, those interested in making their homes more energy efficient, and parents and students paying for college.

Here are six things the IRS wants you to know about ARRA tax incentives for individuals:

1. First-Time Homebuyer Credit Taxpayers who haven’t owned a principal residence during the past three years prior to the purchase date of a home before Dec. 1 of this year may be eligible to receive a credit of up to $8,000 on an original or amended 2008 tax return. They can also wait and claim the credit on their 2009 return.

2. New Vehicle Purchase Incentive Qualifying taxpayers can deduct the state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. The deduction per vehicle is limited to the tax on up to $49,500 of the purchase price of each qualifying vehicle and phases out for taxpayers at higher income levels.

3. Making Work Pay and Withholding The Making Work Pay Credit lowered employees’ tax withholding rates this year and has already put more money into the pockets of wage earners. Self-employed individuals will have an opportunity to claim this credit when they file their 2009 return. Taxpayers who fall into any of the following groups should review their tax withholding rates to ensure enough tax is currently being withheld: multiple job holders, families in which both spouses work, workers who can be claimed as dependents by other taxpayers, workers without a valid social security number, some social security recipients who work and pensioners. Failure to adjust your withholding in these situations could result in potentially smaller refunds or in limited instances may cause you to owe tax rather than receive a refund next year.

4. Tax Credit for First Four Years of College The American Opportunity Credit can help parents and students pay part of the cost of the first four years of college. The new credit modifies the existing Hope Credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Eligible taxpayers may qualify for the maximum annual credit of $2,500 per student.

5. Certain Computer Technology Purchases Allowed for 529 Plans ARRA adds computer technology to the list of college expenses that can be paid for by a qualified tuition program, commonly referred to as a 529 plan. For 2009 and 2010, the law expands the definition of qualified higher education expenses to include expenses for computer technology and equipment or Internet access and related services.

6. Energy-Efficient Home Improvements The credit for nonbusiness energy-efficient improvements is increased for homeowners who make qualified improvements to existing homes. Qualifying improvements include the addition of insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.

For more information on this and other key tax provisions of the Recovery Act, visit the official IRS Website at IRS.gov/Recovery.

Links:

• The American Recovery and Reinvestment Act of 2009: Information Center

August 12, 2009
Posted on the OSCPA Blog

By: Kristin Gentry
Savvy Social Media Marketing

As seen on WebCPA: Featuring BCG&Co.

A Firm 2.0 is one that utilizes Web 2.0 technology to create efficiency and improve productivity in all aspects of its operations.

In my last article, Strategic Growth Planning in a New Participatory Culture, I addressed the top five principles of a Web 2.0 application and how to apply those to your firm’s growth strategy. Now let’s stretch ourselves further out of our comfort zones and discuss the new generation of accounting firm, Firm 2.0.

Legislation goes into effect July 1, 2009.

President Obama signed into law a program NHTSA is calling the Car Allowance Rebate System (CARS). This is a government program that helps you purchase a new, more fuel efficient vehicle when you trade in a less fuel efficient vehicle.

Under the CARS program, NHTSA is charged with rules for program implementation in 30 days.

5 Important Things to Know

- Your vehicle must be less than 25 years old on the trade-in date

- Only purchase or lease of new vehicles qualify

- Generally, trade-in vehicles must get 18 or less MPG (some very large

pick-up trucks and cargo vans have different requirements)

- Trade-in vehicles must be registered and insured continuously for the

full year preceding the trade-in

- You don’t need a voucher, dealers will apply a credit at purchase

GENERAL PERIOD OF ELIGIBILITY- A voucher issued under the Program shall be used only in connection with the purchase or qualifying lease of new fuel efficient automobiles that occur between July 1, 2009 and November 1, 2009.

*Data compiled from www.cars.gov

Full details here.

The Secretary of State’s Office has become aware of a  company called “Ohio Corporate Compliance” which has been sending out a form titled “Annual Minutes Disclosure Statement.” They ask for a $150 annual fee along with corporate information. Although this form looks official – do not fill it out or send it back. Corporate minutes are not required to be filed with any governmental agency according to the Ohio Secretary of State.  

View alert from the Secretary of State.

Submitted by: Doug Mathey, CPA, MT

The recent tax legislation provided a valuable tax incentive to consumers to aid the auto manufacturer’s, a tax break for new car buyers. While subject to income and other limitations, we are finding this opportunity has broad applicability. Consider this tax incentive when deciding whether to purchase a new vehicle between now and year-end, as this income tax deduction is available for purchases prior to 2010 (and on or after 2/17/2009).

In hopes of spurring the overall economy in general, and the automobile industry in particular, the recently enacted “American Recovery and Reinvestment Act of 2009” includes a new tax break for purchasers of new cars: a deduction for state and local sales and excise taxes paid on new vehicle purchases. Here are the details.

Sales tax is generally not a deductible item for individuals. A limited exception allows taxpayers who itemize their deductions to claim either state and local income taxes or state and local general sales taxes, which mainly benefits taxpayers with a state or local sales tax but no income tax. Under the new law, buyers can claim an income tax deduction for the sales or excise tax they pay on a vehicle purchase. Key details of this new tax incentive include:

• The tax break applies to purchases of passenger cars, minivans, light trucks, motorcycles, and motor homes, but it only applies on $49,500 of the vehicle’s price and it only applies to new vehicles.

• The tax break covers new vehicles purchased between Feb. 17, 2009 and the end of 2009.

• You do not have to itemize your deductions to be able to claim the deduction. However, the deduction cannot be taken by a taxpayer who elects to deduct state and local sales taxes in lieu of state and local income taxes.

• The amount of taxes treated as qualified motor vehicle taxes that can be taken as a deduction is phased out ratably for a taxpayer with modified adjusted gross income (modified AGI) between $125,000 and $135,000 ($250,000 and $260,000 on a joint return)

If you would like more details about this or any other aspect of the new law, please do not hesitate to call your BCG&Co. Tax specialist.