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Audit & Assurance

Nearly all medical marijuana licensees in Michigan will need to work with licensed certified public accountants, among other stipulations, as part of required annual financial reporting recently announced by the state marijuana regulatory agency. More information about these annual requirements, issued by the Michigan Marijuana Regulatory Agency: All medical marijuana licensees initially licensed as of Dec. 31, 2019 must comply, with financial reports for most licensees due by Oct. 31, 2020...

Published in Business Wisdom

In response to the novel coronavirus (COVID-19) crisis, the implementation deadlines have been deferred for the updated accounting rules on current expected credit losses (CECL), revenue recognition and leases. But those deferrals apply only to certain entities. In particular, the CECL deferral excludes publicly traded insurers, credit card companies and auto lenders. Now these overlooked creditors are asking the Financial Accounting Standards Board (FASB) to extend them the same relief...

Tuesday, 02 June 2020

COVID-19 relief: Short-term loan modifications aren’t TDRs

Written by Thomson Reuters

During the novel coronavirus (COVID-19) crisis, financial institutions may be working with struggling borrowers on loan modifications. A group of financial institution regulatory agencies, after consulting with the Financial Accounting Standards Board (FASB), has issued a joint statement. The guidance confirms that, for borrowers that are current on their loan payments, short-term modifications due to the COVID-19 pandemic won’t be considered troubled debt restructurings (TDRs). The statement is also consistent with a related provision of the Coronavirus Aid, Relief, and Economic Security (CARES) Act...

Monday, 18 May 2020

More COVID-19 relief: FASB to defer implementation deadlines

Written by Thomson Reuters

During the novel coronavirus (COVID-19) pandemic, many businesses are, at best, facing unprecedented operational challenges and, at worst, struggling to avoid bankruptcy. In such dire circumstances, the last thing management wants to think about is updating the company’s systems and records to comply with new accounting rules. Fortunately, the Financial Accounting Standards Board (FASB) has unanimously decided to propose one-year deferrals of the updated revenue recognition and leases standards for certain entities, including specific types of businesses and nonprofits. Here are the details...

Monday, 18 May 2020

COVID-19 pandemic to trigger midyear goodwill impairment

Written by Thomson Reuters

Airlines, cruise ships, restaurants, entertainment venues, hotels and many other types of businesses are expected to report goodwill impairments for the first quarter of 2020 because of the novel coronavirus (COVID-19). The contagious disease that’s wreaking havoc worldwide is a clear triggering event that would cause many companies to have to test for impairment on an interim basis — before the scheduled annual testing date. What is goodwill impairment? Goodwill is an intangible asset recorded on balance sheets following merger and acquisition (M&A) activity...

Tuesday, 21 April 2020

Internal controls prevent fraud

Written by Matt Behnke, CPA, CGMA

Fraud costs organizations more than $7 billion annually, according to the Association of Certified Fraud Examiners' (ACFE) latest “Global Report to Nations.” And those are just the hard costs. They don’t account for reputation loss and poor public opinion, which can be impossible to overcome. Nearly half the cases in the ACFE study were due to weak internal controls...

Published in Audit & Assurance
Thursday, 16 April 2020

Reporting profits interests

Written by Thomson Reuters

Profits interest awards are a flexible type of equity compensation used by limited liability companies (LLCs) and partnerships to incentivize exceptional performance. The Private Company Council (PCC) plans to meet in the coming months to discuss ways to simplify the accounting rules that apply to these awards and how to reduce diversity in practice. The PCC is the panel that advises the Financial Accounting Standards Board (FASB) on private company accounting matters. Growing popularity Under a profits interest plan, participants are usually granted an equity interest in a company’s future profits, but not any current capital...

Published in Audit & Assurance
Thursday, 16 April 2020

To amortize or not to amortize: FASB wants feedback on goodwill accounting

Written by Thomson Reuters

Both the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have early-stage projects on their agendas to consider the subsequent accounting for goodwill. This term refers to an acquired intangible asset that can impact earnings by billions of dollars if it declines in value. The Financial Accounting Standards Advisory Council (FASAC), the FASB’s main advisory panel, met in March to discuss recent feedback from stakeholders on this topic.  Close up on goodwill Since 2004, the principles for reporting goodwill and other intangible assets under U...

Published in Audit & Assurance
Wednesday, 04 March 2020

Simplifying MD&A and KPI disclosure requirements

Written by Thomson Reuters

In January, the Securities and Exchange Commission (SEC) issued a proposal that would streamline the disclosure requirements in management’s discussion and analysis (MD&A) of financial condition and results of operations. The proposal is part of a broader effort to overhaul the disclosure regime for public companies. On the same day that the proposal was issued, the SEC published interpretive guidance on disclosing key performance indicators (KPIs). Proposed changes to MD&A Public companies are required to write MD&As under Reg...

Published in Audit & Assurance
Wednesday, 04 March 2020

Updated audit risk alert: A view from the trenches

Written by Thomson Reuters

The American Institute of Certified Public Accountants (AICPA) recently issued the 2019/2020 edition of the Audit Risk Alert (ARA), General Accounting and Auditing Developments. This publication provides auditors with an overview of recent economic, industry and regulatory developments that might affect how they conduct audits. Here are some highlights to help private companies understand the auditor’s mindset in the current audit season — and beyond. Economic uncertainty When assessing risk, auditors must consider the effects of external forces on the organization...

Published in Audit & Assurance
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