Professor Elam

Ramping Up Internal Audit Departments

Wednesday March 26 2014

Here is a Journal of Accountancy article on internal audit.  I am a member of SA Institute of Internal Auditors. Several students have accompanied me to their monthly meetings. I continue to recommend that our non traditional students consider internal audit as a career. 

The article makes the point that increased regulation has organizations focused on their risks, and how to abate that risk. That is an internal audit function. 

AIPB

Tuesday March 25, 2014

I have previously mentioned the down to earth helpful advice as well as the practical exam available through the American Insitute of Professional  Book Keepers. Here is a sample. This is precisely the sort of question a practicing tax preparer, at any level, gets from a client. Knowing the corrrect answer is what makes one a professional.

I am on record suggesting a ladder of certifications. Start wtih Professional Book Keeper, and you might learn smomething along the way.

Making sure that   business dinner, night out or ball   game is deductible Our goal as your national   association is to raise bookkeepers’ professional status. We do this by   offering self-study   courses (ebooks or hard copy)   in bookkeeping, accounting and tax—and by keeping you current in our member   newsletter, The General_Ledger. Here’s an   example from a recent issue:

AO Corp   was a medical practice with a single   shareholder/professional employee. AO paid to send the   shareholder/employee on hunting trips,   because he was developing medical devices to make the ear less susceptible to damage from loud noises such   as gunfire and needed to test the devices. The expenses generally involved renting hunting lodges and camps or paying expenses for a hunting trip. The   IRS denied the deductions, claiming   that the payments were constructive dividends to the shareholder. Held: For the IRS.   Expenses for entertainment facilities   are subject to special rules. An   entertainment facility is any item   of personal or real property owned, rented or used by a taxpayer for or in connection with entertainment, including lodges, camps and ranches. No expenses   for these facilities are deductible. So the taxpayer was denied all   deductions for renting the lodges and camps. However,   expenses for entertainment activities that do not involve renting a lodge or   camp could be deducted   under the strict rules of §274, Disallowance of certain entertainment, etc., expenses. Such expenses must be directly related to active   conduct of the trade or business. They must   meet each of four requirements:   The taxpayer must have had more than a general expectation of   deriving some income or other business   benefit at an indefinite future time;     During the entertainment period, the taxpayer must have   engaged in a bona fide business transaction other than entertainment   for the purpose of obtaining such business benefit;     The   principal character of the combined business and entertainment was the active conduct of the taxpayer’s trade or   business; and     The expenditure was allocable to the taxpayer and a person or persons with whom the   taxpayer engaged in the active conduct of   trade or business during the   entertainment.   The court   said the trips did not meet requirement #3. The equipment could have been   more easily tested at a lower cost at outdoor shooting ranges. Also, the   amount of time spent on each trip researching the devices tended to show that the trips’ primary purpose was   personal pleasure, not business.   When a corporation distributes money   or property to a shareholder or incurs expenses for the benefit of a shareholder, the amounts are   treated as dividends to the shareholder if they primarily were for the benefit of the shareholder. In this case, the   expenses primarily were for the   personal benefit of the shareholder, so they were treated as   nondeductible dividends. [Austin Otology Associates v. Commissioner,   T.C. Memo. 2013-293]   Why risk   falling behind?    Try a   no-risk membership and see what it can do for you. If not completely   satisfied, cancel for a refund. Join now and   get:         The   General Ledger   newsletter every month.     Free use of our member   telephone AnswerLine, where experienced accountants answer your everyday   bookkeeping and payroll questions.   Discounts on convenient continuing   education for bookkeepers, and other professional discounts.   Join now and you also get 3 special   reports, free:   Free   Report #1: “21   Key Bookkeeping Changes in Current Tax Laws.” Discover:   Change #7: When the same worker can be both employee and   independent contractor. Change #11: IRS coming after your ICs: what   to do. Change #14: How workers who quit can   qualify for UI benefits. Change #18: New regs on 50% v. 100% T&E   deductions.   Plus: 17 other key   changes you should know about.   Free Report #2: “Better   Bookkeeping in 15 Minutes: The 25 Best Bookkeeping Tips of 2013.” Find out how to:   Post returned checks. Withhold from car allowances. Know when to take, or refuse, a prompt-payment   discount. Record checks made out to cash. Prove expenses if canceled checks are lost. Correct W-2 errors the easy way. Prepare internal income statements. Set up successful collection calls.   Plus:   A special section on what is (and is not) overtime pay, and how to compute   it.   Free Report #3:   “The Bookkeeper’s Guide to Internal Controls.” Protect your company or   client. And, make sure you are not held personally liable. Includes:   How to protect yourself if you sign company checks. Self-protection if you withhold taxes on paychecks. How to make sure you are not liable for company loans   or notes. Steps you can take to avoid inadvertent disclosure. And more.   Offer your company or clients protection,   including: 9 ways to prevent bad-check losses. 5 ways to protect company bank accounts and other   cash. 12 policies that prevent fraud. 15 signs that employees are stealing. And more.   Enjoy member   benefits, such as:   Free use of our telephone Member AnswerLine, where experienced   accountants answer your everyday bookkeeping and payroll questions     Discounts of up to 34% on UPS.     Discounts on continuing professional education.     Discounts on professional liability insurance.   Get the recognition you deserve, and stay up to date.   Join 30,000 bookkeepers as a member of The American Institute of Professional   Bookkeepers.  Join now.

Who's the Worst, Continued ( (The Never Ending Story)

Tuesday March 25, 2014

For the last two years I started a Who's the Worst thread on my blog in advance of the Spring Ethics class. We have noted that some characters revive their status. Eliot ?Spitzer got a gig on CNNa nd then failed to be elected NY Comptroller. Nick Lessonwho took down Barings Bank has re surfaced as a speaker and consultant. Barry Minkow after claiming he had reformed is back in jail for atempting to manipulate stocks. 

Now Anthony Weiner aka Carlos Danger is getting a column at Business Insider. After having to resingn from Congress and then losing the NY Mayoral Race all over revealing photos on the net, he has landed a media gig of sorts. Remember the CEO of BI is 

The site editors vary greatly in background. Henry Blodget, a Yale graduate who previously worked on Wall Street, then was fined $2,000,000 as part of a civil suit for fraud, and another $2,000,000 in disgorgement, and being censured and barred from the securities industry by the Securities and Exchange Commission,^[10] is the CEO and Editor-In-Chief.

So maybe as they say it takes one to know one. 

Or as the article says, what could go wrong?

Would you have Anthony as your columnist?

When it Comes to Gross Profit, Porsche, There is no Substitute

Monday March 24 2014

Porsche records a $23,00 an average profit for each car it sells. That c omes ot an average 18% per vehicle. Porsche is famous for addin gon expensive gotta have it accessories like expensive wheels, navigation systems, and variou sperformance enhancing options.

The way to make money in the  car business is to make multiple vehicles off the same platrform. The 100 K Cayenne shares a  platform with a VW SUV.

Three Speaking Ideas from TED

Monday March 24, 2014

If you are invited to speak at TED, you have arrived. This is an annual high tech confab of who is who. 

Carminhe Gallo examined 500 TED talks and came up with these three recommendations.

1. Don't bore people with facts and figures, tell a story. Everyone from Bill Cosby to Jesus Chrits used this idea to their advantage. People remember stories. This was the foundation that launched Cosby's career. He told stories about hea nd his Brother, he and the neighborhood kids like Fat Albert, and everyone identified with the stories. With the movie Noah on tap, one of his first was Noah talking to God. 

2. Create Emotionally Charged Events. Frankly I don't think I would let mosquitoes go on stage but the idea has merit. Use a demonstration to illustrate your point. In high school, regarding a topic on nuclear weapons proliferation, one debater painted the earth on an empty egg shell. At his conclusion warning of imminent danger he held it aloft and crushed it, demonstrating the danger of nuclear weapons proliferation. 

3. Use the rule of three, people remember three not two or four. 

CTP

Weekend March 21 2014

I ran across another designation today, this is new to me. It is CTP for Certified Treasury Professional.

The link describes the exam but let me make a point about that. One has 3.5 hours which is

3.25 x 60 = 210 minutes to answer 170 questions or 210/170 = 1.24 minutes per question. 

How's that for speed and concentration spread across 3.5 hours. 

I keep telling classes the difficulty is something they have not really experienced, a short time fuse on each and every question. 

Here is another example. 

The 70% Solution

Wednesday March 19, 2014

Here are the 30 Management Principles of the Marines.

THe first, the 70% solution, means we never have all the intell we need. But wait for 80% and you will be the defender, not the attacker. 

COPAS Scholarship

Tuesday March 18, 2014

This past year the San Antonio Council of Petroleumn Accountants awarded five  $1,000 scholarships.

I urged our students to apply this past sumer. The result was that TAMUSA students were awarded two of the five. Amazingly at the awards ceremony we were the only ones You definitely do need to have a desire to be in the oil and gas business.

My best advice on scholarships is this. Ifyou co not apply, you definitely positively absolutely will not win. Period.

See me with any further questions.

 

SA CPA Scholarship

Tuesday March 18, 2014

Please share the following information the accounting faculty and students.  Currently, the odds of being awarded one of the five scholarships are very high.  I thank you in advance for your assistance, and I look forward to awarding these scholarships at the San Antonio CPA Society's Accounting Excellence Awards/Meet the Firms luncheon on Wednesday, April 23, 2014. 

 

 

The deadline to submit the application for the 2014-2015 San Antonio CPA Education Foundation Scholarship is March 31, 2014.  The Foundation will be awarding up to five scholarships for the 2014-2015 academic year.  The link for the application and qualification requirements are found at http://www.sacpasociety.com/students (“Apply soon for 2014-15 SACPAS scholarship”).  Please contact [email protected]  or Amanda Talaat at (210) 828-2722 if you require more information.

 

Kind regards,

 

 

 

Maria A. Martinez, CPA, CGMA

& Bethany Eggleston, CPA

Education & Accounting Careers Committee

San Antonio CPA Society

901 NE Loop 410, Ste. 420

San Antonio, TX  78209

Picking Your College

Friday March 14 2014

Here is an article on your choice of college. The head of  a public company puts a lot of stock in going to THE right school. The author notes that first time familty graduates are more likely to pick a regional school. Who is right?

I taught an Intro to College class at Texas State for a few semesters. Some of the students lamented that they tried to get into College Station A & M or UT Austin but had to 'settle for Tx State.' Considering the gorgeous campus and 50,000 graduates since the late 1980s I found that a bit silly. 

Ivy League schools like Brown and Princeton sell themselves as special. But what they are really selling is a limited membership in a fraternity. That fraternity would be the graduates of Ivy League Schools. If you are applying to a place where such folks are the majority, you probably have a better chance of being hired. 

The Ivy League in Texas is probably UT Austin and College Station. I witnessed that the big adccounting firms in Houston and Dallas were loaded with such grads. And they definitely showed  preference to their own. 

Frankly I have not met anyone at TAMUSA that has any interest in working in downtown Houston or Dallas, smart students indeed. I would say that one of my benchmarks is this. If you were out of state and said I went to ______ College, would anyone recognize the school?  As a future grad of an A & M System School the answer is yes. 

For accounting graduates the real answer is even easier. Just this week I received an e mail from a student wanting the specifics on her grade. Well, you have been conditioned through years of school to believe your grade is important, and yes, you want to land in the A or B category. But for accounting grads, there is another dimension.

The grades you make or the degrees you hold are secondary as I say to achieving the real brass ring, and that is certification. One student came by last week asking about the Certified Internal Auditor exam. Many students mistakenly believe that the experience requirement, work as an internal auditor, is a barrier to passing. This is exactly reverse of the case. As I pointed out to my student, pass the CIA the first time you take it and you will likely get hired at an Internal Audit shop pretty fast. Then you will earn the necessary experience. 

And if that is the case it won't matter where you went to college, just that you did. 

Passing such exams is far more important than most college students realize. Set your goals on certification now. Buy the review books and start studying while in those classes in college. You will never regret your decision to stand out in your interview by saying

 

Oh sure, I passed that exam the first time I took it.