Posts in category: Firm News

Summer is here and so are all the activities. But as we know, these activities cost money. Here are a few ways you can still have fun and, while doing so, save some cash.

Look at Your Calendar

Summer months are filled with holidays, birthdays, cookouts, weddings – the list goes on. Take a look and make an estimate of how much you want to spend on each event. When you can plan ahead and figure out your budget, you won’t be faced with surprise expenditures at the last minute. Nobody likes that.

Go on a Spending Cleanse

We’re not talking for months on end – just a few weeks. During this time, make a point to spend only on necessities. It will force you to take a look at what you want versus what you need. The money that you might have otherwise spent on wants can go into a slush fund for future summer events.

Check Out Money-Saving Sites

If you want to go to an amusement park or say, the movies, you know how quickly this can add up. Go to Groupon or LivingSocial for some serious price-slashing coupons. Other resources to check out are AAA or AARP. For instance, AAA members get up to 30 percent off tickets to Six Flags.

Take Advantage of Free Entertainment

Inquire at your public library for free events and activities. Check out your local zoo and botanical gardens for free admission days. Go online to your local parks and recreation centers – many plan free, outdoor things to do. All you have to do is dig around a little!

Freeze Your Gym Membership

Chances are you’ll be spending a lot more time outside this summer, some of which might be working out. So why pay for a gym membership if you’re not using it? Instead of paying a hefty cancellation fee or initiation fee to rejoin, ask if you can freeze your membership for the summer. You might be charged a small fee, but in comparison to your monthly or yearly dues, you could save a lot. Plus, exercising outside is good for you.

Turn Down Your Air Conditioner When Away

After you’ve been out in the heat, coming home to an icy home undoubtedly feels great. But what doesn’t feel so great is looking at your A/C bill every month. You could turn down your A/C to a tolerable temp when you leave, then of course, turn it up when you return. Or, you can get a programmable thermostat that will automatically adjust while you’re away. According to the U.S. Department of Energy, one of these devices can save you as much as 10 percent on heating and cooling costs.

Unplug Electronics When You Leave for Vacation

Before you head out for your summer adventure, make sure to unplug everything from your entertainment system – cable box, TV and speakers – to your small kitchen appliances like your toaster and coffee maker. These devices still consume energy when they’re plugged in.If you want to expedite this, get a power strip. With just one or two flips, you can save up to 5 percent on your energy bill.

These are just a few little things you can do to shave costs but, over time, they can add up to substantial savings. They’ll also help remove the stress that lack of money can cause. You deserve to have a relaxing, worry-free summer!

Sources:
https://theeverygirl.com/summer-money-tips/
https://www.gobankingrates.com/saving-money/budgeting/money-mistakes-probably-making-summer/
https://www.consumerreports.org/appliances/thermostats/best-programmable-thermostats-of-the-year-a1031454339/

The end of the federal emergency declaration for Covid-19 came on May 11. As a result, there are various public health policy changes. For example, vaccines and treatments will remain available, but at-home tests may no longer be covered by insurance and national CDC data reporting is subject to change.

Administratively, there are also changes to regulatory measures temporarily put in place by the emergency status that will have tax consequences. As employers struggled during the pandemic, some even to meet payroll, issues around expense reimbursements, stipends and how these are considered fringe benefits or compensation came into light.

History of Section 139

Section 139 came into being over 20 years ago after the Sept. 11 terrorist attacks. Then President George W. Bush signed the Victims of Terrorism Tax Relief Act, which created Section 139, defining qualified disasters and providing a non-taxable status to relief payments. The emergency Covid declaration enabled Section 139 to apply under its time in existence.

Section 139

Consequently, employers were able to aid employees under the federally declared Covid-19 disaster by providing non-taxable benefits to employees while deducting 100 percent at the company level.

One of the typical principles of tax law is that in order for compensation, whether cash or in-kind, to not be taxable to the recipient, it cannot be deducted by the compensating party. This makes sense logically, as the IRS simply wants one side to pay taxes in the end. The disaster declaration allowed a sort of have your cake and eat it too period when it came to certain employee benefits.

Impact on Benefits

So, Section 139 is the reason why some Covid-related payments never found their way onto a Form W-2. It meant that certain medical expense reimbursements such as testing and OTC treatments, dependent care expenses, and work-from-home expenses including home office stipends were treated as deductible for the employer providing them, but still not taxable to the employee receiving them.

There was never any specific IRS guidance stipulating exactly which Covid-19 expenses qualify under Section 139. Instead, most employers looked at what benefits they would not have otherwise provided, but for the COVID-19 pandemic, and classified these as qualifying items.

The Big Problem

Using this logic of classifying benefits that would otherwise not exist, but for Covid-19, as the justification for their taxability under Section 139 put companies in a bind. If they want to continue these benefits, they have to be treated as taxable income to the employee or the employer can no longer deduct them.

While some benefits such as Covid-19 test reimbursements are less of an issue, many employees have come to see others such as home office stipends as a normal benefit – especially in the context of the work-from-home (or at least partial) new normal. No longer receiving these benefits or having to pay tax on them is going to cause a lot of consternation.

Conclusion

One thing is certain. The end of the emergency declaration is going to bring changes in the realm of employee benefits. While the easy solution could be to simply make these benefits taxable to employees, companies need to think about what and how they provide in the context of both tax compliance and employee engagement and retention.

According to a 2022 Allied Market Research report, the size of the global forensic accounting market is forecast to increase in value to $11.68 billion in 2031, up from its 2021 estimated value of $5.13 billion. Allied Market Research puts this compound annual growth rate at nearly 9 percent (8.8 percent). This same report found that the Covid-19 pandemic saw an uptick in the need for forensic accounting skilled professionals and approaches.

Forensic accounting is a specialization within the general accounting profession. Professionals in this specialized subset focus on allegations of financial fraud brought by individuals and business in the civil courts and government agencies in the criminal courts. Disputes can range from family members contesting assets and valuations of such assets in estate, business or divorce proceedings. When it comes to proving criminal allegations, government agencies look to forensic accountants to investigate financial records for evidence of fraud in the quest to prove crimes such as securities fraud or identity theft.   

Forensic Accounting Methodology

According to the Journal of Accountancy and the Association of Certified Fraud Examiners (ACFE), CPAs and specifically forensic accountants can use Benford’s Law to begin the process of identifying potential fraud. Examples of data sets that forensic accountants can build and analyze come from income statements, expense reports, ledgers, balance sheets, invoice and inventory data, accounts payable and accounts receivable. When analyzing the leading or first digit in a data set, forensic investigators can take the data set and look at how the leading digits are distributed against the percentages that Benford’s Law sets out.

According to the ACFE, in contrast to the common belief that digits occur in equal probability, Benford’s Law states that numbers starting with 1 as the first digit occurs with the highest frequency. Then each subsequent number 2 through 9 occurs with lower probability. According to Carnegie Mellon University, per Benford’s Law, 30.1 percent of a data set will be led by a 1. The digit 2 will be the first in a data set 17.6 percent of the time. For numbers 3 to 9, the likelihood of each respective number leading the data set should become less frequent.

The ACFE gives the example of a counting exercise to illustrate Benford’s Law. When counting to 25, only one of the 25 numbers would lead with a 3; seven numbers would lead with a 2; and there would be 11 leading numbers beginning with 1. Numbers generated by a computer would give equal weighted probability to 1 to 9 being the first or leading digit. If equally weighted numbers were in fact generated, the results would deviate from Benford’s Law. However, simply because Benford’s Law is not observed in the dataset analyzed, it doesn’t automatically mean fraud occurred. But it is a tool that helps forensic accountants investigate further and determine through additional means if fraud did, in fact, occur.

Similarly, the ACFE points out that if someone wants to commit a financial crime, they would generate invoices worth a lot. It would be a lot more effective for someone to pass off invoices of $800 or $900, versus smaller $100 or $200 amounts. While this would make better use of a criminal’s time, according to Benford’s Law, if a forensic accountant were to test a data set against a few hundred invoices, they might see an abnormal percentage of them with high leading numbers, prompting further investigation.

The Journal of Accountancy reminds readers that it’s important to keep in mind a few caveats. The more numbers available in the data set, the better. It can work with as few as 50 to 100 numbers, but more is always preferred. Another consideration, per the ACFE, is where the data comprising the data set originates. Using a sports analogy, if players are between 5 feet and 8 feet tall, it would make testing the data set against Benford’s Law impossible because there’s zero chance of numbers 1 through 4 and 8 or 9 showing up in a probability test. In these scenarios, Benford’s Law wouldn’t apply.

While the method for detecting financial fraud is not black and white, the need for more forensic accountants will not slow down any time soon.

Sources:

https://www.acfeinsights.com/acfe-insights/2023/3/28/benfords-law-how-to-use-it-to-spot-fraudnbsp?rq=Benford

https://www.acfeinsights.com/acfe-insights/2023/3/21/benfords-law-applicationsnbsp?rq=Benford

https://www.acfeinsights.com/acfe-insights/what-is-benfords-law?rq=Benford

https://insights.sei.cmu.edu/blog/benfords-law-potential-applications-insider-threat-detection/

https://www.journalofaccountancy.com/issues/2017/apr/excel-and-benfords-law-to-detect-fraud.html

Some economists and market analysts have been predicting a U.S. recession ever since last fall. They’ve been wrong before – but they’ve also been right. Rather than try to predict how the stock market will react during the next recession, investors are better off planning for a range of potential outcomes. This will help reduce the risk of losses regardless of whether or not the United States experiences a recession in 2023.

Bear in mind that stock and bond markets are forward-looking, and typically priced to take into account economic conditions such as higher interest rates, inflation and commodity prices. In response to whatever factors are in hand, the market adjusts in ways to try to keep returns on par with historical norms and practices. 

In its market perspective for 2023, Merrill Lynch suggested that the economic cycle would bottom out, market returns would begin turning a corner, and investors who hold diversified portfolios would see less volatility and be positioned to fully participate in a renewed bull market.

There are several strategies you can implement to help mitigate the impact of an impending recession. Be aware, too, that these strategies are sound all-weather moves designed to help reduce your risk and maximize returns over the long term, regardless of economic and market conditions.

Diversify Your Portfolio

The recent failure of established regional banks is a reminder that there are no “safe” stocks – all stock market investing is subject to a wide range of risks. However, investors should be most wary of owning a high concentration in any single stock. After all, while it is unlikely the stock market will ever be reduced to zero, it is entirely possible for an individual stock to lose total value. This can happen due to a fall in demand, bankruptcy, corruption/embezzlement, a natural disaster or a public relations scandal. There are many situations that are unforeseen and out of an investor’s control that can lead to substantial losses.

By diversifying your portfolio across a large number of stocks, even those within the same industry (such as competing banks), you can mitigate exposure to a single stock that experiences a major decline in performance. For 2023, Merrill Lynch recommended a broad global stock portfolio with a slight overweight in U.S. equities, including large cap value stocks and a mixture of small-cap growth and value stocks. It contends that the Energy, Financials, Healthcare, Utilities and Real Estate sectors offer stable returns via strong cash flow and attractive valuations.

Well-established dividend stocks pay out steady income as well as offer growth opportunity, which is a good hedge for a strong long-term total return regardless of economic conditions.

Merrill Lynch also favors global fixed income securities, including investment-grade corporates, 10-year Treasury bonds and longer-maturity municipal bonds.

Fund Investing

An easy way to diversify across a wide range of stocks and/or bonds is to invest in asset category-specific mutual funds or exchange-traded funds. The immense universe of funds offers a broad range of stocks (e.g., growth, value, large-, medium- and small-cap) and bond (high yield, high quality, government, corporate) fund options. A balanced fund offers a combination of both stock and bond securities to help capture growth as well as capital preservation.

If you invest regularly through a 401(k) plan at work or defer income to an IRA, note that your money will purchase more shares when prices drop, which is often the case during a recession. As long as you have vetted and have faith in your investment choices, this discounted buying opportunity can set up your portfolio for stronger gains once the market recovers.

Cash Allocation

It is always a good idea – even more so during a recession – to hold an allocation in cash or cash-equivalent vehicles such as CDs and money market funds. However, it is not a good idea to sell stocks that have lost ground just to beef up your cash allocation. It may be better to sell a stock with significant appreciation instead, especially if it is in an industry that does not tend to perform well during a recession (e.g., Construction, Manufacturing, Retail, Leisure and Hospitality).

Russ joined RBG in 2023 and serves as director of the Financial Institutions team. In this role, he provides assurance and consulting services to financial institutions of all sizes, including community banks, credit unions, and farm credit associations. He received his Bachelor of Arts in Business Administration and Economics along with a Masters in Accounting from Rhodes College in Memphis.

Russ’s wife, Chelsea works in Marketing at FedEx and they have been married for 3 years.  The two have a baby boy, Sully, who turns one in May.  Russ has four younger siblings who all live in Memphis except for his comedian brother, who lives in Chicago.

Fun Questions

If you didn’t have to sleep, what would you do with the extra time?

Honestly, I would probably still sleep because I love it but maybe a little less and spend some extra time running and playing basketball.

What fictional place would you most like to visit?

The Grizzlies championship parade down Beale Street. 

What is a new skill that you would like to master?

I have taken up golf as an adult and have accepted I will never master it, but I would like to at least get to average.

What do you wish you knew more about?

In another life I may have tried to do something in music.  I have Spotify on all day and love all types of music, but I know very little from a technical standpoint.

What’s the farthest you’ve ever been from home?

I did a Maymester in Antwerp for a month and traveled to Brussels, Reims, Paris, and Amsterdam.  I loved every minute but that is the only time I have ever been out of the country.

What question would you most like to know the answer to?

Probably just everything that did not get answered at the end of Game of Thrones.

What is the most impressive thing you know how to do?

  I used to wakeboard a lot and was never great but could hold my own.

What was the best compliment you’ve ever received?

I play a lot of basketball and anytime someone on the other team tells their teammate that they have to actually guard me I blush a little bit.

What accomplishment are you most proud of?

I am going to have to go with the honest/cheesy answer of being a dad.

What is your favorite smell?

Would definitely have to go with coffee.

If you had a clock that would countdown to any one event of your choosing, what event would you want it to countdown to? 

Probably the start of BBQ Fest. I am a member of team Grill N Grind and look forward to it every year.

When was the last time you climbed a tree?

Probably when I was 25 to jump off the waterfall in Pickwick Lake.  That may be my last time ever as well. 

What’s the most unusual thing you’ve ever eaten?

I hate to admit I do not have a good answer for this.. Probably just sushi. 

What was your first job? 

I have a lot of younger siblings and cousins so I would have to say babysitter/chauffeur.

If you could have any superpower, what would it be?

I think teleporting would be pretty cool.   

RBG is pleased to announce the following promotions:

Thames Kennedy has been promoted to Tax Manager.

Since 2017, Thames has been a valued member of the RBG team. She began her time at RBG as an Audit Intern and quickly advanced to her current position of Tax Manager. In this position, she participates in a variety of tax assignments for various individuals and entities. 

Rachel McManus has been promoted to Tax Senior.

A 2018 graduate of Texas A&M University, Rachel holds a Master of Science in Accounting. Rachel McManus serves as a Tax Senior in the firm’s Tax Department. In this role, she fulfills a variety of tax assignments for various individuals and entities. 

Alexis Crews has been promoted to Audit Senior.

In 2020, Alexis joined the RBG team as an intern in the Audit department but joined the firm full-time in 2021. She now serves her clients as an Audit Senior. 

Ricardo Gonzalez has been promoted to Audit Senior.

Ricardo joined RBG in 2021 as a Hybrid Intern working with both the Audit and Tax Departments. He has since joined the firm full-time as an Audit Senior.

Fred Atkins has been promoted to Audit Senior Manager.

Fred has worked diligently to achieve the best outcomes possible for his clients. He currently serves as an Audit Senior Manager in the firm’s Financial Institutions Department. 

Nick Morris has been promoted to Audit Senior.

Nick joined the RBG team in 2020 as an intern and then joined the audit staff full-time in 2021. He currently serves as an Audit Senior on the Audit team.