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Michael Schaefer 's Articles

The Number 1 Effective Fraud Detection Method

In 2018, the Association of Certified Fraud Examiners (ACFE) released their 2018 Report to the Nations, based on the ACFE 2017 Global Fraud Survey, a survey conducted by the ACFE of its members from July 2017 through October 2017. As part of this survey, members were asked to provide information on the largest fraud case they were involved in from January 2016 through the survey date. The information from this survey was compiled into a variety of statistics to gain an understanding of the impact that occupational fraud and abuse has on businesses.

Fraud and Occupational Abuse Statistics

In 2018, the Association of Certified Fraud Examiners (ACFE) released its 2018 Report to the Nations based on the ACFE 2017 Global Fraud Survey, a survey conducted by members of the ACFE from July 2017 through October 2017. As part of the survey, members were asked to provide information on the largest fraud case they were involved in from January 2016 through the survey date. The information from this survey was compiled into a variety of statistics to gain an understanding of the impact that occupational fraud and abuse has on businesses.

What’s in a Name? Determining the Value of a Trade Name

Coca-Cola, McDonald’s, and Burger King—all trade names that almost every American knows and recognizes. These trade names carry significant value, and when you buy their products, you know what you are buying. Trade names are part of the intangible nature of business and go beyond the physical. The name alone implies that customers prefer to buy a specific product over the competition.

Does Your Business Have Hidden Value?

In a typical business valuation, the value of a business is derived from a combination of three valuation approaches: an asset based approach, an income based approach, and a market based approach. The most commonly applied approach for most valuations is the income based approach. Just like the name implies, an income based approach revolves around the ability of a business to generate income or cash flow. There are various methods under the income based approach, but all methods revolve around either the past performance of a business, or the projected future performance of the business. Considering this, the solution to increasing the value of your business sounds simple, increase your income.

Goodwill Impairment, What am I Required to Do?

 Goodwill, that fuzzy unknown intangible asset that is tested for impairment at least annually or more frequently when a triggering event is present. For privately held companies, FASB Accounting Standards Update 2014-02 Intangibles – Goodwill and Other, simplified the goodwill impairment process by removing the annual impairment test and allowing private companies to amortize goodwill, but the standard did not remove the requirement to test goodwill for impairment when a triggering event is present. So, what exactly is a triggering event and how do you test goodwill for impairment?

What to Expect For Your First Employee Benefit Plan Audit

If you have never undergone an employee benefit plan audit before, the information requests and involvement may seem difficult and intimidating. By understanding what information is required and working closely with your auditors, you can help alleviate some of the difficulties and intimidation. Almost all employee benefit plan audits require the same information be gathered from multiple parties. So, what are the basic documents needed by auditors to help ensure a smooth audit?

Accounting for Contingent Earn-outs; Are You Recording Yours Properly?

According to Generally Accepted Accounting Principles (GAAP), when a company acquires a business, the consideration paid, assets acquired, and liabilities assumed are recorded at their fair values. The consideration paid not only includes the actual cash paid or debt incurred, but any contingent consideration payments or receipts (earn-outs) that are part of the purchase agreement. Contingent earn-outs are often structured as a multiple of a measureable performance benchmark. For example, if the acquired company makes more than $1,000,000 in sales, we will pay you 1% of the sales above $1,000,000. As the name implies, payments under these agreements are contingent upon the acquired business meeting or exceeding a pre-determined benchmark.

Financial Due Diligence, an Ounce of Prevention is Worth a Pound of Cure

Your company, How Did I Miss That Corporation (HOW) has been struggling. Sales have been stagnant over the last three years and net income has started to decline. Investors are growing restless and are calling for change. One late night you stumble upon an opportunity to acquire Hook Line and Sinker Corporation (HOOK), a competitor. After reviewing the investment reporting package provided, the deal and price look good. HOOK has suffered losses over the last few years, but these losses are due to one-time occurrences and a lot of related party transactions and you believe you can reduce overhead by sharing administrative resources. You sign the purchase agreement and pay the purchase price, it’s done.

Construction Fraud: Corruption

Fraud, a five letter word that keeps some business owners up at night. For others, it is a five letter word that never crosses their mind until it happens to them. As constructions contracts have been growing in size and complexity, a contractor’s time is likely spent trying to manage the contract, rather than devoting time to preventing fraud. No business is perfect, and fraud can occur even at the most vigilant companies. What many business owners fail to realize is that fraud is more than just people stealing your money or supplies.

The Measurement Period in Business Combinations: A Little Known and Often Misunderstood Provision

Accurate financial information is key to investors and management and a good faith effort to complete the accounting for the acquisition timely should be made a top priority.

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