Archives for November 2014

Preparing for an Audit in a Digital World

The business environment is going through a rapid change with technology. Many businesses are relying on the internet, the cloud, and mobile devises to promote and run their business. What does this mean for auditors? In this age of improved and expanding technology, auditors utilize technology to reach global clientele and improve audit effectiveness.

Advances in data science can be applied to the audit process to make it more effective and provide new forms of audit evidence. There are new methods of data collections and analysis that will help identify patterns, correlations, and fluctuations form data models.

There are significant changes that are required for the auditing process. With the technology at your fingertips, there is a chance to be able to access audit information from anywhere. This allows for continuous monitoring or more frequent monitoring. Auditors will be able to monitor transactions through external audits. This would allow for to be spread out of the entire year, not just during the busy season right after taxes are done.

To prepare auditors for these changes, they will need to make sure that educational needs are met. They will have to be up-to-date in their training in areas such as information technology, statistics, modeling, and machine learning models. Assurance departments should be expanded to accommodate the larger needs of clients in areas such as data quality, security, compliance, and fraud prevention and detection. Procedures should allow auditors to better understand the client’s environment and specialize their audits for the needs of the client.

The use of technology should allow for deeper analysis for companies, and the audits could be spread out over the year to get a better view of the year round workings of the company, instead of a brief glimpse. With all the changes in technology, auditors will needs to change their standards of auditing to keep up with the ever evolving world of business.

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Defined Contribution Plans Offer Options for Older Participants

Recently there is more information released on older participants with defined contribution plans. The information released refers to qualified plans that will be allowed to provide lifetime income to plan participants by offering funds that would include deferred annuities. The notice from the IRS explained how target date funds (TDFs) could offer deferred annuities without violating the nondiscrimination requirements.

Target date funds are funds offered to participants in a specific age groups designed to change the investment mix as the group ages. TDFs are usually restricted to particular age groups, usually older employees. This allows them to invest in deferred annuities allowing older participants to increase their portfolio quicker. The older participants have the potential to reach greater earning than someone who is younger doing the same thing.

Some TDFs also offer the deferred annuities. These are distributed when the participant reaches their target age. The target age usually come within a few years of the groups’ normal retirement age. As the group age increased, more of the portfolio is invested into deferred annuities. The IRS understands that most deferred annuities are based on the purchaser’s age, and do not expect participants outside that range to hold an interest in the TDF. The largest concern is that they favor highly compensated employees, but a TDF will not violate the nondiscrimination requirements if they:

  • Offer a series of TDFs under a defined contribution plan that serve as an integrated investment program in which the same investment manager manages each TDF and applies the same generally accepted investment theories across the series of investments.
  • Some of the TDFs available to the older participants offer deferred annuities and none of the annuities offer a guaranteed lifetime withdrawal benefit or guaranteed minimum withdrawal benefit.
  • None of the TDFs holds employer securities that are not tradable on an established securities market.
  • Each of the TDFs are treated in the same manner as any of the other TDFs. They all need to offer the same options.
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IRS Does Not Provide Identity Theft PIN to All Victims

In the past, the IRS policy was to provide Identity Protection PINs to victims of identity theft, but according to a new government report, not all victims of tax-related identity theft are receiving these special PINs. The IP PINs allows the taxpayers to process their returns immediately and help prevent the misuse of taxpayers’ social security numbers on fraudulent returns.

In recent years, this program has been expanded, but there are still over 500,000 taxpayers who had an identity theft indicator on their tax account, that have not been issued an IP PIN. There have also been numerous errors resulting in 32,274 taxpayers not receiving their IP PINs in a timely manner. There were even cases where over 10,000 were issued to deceased taxpayers. There are many instances of inconsistencies in notices provided to victims. These include not providing adequate instructions on the importance of the PIN and the proper use the PIN on the tax return.

Tax return fraud is the biggest problem facing the Federal tax system. It is vital that the IRS fully utilize the tools available to them to help prevent the fraudulent activity. In 2014, there were 1.2 million IP PINs issued. When using the IP PINs, tax returns are processed in the same period that the general public would have theirs processed. This has been a big success for taxpayers who have been effected by fraud.

In a statement released by the IRS, the victims that have not received the IP PIN are one that still have suspicious activity on their account. The IRS has set very strict parameters before an IP PIN are issued. They are planning on expanding the issuing of IP PINs in the next few years to people that are eligible for them. This will be an added protection to taxpayers. They continue to find ways to prevent fraud from happening.

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Attracting New Clients

In the competitive world of business, attracting new clients is vital to sustaining any company. Having the skills or services that meets the client’s needs, attracts them to you in the first place, but why do they pick your company? What sets you apart from the rest of the choices? Is there something you can do that will convince them to pick you? The answer is yes, and they pick your company because you can offer them skills or services they cannot do themselves.

When facing a prospective client meeting, how you prepare is as important as what you prepare. Many times the client is coming to you because they know what services or skills you have. You can highlight you credentials, past successes, the team of knowledgeable experts, but in the end they want to know how you will take that and make it work for them.

Many times a common misconception is the knowledge is what separates competitors from each other, but the truth is that it is not just the knowledge; it is how you make the knowledge work for your clients. The one thing the separates one business from another is how they relate to their clients. If the business centers on how well they work with and provide the best value for the client, then it sets them above other businesses in the same field.

To know what the client needs, there are a few ideas that will improve your chances.

  1. Listen First: Listen to what the client needs, how they would like thing to work for them. They already know the basics of what you can do. Find out what is giving them problems and offer ways to fix those problems.
  2. Focus on Values: Following laws and regulations is great for you, but that does not the client needs to know all the regulations. They just want to know how you will use you will use your resources to solve their problems. Focus on the values and outcomes of the service you are providing instead of how to get there. Your client will appreciate your attention to details without actually seeing the details.
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