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Edsel

Depr Elections for GAAP

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A company uses:  1)  Half year convention on acquistions and dispositions  2)  MACRS lives  3)Double-declining balance  4)  1/2 yr depreciation on acquisitions and dispositions.

Is this a valid election under GAAP?

Those who know are welcome to comment.  Have no concern why I am asking about GAAP on a tax forum - I have to deal with the issue.

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14 hours ago, Edsel said:

A company uses:  1)  Half year convention on acquistions and dispositions  2)  MACRS lives  3)Double-declining balance  4)  1/2 yr depreciation on acquisitions and dispositions.

Is this a valid election under GAAP?

Those who know are welcome to comment.  Have no concern why I am asking about GAAP on a tax forum - I have to deal with the issue.

 

Your question, like those you posed last year regarding GAAP reporting, very clearly exemplifies why non-CPAs should not be involved with the complexities of GAAP-based financial reporting. If anyone has discouraged you, it is because some of us feel you are neither qualified nor well-versed enough to prepare or advise on GAAP basis financial statements, and may even be bordering on an eithical violation by doing so.

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I would imagine most of us encounter some exposure to GAAP in our practice if we are confronted with M-1 reconciliations and have small business customers who will not or cannot pay for a review or audit.  There are other issues as well from time to time that I have to deal with, as well as heavy workload after April 15 when tax work is over.  On a couple larger customers in the last 5 years, their bank has insisted on an audit, whereby the work encountered a clean slate.  Only one exception since 1998 where I failed to recognize one month of Prepaid Medical insurance that was paid in December.

From these responses and others in the past, I will cease bringing GAAP issues to this forum.  Some of our CPA members have been very gracious, often Judy who tries to be helpful.  Others have acted like I shouldn't be touching the Ark of the Covenant from the old Harrison Ford movie.

Best regards, Edsel

 

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9 hours ago, Edsel said:

On a couple larger customers in the last 5 years, their bank has insisted on an audit, whereby the work encountered a clean slate.  Only one exception since 1998 where I failed to recognize one month of Prepaid Medical insurance that was paid in December.

As I said, you probably have an ethical violation unless you are a CPA or PA licensed and recognized as such by the state of TN. You would also be required to participate in appropriate CPE in those areas and subject your work to periodic peer review.  If you are performing this work without being a CPA or PA, and you are an EA, you are violating your state law, and I think that is where additional ethical violations occur.

You never know who's watching, and if you don't believe me that this can happen and put you out of business, just read up on the Ralph V Estep case that was brought against him here in the State of DE.  It was brought to the attention of our State Board of Accountancy by the DE State Bar Association, and he had fines of over $600K, had cease & desist orders that he ignored, and his license was finally permanently revoked.     

I'll post a link to the case in the next post. 

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Estep was licensed as an EA and public accountant here in DE, and he also lives close by in my small town. He was ordered to cease and desist by court order that he flagrantly ignored and ended up with fines for nine violations totalling of over $35,000.  He was also brought before the State Board of Accountancy on 3 separate times resulting in cease & desist, lost his license to practice for 2 years the first time which he ignored and it was finally permanently revoked.  His fines in these instances totalled over $582,000 that was based on revenues that ultimately went back to aggrieved former clients.

He was writing wills, trust and estate documents, giving legal advice related to those, and other legal work too that the DE Bar Association had been watching for a while before all of this transpired. He also wanted to issue financial statements like you have been doing.

He used to come to the CPE breakfast seminars and was pretty much lobbying our state representatives to give him a CPA license because he wanted to issue financial statements beyond compilations. He'd sit at my table and once asked me if I'd speak to my state rep on his behalf.  My response was that we'd each tested and worked hard for those hours of experience to qualify, that we each had hurdles that we overcame, and that we'd EARNED the certificate and he should do the same.  

If you want to read about all that he did, his case is always included in my DE ethics course. 

Estep case.pdf

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Judy, you don't really know how I'm involved.  I'm not going to banter the conversation, but when I get time I will send you a private message.  Thank you for your concern.

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Edsel,

I don't think Judy was looking for any banter in the conversation. I read this as she is offering advice for you to consider along with a word of caution for you to protect yourself. JMHO

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Thanks Terry - I understand and agree.  I had to explain things to Judy, and didn't want it to appear as banter.

I trust Judy and I are fine.

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