Archive for the ‘Accounting’ Category

by Anita Sherman, CPA and Larry Greenwalt, CPA
Interest rate swaps have been used for a number of years to hedge against rising interest rates. In the last several years, this technique has become more commonly used with mid-sized companies. SWAPS are useful in hedging against intermediate and long term loan interest rate risk, which makes SWAPS ideal for owner occupied properties and lines of credit that tend to have a certain level of “permanent” borrowings.

Hans Michael Hurdle of PNC Bank, noted that we are experiencing a 60 year low in 10 year Treasury yields. In order to stimulate the economy, the Fed has been able to keep interest rates artificially low. Hans believes that as our economy continues to gradually improve, and if there is a Europe resolution, interest rates will pop up. There may be a 3 to 12 month window in which to take advantage of the current low rates. The market consensus is that LIBOR rates will increase over the next 5-6 years, and LIBOR is the basis used by most banks to determine their pricing.

Continue reading “Should You Act Now to Lock in Lower Interest Rates?” »

by Amanda Meko, CPA | Partner, Director of the Audit & Other Assurance Services Group

Many businesses enter into lease arrangements. Think about lease arrangements your company has. You probably lease office equipment, like a copier and a postage meter. You may lease equipment or vehicles. You may also lease space, such as an office or an entire building. Many of these leases are currently treated as operating leases. That is, you record rental expense in your income statement as you make payments on the lease. Now imagine how different your financial statements would look if you had to treat any long-term lease (greater than twelve months) as a capital lease. Under the new proposed rules, an asset and a liability would be recorded in the balance sheet, and the lease payments would be split into interest expense and a reduction of the liability, instead of showing up as rent expense. The asset would be amortized as noted below. For some lease arrangements, such as office equipment, the impact may not be that great. However, a building lease could have a substantial impact on the balance sheet and related debt and equity ratios.

Continue reading “Significant Changes in Lease Accounting” »

by Tim Ayler, CPA | Partner, Director Construction Services Group

Change orders are a common occurrence for most contractors. Although it is common, the treatment of change orders in the accounting system is something that is not always done correctly. Sometimes change orders go without pricing even though the work is defined and costs are incurred. Once the price is negotiated it could result in the change order being treated differently for accounting purposes, so it is best to record it conservatively and correctly the first time.

Continue reading “The Accounting Treatment of Change Orders” »

by Larry Greenwalt, CPA, Managing Partner

In our recent Business Intelligence Survey, 68% of the respondents reported reducing employee pay, hours or benefits in the last 18 months (43% of not for profit respondents, 75% of manufacturing and distribution respondents, 83% of service and professional respondents, and 100% of construction respondents), as follows:

Continue reading “Business Survey Results Regarding Employee Compensation” »