What We’ve Been Up To – Greg Cargin, Partner, CPA
While you have been dealing with un-cooperative weather this spring and early summer in your operations, we have been busy trying to better ourselves to service your accounting and tax needs. In early May, the Gardiner + Co. staff participated in our annual staff training event in Des Moines. We brought in outside speakers to assist with some topics, while working internally to research and educate ourselves on other topics, including upcoming accounting changes, reviewing changes resulting from the Tax Cuts and Jobs Act of 2018, personnel development and other various topics. Our staff also had the opportunity to participate in the annual golf outing or axe throwing (new for us in 2019). All in all, it was fun and educational event.
In early June, I once again took the opportunity to attend the AICPA Engage Conference in Las Vegas, Nevada, along with Blake Miller from our Des Moines office. This conference offers more than 360 educational sessions, multiple keynote speakers and just an excellent all-around educational opportunity for accounting professionals. The keynote speakers for this year included Barry Melancon, president and CEO of the AICPA; Charles P. Rettig, commissioner of the Internal Revenue Service; Simon Sinek, an unshakeable optimist and author; and John Elway, current general manager and president of football operations for the Denver Broncos.
In addition to listening to these impressive speakers, we were able to take in many hours of additional education. One of the most attended accounting and auditing sessions I sat in was related to the upcoming lease accounting changes resulting from ASC 842, which will change the way leases are recorded and carried on your balance sheets starting in fiscal years that begin after December 15, 2019. The new standard will essentially require all lease liabilities with maturities of greater than 12 months to be presented as liabilities on your balance sheet, as opposed to being accounted for off of the balance sheet as per prior guidance. This will certainly impact your working capital, current ratio and all other debt-related ratios after implementation.
Speaking of implementation, there have been some changes to the rules that might make adoption of new standards into your financial reporting a little easier—but it seems to be the consensus that implementation into your company’s accounting function may be a lot more difficult. I have heard many times that, for some companies, Microsoft Excel may not be sufficient to track and produce the information necessary to account for and prepare the disclosures necessary under the new standards. We are certainly here as a resource to assist you in the transition. But much of this will fall on your accounting department to understand the various contracts your company has entered into, and identify possible leasing arrangements (no matter what the size) in order to present your financial statements in accordance with GAAP. These changes have been talked about for a few years now, but it really is time to start evaluating the impact, identifying all your leases and preparing for the accounting necessary as you bring these on to your balance sheets.
Lastly, I was invited to give a short presentation to the Accountant, Bookkeepers and Controllers (ABC) conference put on by the South Dakota Association of Cooperatives in Mitchell, South Dakota. I have enjoyed participating in this conference many times over the years and noted what might have been the best turnout to date, including many new faces. There were presenters on collection and credit issues, basic balance sheet management information, implementation of the new tax law and analyzing return on investments. I had the pleasure of refreshing those in attendance on internal controls and the importance, especially in today’s current environment, of paying attention to your company’s control procedures, risk assessment and monitoring of the overall environment. With margins and profitability continuing to be tight in all areas of agriculture, it is even more imperative to make sure adequate controls are in place to provide assurance on your entity’s objectives related to the effectiveness and efficiency of operations, reliability of your financial reporting and, lastly, compliance with applicable laws and regulations.