About Gumbiner Savett

Gumbiner Savett Inc. 1723 Cloverfield Boulevard Santa Monica, California 90404 | P | 800.989.9798 | F | 310.829.7853 | www.gscpa.com AICPA | PCAOB | CalCPA | Independent Member of B K R International

About Gumbiner Savett Inc. Gumbiner Savett Inc. (GS) is a Santa Monica, California based full-service certified public accounting firm providing audit and assurance, tax and business advisory services. The firm was established in 1950 and is one of the largest local CPA firms in Southern California. The team at GS offers diverse and specialized backgrounds including certified fraud examiners, certified valuation analysts, MBAs and advanced degrees in taxation. Our size and staff mix allow us to provide the highest caliber of hands-on service to both private and public clients in local, national and international business communities.

Our success is based upon our awareness of our clients’ business objectives and applying the financial skills of our personnel toward achieving these objectives. We work closely and proactively with our clients, and maintain an open line of communication at all times, keeping clients apprised of new developments in the accounting, auditing and tax areas. With deep community and industry involvement, we are also on top of the latest issues facing our clients as their business advisors. Recognized by Inside Public Accounting as a "Best of the Best" firm, GS also ranks 12th in the Los Angeles Business Journal's largest accounting firms list. We are an Accounting Today Top Firm in the West and have been recognized by the California Society of Certified Public Accountants (CalCPA) as one of the largest employers of CPAs in the State of California. GS is a member of BKR International, a leading global association of independent accounting and business advisory firms with over 135 member firms and 300 offices in 70 countries around the world. Gumbiner Services: Accounting for Income Taxes

Audits, Reviews and Compilations

Business Services & Bookkeeping

CFO Outsourcing

M&A Due Diligence and Transaction Support

Estate, Trust & Succession Planning

Fraud Examination Studies

Internal Control Studies

Litigation Support

Public Company Services

Tax Services: tax compliance & planning, state & local, international, credits & incentives, SEC services

Industry Specialization: Agriculture

Airlines

Apparel & Textile

Construction

Employee Benefit Plans

Entertainment, Media and Music

Food & Wine

Franchises

Manufacturing & Distribution

Real Estate

Technology


Accounting for Income Taxes – FAS 109 and FIN 48/ASC 740

Accounting for income taxes and accounting for uncertainty in income taxes may cause many challenges for all involved including the business, the auditors, and the tax preparers. The challenges can take on many forms such as understanding accounting rules for foreign operations, allocations and business combinations. At Gumbiner Savett we are able to help our business clients steer through the complex issues associated with accounting for income taxes by providing specialists who have navigated the rules numerous times before. We have also established ourselves as a go-to firm by other local, regional and national firms who are unable to provide this complex service, many times due to conflicts with independence.

Selected services include:

Preparation and review of FAS 109 calculations — accounting for income taxes

Preparation and review of FIN 48/ASC 740 calculations — accounting for uncertainty in income taxes


Audits, Reviews & Compilations

We emphasize obtaining a thorough understanding of our clients’ businesses through planning to enable timely and efficient financial statement engagements. Obtaining this level of understanding of our clients’ businesses allows our professionals to identify, communicate, and assist with opportunities for strengthening internal controls and operating efficiencies. Audits An audit is an essential tool for the quantitative assessment of any business. The objective of the audit is the expression of an opinion about whether the financial statements are fairly presented, in all material respects, in conformity with U.S. Generally Accepted Accounting Principles (US GAAP). From the owner’s perspective, an audit is a tool for independent verification of a business’ financial position, results of operations, and cash flows. An audit can offer further insights into business processes that allow business owners and operators to make informed decisions. Reviews A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. While a review is less comprehensive than an audit, it involves a significant degree of knowledge and understanding of a business and its industry to effectively evaluate inquiry responses and analytical results. Our review report provides management and the users of the financial statements with limited assurance that no material modifications are required in order for them to be in conformity to US GAAP. Compilations In many instances, management’s requirements are limited to presenting company prepared financial information. In those situations, we can compile financial statements for the company from information that is provided by management. Although a compilation provides no level of assurance, it is adequate for certain purposes. A compilation may offer alternatives to full disclosure financial statements. As an additional service during a compilation engagement, we may assist with the accounting process to ensure your financial statements accurately reflect the company’s financial position, results of operations, and cash flows.


Business Services & Bookkeeping

Gumbiner Savett’s business services and bookkeeping department provides the financial structure needed by many individuals and businesses to maintain proper financial records. Our staff has experience with hundreds of clients and is professionals who understand the day-to-day bookkeeping and finance needs of almost any industry. Our business services and bookkeeping clients range from individuals, to closely held businesses, to small to mid-sized companies without a finance department, such as professional corporations, retail establishments and restaurants. Our business services department works cohesively with our audit and tax departments, allowing our clients to have a seamless delivery of year-round service. We have the capability to provide weekly, monthly, quarterly or annual write-ups and/or prepare compiled financial statements for our clients. As a result our clients are well prepared for their year-end tax obligations. We also assist with government filings and provide training to our clients on QuickBooks and other software.

Our streamlined service has earned GS an excellent reputation with our clients and is a clear differentiator to other firms. Client Success Stories: Finance Function Transition: A high-net-worth individual was looking to eventually hand over the family business and personal finances to his son. He was a tax client of the firm, but requested that the business services department take over all the bookkeeping functions and keep sets of books for the business and select family members’ personal accounts. GS temporarily took over all check writing, deposits payroll and general ledger postings and interacted with the client’s personal bankers and brokers to maintain a no-worry cash flow to the individual family members. GS also assisted the client and the tax department with accurate current reporting to assist with planning. The son eventually took over the responsibilities of the family, but was so

Business management services include:

Handle day-to-day accounting and treasury functions

File applications for federal and state ID’s

Manage banking contact & wire transfers

Process and file monthly, quarterly and/or annual sales tax returns — California and multi-state

Process and file quarterly and/or annual payroll tax returns — California and multi-state

Personal bill paying and check writing

Compilations of financial statements — cash and accrual (in accordance with GAAP)

Reconciliation of investment statements

General bookkeeping and business services include:

Handle confidential and internal information beyond scope of bookkeeping staff

Closeout monthly/yearly journals

Secondary review of bookkeeping entries

Payroll processing & reporting services

Provide monthly bank reconciliation statements for management


comfortable with our handling of their accounts he asked us to continue with the business management relationship being thankful that the transition to him was so easy. Accounting Software Change: A wholesale clothing line client switched accounting software and had very little training. GS’s business services department assisted in not only helping the client convert to the new software, but also in getting the books accurate and current and creating custom reports in the new software for the client’s internal use. The client was so comfortable with our presence in their office, we were asked to come to their office monthly to assist the controller in posting journal entries, performing the monthly close and preparing collateral reports for the bank. When the controller left the company, we were able to temporarily fill-in until another controller was hired. Our business services professionals worked with the new controller to get him up to speed on the software and finance process.

Preparation of tax returns

Preparation of financial statements

General bookkeeping and business services include:

Accounting and bookkeeping technical troubleshooting

Accounting and bookkeeping function assessment and creation

Interim bookkeeping

Establish bookkeeping role and assist with interviews and training

Provide technical support once function has been established


CFO Outsourcing

Companies in the middle market sector in need of a knowledgeable and dedicated part-time or temporary CFO/Controller to manage their finance department can comfortably turn to Gumbiner Savett as a solution. If your company is in transition from your CFO/Controller, or if you do not require a full-time employee at that level, using an outsourced “specialist” can be cost effective. We can get you through important financial benchmarks such as completing quarterly and year-end financial reporting or managing the financial review process to get your bank loan secured. Our advisors can seamlessly work with your auditors because we do what they do every day. We have the necessary knowledge to be able to prepare financial statements and work with independent auditors for both private and public companies. Whether you are a public or private company in the middle market, Gumbiner Savett is strongly qualified to outsource a CFO to your company.


Preparing financial statements

Annual and quarterly reports

Accounting for and disclosure of stock options

Accounting for a business combination such as merger, acquisition or disposition

Tax provision calculations

Advise and assist in placing a full-time CFO role as the company grows

Work with a public company external auditor when independence is needed


M&A Due Diligence & Transactions Support

Gumbiner Savett’s professionals possess the intellectual capital surrounding merger, acquisition and transaction support due to our experience on both sides of the table. This viewpoint brings to our team a well-balanced vision as we work in concert with other professional advisors during a deal. Our clients — entrepreneurs, middle market public and private companies and owner operators — look to us when buying, selling or making strategic investments. Along with merger, acquisition and divestiture support, Gumbiner Savett evaluates industry partnerships and strategic alliances, joint ventures, refinancing and the restructuring of a business. We also provide strategic planning services to clients when they are thinking of succession plans or planning for future growth. Our clients rely on our objectivity and our organizational skills during these sometimes complex dealings.

With a wide network of professional service contacts such as attorneys, bankers, valuation experts and investment bankers, we also play an important role advising clients in putting the right team together for a transaction. Our multi-functional team of professionals provides strategically focused advice designed to make the process less complicated.


Auditing earnings, account receivables, inventory and financial statements

Tax structuring

Financial due diligence

Merger preparation and support

Assisting with obtaining financing

Exit and succession planning strategies

Identifying acquisition targets or buyers

Facilitating communication among concerned parties

Post-acquisition integration, planning and management


Estates, Trusts & Succession Planning

Proper estate planning is essential for preserving and directing the disposition of an individual’s assets, reducing potential estate tax liability and providing adequate liquidity. At Gumbiner Savett, our estate, trust and succession planning specialists have decades of expertise in this complex and ever evolving area. Our specialists are trained to see the big picture and have the expertise to provide the maximum overall benefits for our clients. Many of the services we provide relating to trusts and estates are interrelated to such an extent that decisions made with regard to one area can significantly impact another area. As an example, if the tax bases of an estate’s assets were adjusted to their fair market values at the descendant’s date of death, this tax basis adjustment would also have important income tax consequences. As accountants to high net worth individuals and owner operators of small to medium sized businesses, our expertise and in-depth knowledge of our client’s financial, family and business situations, make us highly suited to spearhead the efforts of all professionals involved in an estate plan. We typically work with all of the professionals involved in estate planning such as attorneys, investment professionals, insurance brokers and appraisers.


Review of existing wills and trusts: wills and trusts may become outdated with time due to changing circumstances and revisions to lax law; a review will help you understand the status and if updates need to be made

Gifting Strategies: information of family limited partnership entities, grantor retained annuity trusts (GRAT’s) and qualified personal residence trusts (QPRT’s); sales to intentionally defective grantor trusts (IDGT’s); and transfers of fractional interests in property and entities

Charitable Gifting: direct donations, charitable directed funds, private foundations, charitable remainder trusts and charitable lead trusts

Tax compliance: preparation of estate tax returns, gift tax returns, and estate and trust income tax returns

Related income tax planning: prevention of loss of tax attributes at death

Estate administration: sub-trust funding, post-mortem estate planning, and court and trust accountings

Tax elections: alternative valuations and deferral of payment of estate taxes for closely-held businesses

Retirement account planning: including but not limited to profit sharing plans, 401(k) and 403(b) plans and employee stock ownership plans (ESOPs)

Business succession planning: assistance to business owners in evaluating solutions and creation of a succession plan

Recommendations: recommend and assist in the creation of an estate planning team of professionals


Fraud Examination

Fraud costs businesses and other organizations in the United States, on average, 5 percent* of their annual revenues and can go on for years without being detected. Gumbiner Savett knows our clients require much more than fraud investigation and detection. They require fraud prevention.

Although any company can be a victim of fraud, your company could be more susceptible based on the nature of your business. A large volume of cash transactions, an owner that is not on the premises, marketable inventory, a lack of accounting controls, multiple locations, international purchases and sales, and a large number of transactions can make your business more vulnerable to potential fraud.

A key aspect of the services we provide is educating our clients about fraud prevention and setting up internal controls that help deter fraud before it occurs. Controls such as implementing a fraud reporting mechanism, establishing an ethics officer and developing a corporate code of conduct are key to mitigating a company’s risk of fraud.

We take careful steps to root out existing fraud and identify security lapses and theft opportunities.

To discuss typical fraud schemes such as: theft of incoming checks, purchasing schemes, returned payment schemes, fraudulent billings from a shell company, false shipment, forged endorsement schemes and theft of inventory, contact our fraud specialists.

*Association of Certified Fraud Examiners, 2010 Report to the Nation on Occupational Fraud & Abuse.


Internal controls: We entrench ourselves in our clients’ operations, looking at existing internal controls and identifying assets susceptible to fraud.

Security lapses: We identify security lapses such as unauthorized access to inventory and financial records, checks and warehouses – which fraudsters typically target.

Records: We look at how fraudsters can cover up fraud in the underlying accounting records.

Education: We educate our clients about how fraud typically occurs in today’s environment and set up and monitor internal controls that deter fraud in order to protect their bottom line.


Internal Controls

Companies gain a better understanding for the way they’re operating when their finance function is properly documented. A study of a company’s internal control system is a service most executives should consider adding to their yearly finance function. We document a company’s finance function and find out where the holes are. Is your company in a transition mode? Are you gaining a new CFO or controller? Are you considering buying another company? Is what you have right now sufficient enough to handle company growth? Is fraud suspected? Gumbiner Savett will work with you to determine the scope of your internal control needs. As accounting professionals Gumbiner Savett has the skill set necessary to find financial inconsistencies that can help companies add to their bottom line through improved efficiency, both day-to-day and long term. How often do you have your internal controls checked? Any organization has its weaknesses and we have the know-how to spot the ones you may not have thought about checking on. Our accounting methodology allows us to look at the checks and balances in your organization and identify instances such as: one person having too much control over a key function, a function residing in the wrong department or a function not being efficiently executed, etc.


Interviews of staff and management involved in key functions

Documentation of the current financial processes of your company

Analyze our findings and make recommendations for improvement

Have a dialogue asking “what do you need?”


Litigation Support

Gumbiner Savett professionals understand that each legal case is unique with its own set of facts, circumstances, players and lawyers. We have significant experience in identifying relevant financial issues and presenting conclusions, allowing us to work closely with attorneys and their clients on litigation matters. Whether we are calculating or rebutting damages, we are involved in all stages of each case, including devising strategies, aiding in the preparation of interrogatories, assisting with preparation for depositions and trial, and providing expert witness testimony in connection with our work findings and opinions. Our clients include attorneys, clients involved in litigation and trustees of large estates. Our litigation support professionals are accustomed to rigorous cross-examination and our experience has given us insight into what attorneys expect from CPAs. We work for both plaintiffs’ and defendants’ counsel. We also provide services as independent accountants and mediators in matters involving accounting disputes.


Analyze and interpret financial data

Identify and quantify damages

Trace assets

Identify, research and resolve income tax issues

Analyze and rebut opposing expert opinions

Assist in formulating strategies and drafting pleadings

Value businesses and other assets

Participate in settlement negotiations Our litigation experience:

Accountant’s malpractice

Bankruptcy

Business disputes

Family law accounting and divorce

Fraud investigations

Personal Injury

Regulatory actions

Royalty and contract audits

Tax controversy


Professional Services

As a certified public accounting and consulting firm, we understand your professional practice from both a service and business operations perspective. With more than 60 years of successive growth and success in the services industry, Gumbiner Savett Inc. has assisted numerous professional service providers in achieving their business objectives.

Our professional services clients range in size from single practitioners to multi-office regional operations.

In addition to traditional accounting, auditing, and tax planning and compliance services, we can assist you in maximizing your operating efficiency and maintaining profitability with customized management advisory services.

Selected service clients include:

Architects and engineers

Health care providers

Insurance agents

Attorneys

Accountants

Real estate professionals and others in the services profession


Public Company Services

Gumbiner Savett understands that public companies require a particular level of expertise and assistance. When your company is under continuous scrutiny by shareholders, analysts, and the Securities Exchange Commission, you need proactive, experienced accountants who respond quickly and effectively. Our services to small and mid-cap public companies offer a strong alternative to larger firms. GS shareholders have worked with companies of varying size, have experience with national accounting firms and have held management and finance positions in public companies. We have well-trained staff and experience very little staff turnover, allowing for continuity and enabling our team to be more responsive to clients’ needs. We do not overstaff projects with multiple and unnecessary accountants, which minimize the amount of time spent getting “up to speed” on a given project —ultimately saving costs for our clients. Significant partner participation throughout the year and decision making from one office mitigates many potential issues experienced in most audits. Both the tax and audit department leaders, as well as our risk and quality officer, are a part of the GS public company team.


Annual audits and quarterly reviews

Tax compliance and planning — international, federal, state and local

Accounting services when we are not providing attest services:

Preparation of tax provisions

Due diligence

CFO services

Internal control

Consultation regarding accounting standards


Tax Services

In today's complex, ever-changing tax environment you need guidance and creativity from knowledgeable professionals who identify and implement tax planning strategies that limit present and future tax liabilities. Gumbiner Savett provides a wide range of tax consulting and planning solutions for individuals, businesses, estates, trusts and private foundations. Our experienced team of tax professionals knows that proper tax planning requires a thorough understanding of each client's unique objectives, plans, and opportunities. That is why we take a proactive approach to ensure that compliance requirements are fulfilled and every opportunity to minimize tax liabilities is examined.

By creating long term relationships and customized tax solutions for our clients we provide creative and flexible options that eliminate, reduce or defer tax obligations. State & Local Tax Since state and local tax rules, regulations and interpretations continuously change, our tax professionals meet with and advise clients on how these changes affect them on a year-round basis. We keep clients informed about new and developing tax issues and provide innovative solutions to help them achieve their business and financial objectives.

Gumbiner Savett takes a proactive, collaborative approach to ensure that state and local tax minimization initiatives are fulfilled while every opportunity to minimize tax liabilities is explored. International Tax Services The pursuit of international business opportunities creates a broad range of challenges: Complying with foreign tax and regulatory issues, properly structuring overseas transactions and evaluating all of the tax consequences and complexities associated with doing business internationally. Gumbiner Savett offers a full range of integrated domestic and international tax services to help you achieve your global business objectives. Our professionals have extensive experience

State & local tax services include:

Sales and use tax reviews

Audit representation & resolution

Multi-state income/franchise and sales & use tax nexus studies

Transaction planning and structuring

Individual and business entity income tax consulting

Multi-state individual and business planning and consulting

International tax services include:

Strategic structuring for U.S. companies tapping foreign markets

Merger and acquisition advisory for cross-border business combinations

Advising foreign businesses entering the U.S. market

Tax planning for global investments using optimal capital structures

Reducing the worldwide effective tax rate

Expatriate and global employment assistance, planning and compliance

Assistance with transfer pricing studies

Foreign reporting and compliance

Tax credit & incentive services include:

Identifying state tax incentives, abatements and credits from qualifying activities


in international tax planning and consulting. Combined with our BKR International affiliation (a worldwide association of independent accounting firms), our tax expertise transcends over 70 countries throughout the world to help meet our client's needs. Tax Credits & Incentives Are you receiving the maximum amount of credits and incentives available to your business? Many state and local authorities offer incentives to attract new businesses and expand existing ones. However, researching the opportunities and keeping track of these ever-changing incentives can be a challenge. Your company may be engaged in activities that qualify for expanded federal and state tax deductions and or credits. Gumbiner Savett works with clients to uncover and document these activities and costs to ensure that all benefits are maximized. SEC Tax Services Gumbiner Savett offers a comprehensive range of tax services to public companies including services "prohibited" by the Public Company Accounting Oversight Board (PCAOB) in conjunction with Sarbanes-Oxley.

Qualifying for the Federal Research & Development tax credit

Reducing current-year effective tax rate

Refunds from previously filed federal and state income tax returns

Jobs Creation Tax Credits

Enterprise and Empowerment Zones

SEC tax services include:

Corporate tax planning and compliance

Tax provision preparation, review and analysis (FASB 109)

FIN 48 analysis and preparation and review

Section 382 Studies (net operating loss limitation analysis)

Research Credit maximization

Tax services "prohibited" by Sarbanes-Oxley including:

Preparation of the quarterly and annual tax provision for the financial statements

Personal tax services for officers with financial oversight responsibility


State and Local Tax

As a full-service CPA firm that can manage all tax disciplines, Gumbiner Savett is equipped to assist with any state and local tax issues or questions. Our clients—which have assets ranging from $5 million to $1 billion and are involved in wine producing, manufacturing, food and agriculture, airline, leisure and other related industries—have had many of the same concerns that you may have. How has the four-year California mandatory property tax audits changed my bottom line? How will my tax liability affect my city business license renewal costs? Our state and local tax services are designed to help take the worry out of managing this aspect of your company, while safeguarding your profits.

In this time of economic downturn, it is more important than ever to re-visit your current property tax program. As an operating expense, property tax can be controlled. However, if your compliance work is being done on a “mass filing” basis, chances are there is no in-depth analysis being performed and therefore, potential property tax savings are being missed. With over 50 years of combined government, industry and public accounting experience, our tax professionals will complete a complimentary asset analysis by reviewing several prior returns for existing and new clients. We look at costs that may not add value based on state tax laws that exempt or exclude these costs. Our knowledge and expertise has saved our long-term clients millions through accurate property tax compliance over the years. Selected client success stories include:

$750,000 refund: A Northern California-based wine producer received a $1

million tax bill after the county assessor determined that it hadn't reported the value and activity of its corporate jet during three years of ownership. After paying this bill, the company brought in our experts to file a protective appeal and develop a reporting formula similar to that used in the commercial airline industry. As a result, the company came to a resolution with the assessor and received a $750,000 refund.

$450,000 refund: A research and development company that outsourced their property tax consulting underwent a standard audit with the county assessor's office, which found unreported costs resulting in $350,000 in additional taxes owed. Our experts filed a protective appeal with the county, and obtained county audit files and the company's records. An analysis over the course of two years determined that the assessor had erred with a double assessment, and assessing other non-taxable costs were reduced by half. Those two factors resulted in a $450,000 refund, effectively cancelling the tax penalties and interest.


Property tax preparation and compliance

Nexus analysis and planning services

Sales and use tax compliance

City gross receipts taxes

State income taxes

Audit representation and resolution

Empowerment zone credits and incentives


International Tax

The pursuit of international business opportunities creates a broad range of challenges: complying with foreign tax and regulatory issues, properly structuring overseas transactions and foreign investments into the United States, while evaluating all of the tax consequences and complexities associated with doing business internationally. Gumbiner Savett offers a full range of integrated domestic and international tax services, designed to help our clients achieve their global business objectives. Our professionals’ depth of knowledge in international tax planning and compliance is a differentiating factor to other firms. We offer years of Big-4 experience with a personal touch for mid-cap firms facing complex issues. Combined with our BKR International affiliation (a worldwide association of independent accounting firms), our tax expertise transcends over 70 countries throughout the world to help meet our clients’ needs. When considering the impact a new Administration or Congress has on the Internal Revenue Code as it relates to foreign operations or investments, the myriad of global taxing structures can be overwhelming. We know how to overcome challenges and find opportunities when doing business abroad or when investing foreign funds in the United States. How does international investment impact net worth? Who can tax foreign investments? How does one reduce tax liability through international investment? What tax benefits are achieved with business expansion onto foreign soil? When dealing with foreign governments and entities, businesses need advisors who understand how to maneuver around all possible issues. As a full-service CPA firm that can manage all tax disciplines, Gumbiner Savett’s level of technical expertise gives our clients the comfort of knowing that their global operations and investments are properly structured and create worldwide tax efficiencies. Our expertise in the areas of international tax planning and compliance has significantly benefited our clients over the years.


Strategic structuring for U.S. companies tapping foreign markets

Merger and acquisition advisory for cross-border business combinations

Advising foreign businesses entering the U.S. market

Tax planning for global investments using optimal capital structures

Reducing the worldwide effective tax rate

Expatriate and global employment assistance, planning and compliance

Assistance with transfer pricing studies

Foreign reporting and compliance

About Gumbiner Savett

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