SingerLewak Newsletter - March 2013

ASSURANCE & ADVISORY____________________________________________________________

FASB Proposes a New Model for Classification and Measurement of Financial Instruments

TAX____________________________________________________________

Effect of New Tax Act on Charities

ENTERPRISE RISK

MANAGEMENT SERVICES____________________________________________________________

Spotlight on Your Bank Account... Yes, Your Bank Account

March 2013

Partner Letter

INTRODUCING THE

SINGERLEWAKACADEMY

25TH ANNUAL ROTH CONFERENCECome meet with our Partners and team March 17th through 20thRitz Carlton Laguna Niguel

Contents

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FROM THE MANAGING PARTNER2 INTRODUCING THE SINGERLE WAK ACADEMY

SingerLewak is pleased to announce the SingerLewak Academy – an Executive Leadership Program.

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ASSURANCE & ADVISORY4 FASB PROPOSES A NE W MODEL FOR CL ASSIF ICAT ION AND

ME ASUREMENT OF F INANCIAL INSTRUMENTSThe FASB issued a revised proposal for the classification and measurement of financial instruments in February 2013. The FASB’s proposal outlines either fair value or amortized cost related to the measurement approach for financial assets and financial liabilities.

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TAX6 EFFECT OF NE W TA X ACT ON CHARIT IES

The President signed into law the “American Taxpayer Relief Act of 2012” (“Act’) on January 3, 2013. In the months leading up to the Act, there had been a lot of discussion and anticipation in the charitable community about how charities will be affected by any changes in the law.

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ENTERPRISE RISK MANAGEMENT SERVICES8 SPOTLIGHT ON YOUR BANK ACCOUNT. . .

YES, YOUR BANK ACCOUNTThere’s a race occurring daily and it’s as competitive as any competition imaginable. What’s at stake you ask? Your bank account. Cybercriminals are hard at work, chipping away at any form of protection you or your bank can throw at them.

March 2013

1 | SingerLewak March 2013

PA R T N E R L E T T E R

SingerLewak is pleased to an-nounce the SingerLewak Acad-emy – an Executive Leadership Program.

OUR PART

SingerLewak Academy is a prac-tical, thought provoking program for Owners, Presidents, CEO’s, CFO’s, and other Key Executives of privately held companies, in all industries. We designed this program to build and/or enhance business acumen, skills, strate-gies and operational expertise in today’s changing environment.

Our Academy series is custom-ized to meet the needs of each geographic market we serve (Los Angeles, Orange County and Silicon Valley) and will be intro-duced to these business com-munities starting in May, 2013 with course offerings currently planned through January, 2014.

Our presenters will consist of a mix of industry experts, business specialists and SingerLewak pro-fessionals who will offer solutions and forward thinking strategies

to optimize business strategies around five key areas: Financial Health, Business Growth, Op-erational Excellence, Succession/

Exit Strategy and Risk & Com-pliance.

The format includes a mixture of half day immersion workshops (with networking, lecture and one on one time or group dis-cussion), “after hours” specialty

sessions and/or networking and coaching. Course materials will be provided for all participants. Course topics include:

• FinancialHealth: Topics will include tax strategies, key performance indicators, finan-cial statement fundamentals, Obamacare strategies, worker’s compensation solutions and other related topics.

• BusinessGrowth: Topics will include profitable growth alternatives, where to set up shop, employee retention tools, and protecting your “assets”.

• Operational: Topics will include using I.T. for growth and protecting what you have and challenging your existing processes and infra-struction for new ideas.

• Succession/Exit: Topics will include strategies includ-ing recognizing the signs of corporate divorce and when to seek counseling, proper sales process and addressing the hard question when succession involves the next generation.

March 2013 SingerLewak | 2

INTRODUCING THE SINGERLEWAK ACADEMYBY DAVID KRAJANOWSKI | [email protected] | 949.261.8600

We designed this program to build and/or enhance business acumen, skills,

strategies and operational expertise in today’s

changing environment.


• NextGenerationBootCamp: Topics will include the basics of Financing (account-ing, banking, etc.), Risk & Compliance (human resourc-es, insurance, etc.), Growth (sales performance & man-agement), Operational (I.T., manufacturing, distribution & service efficiencies, organi-zational & process improve-ment, etc.) and the role of the next generation (responsibili-ties, expectations, accountabil-ity, etc.)

YOUR PART

When we meet with you over the next month to review financials and tax plans, we will be register-

ing those clients and prospects that want to be involved in the process. We will be inquiring about your level of interest in the programs we have planned, as well as your interest in other top-ics (our curriculum is flexible and based on your input).

DAVID KRAJANOWSKI CAN BE REACHED AT

[email protected] OR 949.261.8600

When we meet with you over the next month to review financials and tax plans, we will be

registering those clients and prospects that want to be involved in the process

A S S U R A N C E & A DV I S O RY


FASB PROPOSES A NEW MODEL FOR CLASSIFICATION AND MEASUREMENT OF FINANCIAL INSTRUMENTSBY HARMEET SINGH | [email protected] | 408.294.3924

The FASB issued a revised proposal for the classification and measurement of financial instruments in February 2013. The FASB’s proposal outlines either fair value or amortized cost related to the measurement approach for financial assets and financial liabilities.

In general, the proposal applies to financial instruments with certain exceptions and addresses both initial and subsequent clas-sification and measurement. The following is a summary of the key provisions as outlined in the proposal.

DEBT INVESTMENTS

Debt investments, whether loans and debt securities, will be clas-sified into one of three measure-ment categories:

• Amortized cost

• Fair value with changes in fair value recognized in other comprehensive income

• Fair value with changes in fair value recognized in net income.

The classification and measure-ment of a debt investment is de-termined at the acquisition date or origination, as follows:

• Amortized cost – The debt investment is held in a busi-ness model with a primary objective of holding to collect contractual cash flows, and has terms that give rise on specified dates to cash flows that represent solely payments of principal and interest.

• Fair value through other comprehensive income – The debt investment is held in a business model with a primary objective of holding to collect contractual cash flows and to realize changes in fair value through sale, and has terms

that give rise on specified dates to cash flows that represent solely payments of principal and interest.

• Fair value through net income – The debt investment does not meet the eligibility criteria for either the amortized cost or the fair value through other comprehensive income ap-proach.

In addition, the FASB proposed that hybrid financial assets will not be bifurcated between em-bedded derivatives and the finan-cial instrument host contract as is done today. Instead, the entire instrument will be evaluated and classified based on the above criteria.

EQUITY INVESTMENTS

Equity investments excluding investments accounted for in the equity method of account-ing (unless these investments are held for sale) will be measured at fair value through net income. However, companies, not includ-ing broker-dealers and invest-ment companies, can elect a


practicability exception to mea-sure equity investments without a readily determinable fair value at cost. The proposal simplifies the method for assessing impair-ment for equity investments that qualify for the practicabil-ity exception, as well as equity investments accounted for under the equity method.

FINANCIAL LIABILITIES

Financial liabilities will gener-ally be measured at amortized cost, and the current embedded derivative bifurcation require-ments for hybrid financial liabili-ties will be retained unless intent is to subsequently transact at fair value. Nonrecourse financial li-abilities that must be settled with only the cash flows from specified

financial assets will be measured on the same basis as the financial assets. A fair value option is avail-able in certain limited circum-stances and if elected the com-pany will recognize the change in fair value due to a change in the company’s own credit risk in other comprehensive income.

PRESENTATION AND DISCLOSURE

Public companies will present fair values parenthetically on the face of the balance sheet for financial assets and financial liabilities measured at amortized cost. Only demand deposit liabil-ities and receivables and payables that are due within one year are excluded from this requirement. Nonpublic companies will not be required to present or disclose fair value information for these instruments.

The proposal simplifies the method for assessing impairment for equity

investments that qualify for the practicability exception, as well as equity investments

accounted for under the equity method

HARMEET SINGH CAN BE REACHED AT



TA X

The President signed into law the “American Taxpayer Relief Act of 2012” (“Act’) on January 3, 2013. In the months leading up to the Act, there had been a lot of discussion and anticipation in the charitable community about how charities will be affected by any changes in the law. The following are two key provisions contained in the Act that could have a direct impact on charitable dona-tions made to charities:

• For taxable years beginning after December 31, 2012, the limitation on itemized deduc-tions has been reinstated for individual taxpayers with a threshold of $300,000 for joint filers and surviving spouses, $275,000 for heads of household, $250,000 for single filers and $150,000 for married taxpayers filing sepa-rately. For taxpayers with tax-able income exceeding these thresholds, the total amount of their itemized deductions is reduced by 3% of the amount by which the taxpayer’s Ad-justed Gross Income exceeds the threshold amount, but the

reduction cannot exceed 80% of the otherwise allowable itemized deduction. What this means for chari-ties – while these reinstated limitations will undoubtedly present some challenges for charities in securing future contributions, the continua-tion of the charitable contribu-tion deduction is a welcomed departure after last year’s dis-cussions about the possibility of eliminating the tax benefit altogether.

• For taxable years 2012 and 2013, individuals 70½ years or older may continue to make tax-free distributions from their Individual Retirement

Account (‘IRA”) to public charities in amounts up to $100,000 per taxpayer, per taxable year. The Act contains two elections that enable its retroactive application to 2012:

- A taxpayer may elect to treat a distribution that he or she made in January 2013 as if it

EFFECT OF NEW TAX ACT ON CHARITIESBY NANAZ BENYAMINI | SENIOR [email protected] | 310.477.3924

What this means for charities – while these reinstated limitations

will undoubtedly present some challenges for charities in securing future contributions,

the continuation of the charitable contribution deduction is a welcomed departure after last year’s

discussions about the possibility of eliminating the tax benefit altogether.


was made on December 31, 2012, thereby allowing the deduction to be reported on a 2012 tax return.

- A taxpayer who has already received an IRA distribu-tion in December 2012 may still elect to transfer the IRA distribution that he or she received to a public charity and treat the amount as a tax-free distribution from their IRA as long as the tax-payer transfers the cash to the charity prior to March 1, 2013.

This provision allows charities additional time to solicit chari-table contributions from poten-tial donors who are interested in applying their charitable distribu-tion to their 2012 tax year by way of their IRA account.

This provision allows charities additional

time to solicit charitable contributions from

potential donors who are interested in applying their

charitable distribution to their 2012 tax year by way of their IRA account.

NANAZ BENYAMINI CAN BE REACHED AT


E N T E R P R I S E R I S K M A N AG E M E N T S E R V I C E S

There’s a race occurring daily and it’s as competitive as any compe-tition imaginable. What’s at stake you ask? Your bank account. Cybercriminals are hard at work, chipping away at any form of protection you or your bank can throw at them.

It’s all in the numbers...the bad guys get as many attempts as they want and the bank only has to fail once before millions can be lost and just as many accounts are compromised. The attack-ers have the advantage, and they know it.

Think you’re too small of a fish to be a target? New data suggests that cyber attacks aimed at small

businesses have doubled over the past six months. According to Symantec, 36% of all targeted attacks during the last six months were directed at businesses with 250 or fewer employees.

How are they doing it? With your help! Whether it’s a website you visit or an email attachment you’ve opened, the Internet is littered with botnet-creating, information-stealing Trojans. A Trojan is a small program that first infects your computer and then sends information from infected computers to remote servers.

When thousands of copies of a

Trojan have been installed on computers all over the Internet, you get a network of machines under the remote control of a cybercriminal — known as a botnet. The reason this method has proven to be so successful for the bad guys is that the owners of the infected machines usually aren’t even aware that anything wrong is happening.

One recent story on how quickly things can go awry occurred on July 10th when crooks who’d broken into the computers of a fuel supplier in southern Geor-gia attempted to transfer $1.67

According to Symantec, 36% of all targeted

attacks during the last six months were directed at businesses with 250 or

fewer employees.

SPOTLIGHT ON YOUR BANK ACCOUNT... YES, YOUR BANK ACCOUNTBY RICK MARK | SERVICE AREA [email protected]

How are they doing it? With your help! Whether

it’s a website you visit or an email attachment

you’ve opened, the Internet is littered with botnet-creating, information-

stealing Trojans.



million out of the company’s accounts. When that failed, they put through a fraudulent payroll batch totaling $317,000, which the victim’s bank allowed. Shortly after the dust settled, the victimized company hired an outside forensics firm to investi-gate, and found that the trouble started on July 9, when the firm’s controller clicked a link embed-ded in an image in an email designed to look as though it was sent by the U.S. Postal Service.

Criminals are using these botnets to perform a whole slew of mali-cious internet activities. Whether it’s mounting distributed denial-of-service (DDoS) attacks or sending out spam emails, like anyone else, they’re after the money. Banking Trojan botnets

are used specifically to snag login credentials to online bank ac-counts and payment processors such as PayPal.

While banks are constantly refin-ing online account security by coming up with new methods for authenticating users, there are still steps you can take as well. Getting to know what’s coming into your network is one thing, but what’s being sent out of it is another. Many of these botnets report from very specific and known areas of the world and internet addresses. Having a fire-wall block incoming traffic can’t help when a Trojan is injected into a system. Most networks do not filter proactively or on a regu-lar basis, for outgoing traffic and connections to the botnet servers.

In business, it’s often about the bottom line. There are criminals out there trying to attack yours...what are you doing to protect it? If you have concerns about secu-rity threats in general, and want more information about how to check your network for these threats, and then how to effec-tively ‘curb the trojan appetite’, email us at [email protected] and we’ll be happy to help.

RICK MARK CAN BE REACHED AT [email protected]

OR 818.251.1323

S I N G E R L E W A K

ACADEMYE X E C U T I V E

& B U S I N E S SL E A D E R S H I P

P R O G R A M

FOR MORE INFORMATION:PLEASE [email protected]

OR CALL310.477.3931 ext.1393

RISK & COMPLIANCE

FINANCIAL HEALTH

SUCCESSION/EXIT STRATEGIES

BUSINESS G

ROW

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OPER

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EXC

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NCE

YOURBUSINESS

Wheel of Business ExcellenceThe programs designed by the SingerLewak Academy will be centered on these five critical business essentials. Each of these areas will be explored in detail, providing practical and often overlooked solutions.

The SingerLewak Academy is a practical program for Executives, CFOs, Presidents and Owners of Private companies in all industries — and is designed to build and enhance business acumen, skills, strategies and operational expertise.

Our Academy series has been customized to meet the needs of each geographic market and will be introduced to the business communities in Silicon Valley, Los Angeles and Orange County throughout 2013. Each session presented by the SingerLewak Academy has been designed to fill the “knowledge gaps” experienced today by most executives and business owners.

SingerLewak is a leading regional accounting services firm in California with offices in Los Angeles, Orange County, Wood-land Hills, Monterey Park, San Diego, Silicon Valley and San Francisco. Serving California since 1959, SingerLewak has established a reputation for excellence as professionals with expertise in the Accounting and Management Consulting industry. Providing the services of a large firm with a blended environment of practices, industry specializations and partic-ular attention to hands-on service, SingerLewak continues to demonstrate leadership and industry growth year-over-year.

We are nationally recognized as active community and profes-sional services partners, working among many sectors of the business world. Our core services deliver results whether it’s auditing, accounting, entrepreneurial business services, tax preparation, business management, SEC filings, transactions, enterprise risk management, forensic accounting, business valuation, litigation support, or consulting.

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SingerLewak Newsletter - March 2013

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