Summary of Federal Loan Programs – Coronavirus Aid, Relief and Economic Security Act, HR 748 (“CARES Act”)

The federal government recently enacted three phases of relief in response to the coronavirus outbreak. Phase 1 offers an Economic Injury Disaster Loans available under the existing Disaster Loan Program overseen by the U.S. Small Business Administration (“SBA”). Phase 2 features no loan programs. Phase 3 is the Coronavirus Aid, Relief and Economic Security Act (“CARES”).[1] CARES features both a Paycheck Protection Program (“PPP”) and an Economic Stabilization Loan Program geared for larger businesses. For information about the PPP, please see our article, Paycheck Protection Program (“PPP”) Under CARES, posted on our website.

Name Law/Status Loan Program Short Description
Phase 1: Coronavirus Preparedness and Response to Supplemental Appropriations Act, 2020, 3/6/2020 H.R. 6074 (Law) 1. Economic Injury Disaster Loans (through the Disaster Loan Program Account) 1. Provides up to $2 million per borrower in working capital loans for small businesses. Small businesses must meet a list of size standards which vary per NAICS industry code.
Phase 2: Families First Coronavirus Response Act, 3/18/2020 H.R. 6201 (Law) N/A No loan programs as a part of this law, which addresses emergency preparedness and leave, health provisions, and tax credits for sick and family leave.
Phase 3: CARES Act 3/27/2020 H.R. 748 (Law) 2. Paycheck Protection Program;

3. Economic Stabilization Loans & Loan Guarantees

2. Makes temporary changes to the SBAs 7(a) loan program by providing 100% loan guarantees or SBA-administered loans of up to $10 million per small business, for payroll losses and selected working capital costs. While administered by SBA, loans are issue by private lenders. Small businesses are defined as having less than 500 employees or meet SBA NAICS code size standards.

3. Provides loans and loan guarantees to businesses of all sizes in industries most impacted by the coronavirus pandemic through the Federal Credit Reform Act of 1990, administered by the Treasury Secretary. Eligible businesses must demonstrate covered losses resulted from the pandemic.

Economic Injury Disaster Loan Program (“EIDL”) For Small Businesses

The SBA is making available its EIDL Program to qualifying small businesses and nonprofits. The Federal government has announced that it has made $50 billion available for this program, which is available to applicants in those states that have declared disasters to the SBA. As of March 25, 2020, most states and the District of Columbia have been declared statewide as “Disaster Areas,” in which eligible businesses can apply for the loans. A full list of Disaster Area Declarations can be found here:

https://disasterloan.sba.gov/ela/Declarations

Eligibility

CARES modified the eligibility requirements for the EIDL loans. In order to qualify as a “small business,” a business must:

  • Be a business concern having not more than 500 employees;
  • Be a sole proprietorship or an independent contractor;
  • Be a cooperative with not more than 500 employees;
  • Be an ESOP with not more than 500 employees;
  • Be a tribal business concern with not more than 500 employees; or
  • Qualify under the SBA’s eligibility standards prior to the CARES Act, which require that the applicant comply with SBA size standards that are determined by reference to the applicant’s industry NAICS code. The SBA’s table of codes can be found here:

https://www.sba.gov/managing-business/running-business/size-standards

  • Each industry classification has either a maximum number of employees or a maximum amount of annual receipts (averaged over a three-year period). An applicant must have no greater that the applicable maximum in order to be eligible. Note that employees of certain affiliates of an applicant must be included in calculating eligibility.

How to Apply and Loan Standards

Qualifying small businesses and nonprofits can apply directly to the SBA by following this link: https://www.sba.gov/funding-programs/disaster-assistance

The SBA has stated it will consider the following among its criteria for underwriting these loans:

  • An applicant’s credit history;
  • An applicant’s ability to repay the loan;
  • The applicant’s location in a county declared as a Disaster Area; and
  • Whether the applicant’s working capital losses are due to the COVID-19 disaster, as opposed to a downturn in the economy generally or other reasons.

Loan Terms

  • Principal, Term and Interest: The SBA can loan an approved applicant up to $2 million, depending on need and underwriting, with a term of up to 30 years for repayment and at interest rates of 3.75% per annum for small businesses and 2.75% per annum for non-profits. Loans in excess of $25,000 may require collateral.
  • Personal Guaranties and Collateral: CARES modified EIDL temporarily so personal guaranties will not be required for loans under $200,000. CARES also waived the requirement that an applicant must not be able to obtain credit elsewhere. In a change from its past practice, the SBA has advised it will not decline a loan due to insufficient collateral or lack of collateral. This statement, however, was not embodied in the CARES Act legislation.
  • Use of Proceeds: Loan proceeds can be used for working capital, payroll and other expenses that the applicant could have paid had the disaster not occurred. But loan proceeds are not intended to be used to replace lost profits or to finance business expansion.

Advance

CARES provides that during the period from January 31, 2020 through December 31, 2020 the SBA may advance an up-to-$10,000 grant to each applicant, paid within three days after completing its application to the SBA. The grant is not required to be repaid, even if the applicant does not obtain a loan under the EIDL program, or if the applicant instead obtains a grant under CARES’ Paycheck Protection Program (described in our article Paycheck Protection Program (“PPP”) Under CARES). But if the applicant does instead obtain a grant under the PPP, the amount of the advance will be reduced from the forgivable amount of such PPP loan. The advance may be used to pay allowable costs:

  • providing paid sick leave to employees unable to work due to the direct effect of the COVID–19
  • maintaining payroll to retain employees during business disruptions or substantial slowdowns
  • meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains
  • making rent or mortgage payments
  • repaying obligations that cannot be met due to revenue losses.

For more information on requirements for qualification for an Economic Injury Disaster Loan, and the SBA’s programs relating to COVID-19 generally: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources     A checklist of items to be provided with the application and a description of the procedures for applying for a loan follow.

Checklist of items to be provided with the application:

  • Completed Form 5 application form.
  • Completed IRS Form 4506-T, including information for:
    • Each owner with 20% or more ownership interest
    • Each general partner or managing member, regardless of ownership %
    • Each owner who owns more than 50% of an affiliate business
  • At least 2 years complete business tax returns with all schedules
  • Most recent year-end balance sheet and income statement
  • Current YTD balance sheet and income statement as of most recent month-end
  • Schedule of fixed debts
  • Personal financial statement on each owner with 20% or more ownership interest

Process:

  • Applicants should register for log-in credentials and complete the application on the SBA website.
  • The checklist above will be verified and credit will be checked by SBA.
  • Forecasts will be completed to determine loan amount.
  • Decision can take up to four weeks.
  • After approval and loan signing, the first $25,000 is disbursed within five business days.
  • Each business or non-profit will work with an assigned case officer on additional disbursements.
  • Loan disbursements can repay bank bridge loans up to $25,000.

OTHER LOAN PROGRAMS UNDER PHASES 1 & 3 (EXCLUDING PPP)

EXPRESS LOANS

Up to $1 million is available through the existing SBA express loan process, an increase from the previous maximum of $350,000. SBA express loans feature a 36-hour turnaround time.

Summary of Economic Stabilization Loan & Loan Guarantees

The program exists to provide emergency assistance and health care response for individuals, families, and businesses affected by the 2020 coronavirus pandemic.

Summary

  • Provides $29 billion to aviation companies, $17 billion to businesses critical to maintain national security and $454 billion to other negatively impacted businesses through loan, loan guarantees within provisions of the Federal Credit Reform Act of 1990 and other investments in programs and facilities through the Federal Reserve.
  • States and Municipalities may receive loans, loan guarantees and investments from the amounts listed above as long as the total amounts awarded through the program do not exceed $500 billion.
  • The CARES Act does not provide a specific allocation distribution of direct loans vs. loan guarantees, nor does it include language on maximum amounts.
  • Eligible businesses must have incurred covered losses, direct or incremental, incurred as a result of coronavirus, as determined by the Treasury Secretary.
  • Provides limits on wage increases to high-wage employee compensation during a two-year period.
  • Specific procedures for application and minimum requirements will be published by the Treasury Secretary within 10 days after enactment of the CARES Act.

Distribution of Loans and Loan Guarantees

The Treasury Secretary authorizes $500 billion in loans and loan guarantees to businesses, states and municipalities of any size through the provisions of the Federal Credit Reform Act of 1990.

  1. Not more than $25,000,000,000 shall be available for passenger air carriers.
  2. Not more than $4,000,000,000 shall be available for cargo air carriers.
  3. Not more than $17,000,000,000 for businesses critical to maintaining national security
  4. Not more than $454,000,000,000 shall be available for other eligible businesses.

Eligibility

  1. Must be a state or municipality or an eligible business. An “eligible business” is defined as:
    1. an air carrier; or
    2. a United States business that has not otherwise received adequate economic relief in the form of loans or loan guarantees provided under the CARES Act.
  2. Other credit must not be reasonably available at the time of the transaction.
  3. Intended obligations must be prudently incurred.
  4. The loan or loan guarantee must be sufficiently secured.

Rates

Any loans made by the Treasury Secretary shall be at a rate not less than a rate taking into consideration the current average yield on outstanding marketable obligations of the United States of comparable maturity.

Terms

The loan or loan guarantee is either (a) sufficiently secured, or (b) is made at a rate that (i) reflects the risk of the loan or loan guarantee, and (ii) is to the extent practicable, not less than an interest rate based on market conditions for comparable obligations prevalent prior to the outbreak of COVID-19.

The duration of loans or loan guarantees should be as short as practicable, and not to exceed 5 years.

Except to the extent required under a contractual obligation in effect as of the date the CARES Act became law, the CARES Act prohibits the eligible business from repurchasing any outstanding equity interests while the loan or loan guarantee is outstanding.

The CARES Act provides that, until the date 12 months after the date the loan or loan guarantee is no longer outstanding, the eligible business shall not pay dividends or make other capital distributions with respect to the common stock of the eligible business.

Prohibition on Loan Forgiveness

The principal amount of any obligation issued by an eligible business, state, or municipality that is acquired under a program or facility shall not be reduced through loan forgiveness.

Employee Retention

The loan or loan guarantee through agreement requires eligible businesses to maintain existing employment levels as of March 24, 2020 until September 30, 2020, and shall not reduce its employment by more than 10 percent from the levels on such date.

High-Wage Employee Compensation Limits

If an eligible business receives a loan or loan guarantee, during a 1-year period starting on the date the agreement is executed, no officer or employee of the eligible business whose total compensation exceeded $425,000 in calendar year 2019 will receive from the eligible business:

  1. total compensation which exceeds, during any 12 consecutive months of such period, the total compensation received by the officer or employee from the eligible business in calendar year 2019; and
  2. will receive from the eligible business severance pay or other benefits upon termination of employment with the eligible business which exceeds twice the maximum total compensation received by the officer or employee from the eligible business in calendar year 2019.

If an eligible business receives a loan or loan guarantee, during a 1-year period starting on the date the agreement is executed, no officer or employee of the eligible business whose total compensation exceeded $3,000,000 in calendar year 2019 will receive from the eligible business during any 12 consecutive months of such period total compensation in excess of the sum of:

  1. $3,000,000; and
  2. 50% of the excess over $3,000,000 of the total compensation received by the officer or employee from the eligible business in calendar year 2019.

The term “total compensation” includes salary, bonuses, awards of stock, and other financial benefits provided by an eligible business to an officer or employee of the eligible business.

General Terms & Conditions

For the avoidance of doubt, any applicable requirements under section 13(3) of the Federal Reserve Act (12 U.S.C. 343(3)), including requirements relating to loan collateralization, taxpayer protection, and borrower solvency, shall apply with respect to any obligation or other interest issued by an eligible business, State, or municipality that is acquired under a program or facility under subsection (b)(4).

Terms, conditions and containment of covenants, representatives, warranties, and requirements (including requirements for audits) will be determined as Treasury Secretary deems appropriate.

Further Guidance & Future Programs for Consideration

No later than 10 days after the date of enactment of the CARES Act, the Treasury Secretary shall publish procedures for application and minimum requirements, which may be supplemented by the Treasury Secretary in the Treasury Secretary’s discretion, for the making of loans and loan guarantees.

Mid-size & Large Business Financing

The Treasury Secretary shall endeavor to create a program or facility that provides financing to banks to make direct loans to eligible businesses between 500 – 10,000 employees with an annualized interest rate not higher than 2% per annum, with no principal or interest during the first 6 months. The loans would be based on good faith certifications that a) uncertainty of economic conditions deem the loan necessary, b) funds will be used to retain 90% of the recipients’ workforce at full compensation and benefits until September 30, 2020, c) workforce and compensation levels from February 1, 2020 will be restored no later than 4 months after termination of the COVID-19 public health emergency

Main Street Lending Program

Nothing shall limit the Federal Reserve System to establish a Main Street Lending Program or other similar program or facility that supports lending to small and mid-sized businesses on such terms and conditions as the Board may set consistent with section 13(3) of the Federal Reserve Act 16 (12 U.S.C. 343(3)), including any such program in which the Treasury Secretary makes a loan, loan guarantee, or other investment under subsection (b)(4).

Government Participants

The Treasury Secretary shall endeavor to seek the implementation of a program or facility in accordance with subsection (b)(4) that provides liquidity to the financial system that supports lending to states and municipalities.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.

[1] This summary is based on the bill text available on March 25, 2020

The Coronavirus Aid, Relief, and Economic Security (Cares) Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress on March 27, 2020, and the President is expected to sign it into law immediately. The CARES Act is the most expensive piece of Legislation passed to date with a total of 2.2 trillion dollar price tag.

The CARES Act provides tax and cash-flow relief for individuals and businesses alike. Below are some major points from the Act.

Paycheck Protection Program (PPP) (SBA 7(a) forgivable loans)

  • Helps small businesses, 501(c)(3)’s, 501(c)(19)’s, and 31(b)(2)(c).
  • Limited to businesses with 500 employees or less.
  • Includes independent contractors, sole proprietors and the self-employed.
  • Entities must have been operational by 2/15/20, had payroll, and paid taxes.
  • Covered loan period is 2/25/20 through 6/30/20.
  • Maximum loan amount via 7(a) set to $10 million through 12/31/20.
  • Eligible expenses include payroll, insurance, rent, mortgage and utilities.
  • Amount spent by borrower in the first 8 weeks from loan origination may be forgiven; amount reduced proportionate to reductions in workforce as compared to previous year; if rehires made during 8-week period, no penalty in reflection of possible layoffs early in the 8 week period.
  • Borrower cannot apply/carry both PPP and Economic Injury Disaster Loan (EIDL) for
  • COVID-19, but can carry previous, non-COVID-19 EIDL and participate in PPP.
  • Borrow must good-faith certify that funds are needed for COVID-19 related purposes, the funds will be used to retain workers, and that their request is not duplicative with other SBA funds for the same purpose.
  • Waives borrower and lender fees.
  • Waives credit elsewhere requirements.
  • Waives collateral and personal guarantees.
  • Sets maximum interest rate of 4%.
  • No prepayment fees.
  • Delegates authority to all existing 7(a) lenders to expedite approvals/distributions
  • Anything not forgiven or repaid by 12/31/20 will convert to a max 10 year loan at a max 4% interest rate.

 Deferral of Payroll Taxes

The Act would defer employer payroll, railroad retirement, and self-employed Social Security tax payments through the end of 2020. Deferred funds would be paid over two years in 2021 and 2022. Deferral wouldn’t apply to employers with 7(a) small business loan debt forgiven under the bill.

Retirement Plans

  • Individuals could withdraw as much as $100,000 from their retirement accounts through the end of 2020. Funds would be treated as a tax-exempt rollover contribution if repaid in the next three years. If funds are not repaid, they will be taxed as income over three years.
  • Individuals would be eligible to make withdrawals if they or their spouse are diagnosed with Covid-19, or if the pandemic hurts their finances, such as through layoffs or reduced hours (is it necessary to repay for tax purposes?).
  • Eligible individuals may receive loans for the lesser of $100,000 or the present value of their vested benefits in their employer retirement accounts in the 180 days after the bill’s enactment. The limit is currently $50,000 or half the account’s value.
  • Plans would have to be modified to allow some of these provisions.
  • Individuals affected by the coronavirus with retirement plan loans due by Dec. 31, 2020, have an extra year to repay.

Charitable Contributions

  • The Act would create a permanent $300 above-the-line individual charitable contribution allowance, beginning in 2020, for individuals who don’t itemize their returns.
  • The Act would also would suspend for 2020 the limit on the individual charitable deduction, which is available to filers who itemize. The deduction is limited to 60% of individual taxpayers’ adjusted gross incomes through 2025.
  • The corporate charitable deduction limit would be increased in 2020 to 25% of taxable income, from 10%. A deduction for food inventory contributions would be increased to 25%, from 15%.

Business Provisions

  • The Act would allow business losses from tax years after Dec. 31, 2017, and before Jan. 1, 2020, to be carried back five years. Net operating loss carrybacks were previously eliminated for most businesses by the 2017 tax overhaul.
  • The Act would allow the full amount of net operating loss carryovers and carrybacks to be used for tax years beginning before Jan. 1, 2021. The deduction was limited to 80% of taxable income under the 2017 tax overhaul. A separate deduction limit would be established for tax years beginning after Dec. 31, 2020.
  • The Act would modify the effective date of changes to the net operating loss deduction included in the 2017 tax overhaul.
  • The measure would also modify net operating loss deduction limits for pass-through businesses and sole proprietorship as well as small business loss limitations.
  • The measure would modify the interest limitation provision of 163(j) modifying the income threshold from 30% to 50%. For 2019 & 2020.
  • Certain technical corrections are made to the TCJA including a correction of the rules related to qualified improvement property.
  • The bill provides for an exclusion of up to $5,250 from income for payments of an employee’s education loans. In order for the exclusion to apply, the loan must have been incurred by the employee for the education of the employee. The payment can be made to the employee or directly to the lender. The exclusion only applies for payments made by an employer after the date of enactment and before January 1, 2021.

Recovery Rebates

  • The Act would provide rebates of as much as $1,200 per individual or $2,400 for couples who file joint tax returns. An additional $500 would be provided for each child.
  • Taxpayers are eligible if they had qualifying income on their 2018 tax returns – including earned income and certain retirement benefits – of at least $2,500, or net income tax liability greater than zero and gross income greater than the basic standard deduction.
  • The credit will be reduced by $5 for each $100 that a taxpayer’s income exceeds $75,000, or $150,000 for joint filers. It would completely phase out for individual incomes greater than $99,000 or joint incomes greater than $198,000.

Employee Retention Benefit

  • 50% refundable payroll tax credit during COVID-19 crisis for businesses that either fully or partially shut down OR have a 50% decrease in receipts versus the same quarter in the previous year and continue to pay employees.
  • Based on qualified wages paid to employees during crisis, tied to number of employees (100+ full time employees = wages paid when they are not providing services due to COVID-19 and less than 100 full time employees = wages paid regardless of business closure status).
  • Covers up to $10,000 paid per employee, including benefits, for the period 3/13/20-12/31/20.

Student Loans Paid by Employers

The bill provides for an exclusion of up to $5,250 from income for payments of an employee’s education loans. In order for the exclusion to apply, the loan must have been incurred by the employee for the education of the employee. The payment can be made to the employee or directly to the lender. The exclusion only applies for payments made by an employer after the date of enactment and before January 1, 2021.

Unemployment Insurance

  • Provides an additional $600 per week in recipients of Unemployment Insurance (UI) for up to 4 months.
  • Federal government will cover 100% of the cost of the first week of UI if states waive the 1 week waiting period to begin benefits.

 

Staff Auditor

OPPORTUNITY:

We’re seeking team players with a strong work ethic and excellent professional skills for the role of Staff Auditor with our firm.

 Essential Functions:

  • Performs detailed audit procedures on financial statement account balances, prepares and adjusts workpapers from clients’ trial balance
  • Identifies potential management letter comments
  • Researches accounting issues
  • Recognizes potential problem areas in specific engagements and discusses them with engagement supervisor
  • Participates in the engagement planning process
  • Performs other accounting, auditing, and consulting duties as needed in engagements and as assigned by supervisory personnel
  • Assumes full responsibility (under supervision) for preparation of compiled and reviewed financial statements
  • Assists with more complicated segments of audit and accounting engagements
  • Drafts annual financial statements, including footnote disclosures
  • Becomes proficient at preparing financial statements using the firm’s software programs
  • May train other staff auditors

QUALIFICATION GUIDELINES:

Knowledge, Skills, and Abilities

  • Bachelor’s degree in accounting; 3.5 or higher GPA in major preferred; advanced degree preferred
  • One to three years audit experience in the commercial, non-profit sectors or benefit plan audit experience a plus; public accounting experience preferred
  • Well-rounded knowledge of accounting principles; knowledge of Generally Accepted Auditing Standards (GAAS), Government Auditing Standards (GAS Yellow Book) and Generally Accepted Governmental Accounting Standards (GAGAS) a plus
  • Proficiency in use of computers and computer accounting software programs
  • Good oral and written communication skills
  • Either holds a current and valid certified public accountant’s license or is working toward obtaining the license by taking and passing the applicable state CPA exam
  • Good time management and organizational skills
  • Some travel may be required

 

Staff Auditor

OPPORTUNITY:
We’re seeking team players with a strong work ethic and excellent professional skills for the role of Staff Auditor in our Fort Lauderdale and West Palm Beach offices.

Essential Functions:

  • Performs detailed audit procedures on financial statement account balances, prepares and adjusts workpapers from clients’ trial balance
  • Identifies potential management letter comments
  • Researches accounting issues
  • Recognizes potential problem areas in specific engagements and discusses them with engagement supervisor
  • Participates in the engagement planning process
  • Performs other accounting, auditing, and consulting duties as needed in engagements and as assigned by supervisory personnel
  • Assumes full responsibility (under supervision) for preparation of compiled and reviewed financial statements
  • Assists with more complicated segments of audit and accounting engagements
  • Drafts annual financial statements, including footnote disclosures
  • Becomes proficient at preparing financial statements using the firm’s software programs
  • May train other staff auditors

QUALIFICATION GUIDELINES:

  • Bachelor’s degree in accounting; 3.5 or higher GPA in major preferred; advanced degree preferred
  • One to three years audit experience in the commercial, non-profit sectors or benefit plan audit experience a plus; public accounting experience preferred
  • Well-rounded knowledge of accounting principles; knowledge of Generally Accepted Auditing Standards (GAAS), Government Auditing Standards (GAS Yellow Book) and Generally Accepted Governmental Accounting Standards (GAGAS) a plus
  • Proficiency in use of computers and computer accounting software programs
  • Good oral and written communication skills
  • Either holds a current and valid certified public accountant’s license or is working toward obtaining the license by taking and passing the applicable state CPA exam
  • Good time management and organizational skills
  • Some travel may be required

Senior Tax Associates

OPPORTUNITY:

We are seeking talented and accomplished professionals who have been in client-facing roles to join our expanding tax practice in our Fort Lauderdale and West Palm Beach offices.  This is your opportunity to use the breadth of your accounting skills to join an elite and growing local firm CPA that offers many opportunities!

Essential Functions:

  • This is an upper level tax position.
  • You will be responsible for utilizing your educational background as well as communication and organizational skills by reviewing and preparing tax returns, performing tax research, and working with firm Partners, Managers and clients on tax matters.
  • Actively supervise most aspects of engagement and work directly with Partners on 50% of engagements, while working with tax manager on 50%.
  • Experience preparing tax returns for individuals, trusts, partnerships, S corporations and C corporations.
  • Work overtime as required.
  • Performs other duties as assigned.

QUALIFICATION GUIDELINES

Knowledge, Skills, and Abilities:

  • Strong analytical skills and an attention to detail. Able to identify and assist with implementation of tax planning and tax savings strategies, as well as research and consult on complex tax matters.
  • A self-starter, able to perform work with supervision from Tax Partners and Managers.
  • Familiarity with standard tax practices and procedures and the ability to apply them to each project assigned. General knowledge of FASB regulations, GAAS, and GAAP.  Capable of research and consulting on tax matters.
  • Good interpersonal skills including the ability to manage and develop a team.
  • Seeks advice of appropriate superiors regarding issues or problems relating to compliance and consulting.
  • Familiarity with overall company operations and an ability to understand correlations between internal operating departments.
  • A positive and willing attitude is absolutely essential!

Training and Experience:

  • Bachelor’s in Accounting required, Master’s in Taxation or LLM a plus, minimum of 2-4 years public accounting experience (Big 4 and / or Regional Accounting firm experience a plus) and strong demonstrated progress to pursue CPA license if not already licensed.
  • Experience with Microsoft Office Suite environment is required. Experience with tax technology similar to CCH WK, ProSystem Tax, Engagement, Fixed Assets is also required.
  • C-Corp, Partnership, S-Corp, Individual tax preparation and review experience is a requirement of the position.
  • ASC 740, ASC 740-10, and multi-state experience preferred, though not required.
  • Exceptional client relationship skills essential.
  • Effective writing, communication, and tax research skills necessary, experience with tax technology a must.

 

Spring 2018 Tax Internships

OPPORTUNITY:
We are seeking talented soon to be college graduates to join our tax practice in our Fort Lauderdale and West Palm Beach offices. This is your opportunity to use the breadth of your accounting and tax knowledge and skills and intern with an elite and growing local firm CPA that offers many opportunities!

Essential Functions:
• This is a staff level tax position.
• You will be responsible for utilizing your educational background as well as communication and organizational skills by preparing tax returns, performing tax research, and working with firm Partners, Managers, Seniors and clients on tax matters.

QUALIFICATION GUIDELINES:

Knowledge, Skills, and Abilities:
• Strong analytical skills and an attention to detail.
• A self-starter, able to complete projects with supervision from Tax Partners, Managers and Seniors.
• Book knowledge with standard tax practices and procedures.
• Good interpersonal skills.
• A positive and willing attitude is absolutely essential!

Training and Experience:
• Working toward a Bachelor’s in Accounting is required. Working toward Master’s in Taxation or LLM a plus.
• Experience with Microsoft Office Suite environment is required while programs similar to CCH WK and ProSystem Tax, Engagement, Fixed Assets suite experience is a plus.
• Experience preparing individual, trusts, partnerships, S Corp, or C Corp Returns a plus.
• Willingness to work at least 8 hours per day from January 15th through April 17th of 2018 is a major plus. Part time opportunities may exist depending on need and location. Those willing to work overtime are a major plus.
• Hourly pay rate is based on college and work experience level and will range between $15 and $22 per hour.

Templeton & Company, LLP Named a Top 300 Accounting Firm in the Nation

West Palm Beach, Fla. – August 10, 2017 Templeton & Company, LLP has been named a Top 300 Accounting Firm in the nation by INSIDE Public Accounting (IPA) for the third consecutive year. Templeton & Company is one of only four Florida firms to be included.

Since 1994, INSIDE Public Accounting’s Survey and Analysis of Firms and the resulting national benchmarking report on the nation’s largest accounting firms has served as a barometer of the overall health, challenges and opportunities of the accounting industry and is known as the gold standard within the profession. More than 540 firms participate in the survey process each year.

Templeton & Company has been dedicated to providing the highest quality audit, tax and consulting services to its clients since its founding more than 27 years ago. The firm continues to grow its client base and consistently ranks as one of the largest accounting and management advisory firms in the South Florida region.

“It is an honor to once again be nationally recognized as a top CPA firm.” said Steven Templeton, Managing Partner of Templeton & Company.

About Templeton & Company

Founded in 1990, Templeton & Company, LLP is a professional services firm providing comprehensive business solutions to help its clients discover and realize their vision for success. Located in Fort Lauderdale, West Palm Beach, and Wellington, Fla., the firm provides consulting services to businesses in multiple industries with a focus on audit, tax, technology, accounting, succession strategy, and business valuations. Templeton & Company is also an independent member of the BDO Alliance USA, a national network of leading CPA firms. For more information about Templeton, its people, services, experience, and alliances, visit www.templetonco.com.

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FASB Issues ASU 2016-14, Presentation of Financial Statements of Not-for-Profit Entities

By Lee Klumpp, CPA, CGMA and Tammy Ricciardella, CPA

The Financial Accounting Standards Board (FASB) released the Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities on Aug. 18, and you can read the full ASU here.

The standard aims to improve presentation of financial information, ultimately making not-for-profit financial reporting statements more informative, transparent and useful to donors, grantors and other users. This is the first major change to the nonprofit financial statement model in over 20 years.

ASU 2016-14 impacts all not-for-profit entities in the scope of Accounting Standards Codification (ASC) Topic 958. The ASU addresses the following key qualitative and quantitative matters:

  • Net asset classes
  • Investment return
  • Expenses
  • Liquidity and availability of resources
  • Presentation of operating cash flows

In addition, the ASU includes illustrative financial statements for not-for-profit entities, which reflect changes made by the new standard.

Net asset classes:
The effects of the ASU on net asset classes are as follows:

  • The current presentation of three classes of net assets (unrestricted, temporarily restricted and permanently restricted) is replaced with two classes of net assets–net assets with donor restrictions and net assets without donor restrictions. The totals of these two required net asset categories must be reported in the balance sheet and the changes in these two net asset categories must be presented in the statement of activities. However, this is a minimum presentation requirement. An entity may choose to disaggregate within these two net asset categories.
  • The current requirement to provide information about the nature and amounts of different types of donor-imposed restrictions is retained and includes the need to highlight how these restrictions affect the use of the resources and their impact on liquidity.
  • Changes the net asset classification of underwater amounts of donor-restricted endowment funds to net assets with donor restrictions and requires additional disclosures related to these underwater endowment funds.
  • Eliminates the over-time approach for the expiration of restrictions on capital gifts and requires the use of the placed-in-service approach in the absence of donor explicit stipulations otherwise.

Investment return:
The ASU requires the following items with regard to investment return (relates to total return investing and not programmatic investing):

  • Investment return should be presented in the statement of activities net of all related external and direct internal expenses. The ASU provides definitions and examples of what qualifies for direct internal expenses to assist entities with this presentation.
  • The current requirement to disclose the netted investment expenses has been eliminated.

Expenses:
All nonprofit organizations currently must present expenses by function. The ASU introduces
a requirement to present expenses by nature and function, as well as an analysis of these expenses in one location by both nature and function. The intent is to provide additional information to the users of the financial statements regarding how the nonprofit uses its resources. This analysis can be presented in the face of the statement of activities, as a separate statement (not a supplemental statement) or in the notes to the financial statements.

  • This analysis should be supplemented with enhanced disclosures about the allocation methods used to allocate costs among the functions.

Liquidity and availability of resources:
To improve the ability of financial statement users to assess a nonprofit entity’s available financial resources and the methods by which it manages liquidity and liquidity risk, the ASU contains specific disclosures including:

  • Qualitative information that communicates how a nonprofit entity manages its liquid available resources to meet cash needs for general expenditures within one year of the balance sheet date.
  • Quantitative information that communicates the availability of a nonprofit’s financial assets to meet cash needs for general expenditures within one year of the balance sheet date. Items that should be taken into consideration in this analysis are whether the availability of a financial asset is affected by its nature, external limits imposed by grantors, donors, laws and contracts with others, and internal limits imposed by governing board decisions.

Presentation of Operating Cash Flows:
The ASU maintains the option for nonprofit organizations to present their statement of cash flows on either the direct or indirect method of reporting. If an organization chooses to use the direct method, the reconciliation of changes in net assets to cash provided by (used in) operating activities is no longer required.

Effective Date of ASU:
The amendments in ASU 2016-14 are effective for annual financial statements issued for fiscal years beginning after Dec. 15, 2017 (2018 for calendar year ends and 2019 for fiscal year ends), and for interim periods within fiscal years beginning after Dec. 15, 2018. Application to interim financial statements is permitted but not required in the initial year of application. The amendments in this ASU can be adopted early. Entities presenting comparative financial statements must apply the amendments retrospectively; however, the following optional practical expedients are available for periods presented prior to adoption. For prior periods presented organizations can opt not to include:

  • The analysis of expenses by nature and function and/or,
  • Disclosures related to liquidity and availability of resources.

Actions to Take Now:

  • Read through the ASU and watch for further alerts from BDO with more details related to the implementation of this ASU.
  • Discuss the new ASU with your audit committee, board members and external auditors to prepare for the changes introduced.

On the Horizon
This ASU completes the first phase of the FASB’s project to improve the financial reporting of not-for-profit entities. As we have discussed in earlier newsletters, the FASB determined that a second phase would consider other potential changes that are likely to require more time to resolve, including potentially reconsidering intermediate operating measures and certain other enhancements.

This article originally appeared in BDO USA, LLP’s “Nonprofit Standard” newsletter (Fall 2016). Copyright © 2016 BDO USA, LLP. All rights reserved. www.bdo.com

PErspective in Manufacturing

The housing market remains a bright spot in the U.S. economy this year after a similarly robust 2015. Housing construction is booming and U.S. construction spending reached its highest level in March in more than eight years, according to the New York Times.

Both the residential and commercial sides are making gains. Inventory is tight and, with demand exceeding supply, home prices are climbing and new home starts are on the rise. As a result, construction job numbers are up, and builder sentiment is positive, MarketWatch reports. With interest rates still low and fewer rate hikes expected than previously predicted, mortgage rates remain at historically low levels, adding to the positive construction environment.

This recent uptick in building has boosted sales of construction products, turning manufacturers of these products into attractive takeover targets for private equity firms and strategic buyers alike, according to The Middle Market. Our Q1 Manufacturing & Distribution M&A Outlook and Review notes that the while the general economy tends to ebb and flow in four- to seven-year cycles, the building products industry appears to be in year four of a 10-year cycle and deal flow in the sector is active.

Innovative Chemical Products—backed by Audax Private Equity—acquired adhesives maker Fomo Products in April for an undisclosed sum. Fomo manufactures adhesives, sealants and spray foam products, making it a natural fit for ICP, which makes coatings and adhesives for the construction, packaging and printing sectors. Also in April, Nautic Partners-backed IPS—a global manufacturer of adhesives, solvent cements and specialized plumbing products—purchased Integra Adhesives from management in its fifth acquisition since becoming a Nautic VII portfolio company in February 2015. And Z Capital Partners bought Twin-Star International, a designer and manufacturer of electric fireplaces, heaters and home furnishings.

Strategic investors have also closed a number of deals in the last year. Quanex Building Products paid $248 million for cabinetmaker Woodcraft Industries in November, while last August, Summit Materials bought gravel-pit operator LeGrand Johnson Construction, which will become part of Summit’s Kilgore Companies business in Utah. Door manufacturer Masonite International bought privately held USA Wood Door last October for $13 million and door-kit maker National Hickman for $82 million last August.

The Middle Market predicts that building products M&A will remain strong through 2016, as the prospect for a continued housing recovery remains strong. Private equity firms interested in middle market companies may continue to find opportunities in the building products sector and those entering now could be poised to enjoy even greater growth.

Sources: Forbes, Furniture World, MarketWatch, Mergers & Acquisitions, Modern Distribution Management, New York Times, NREI Online, The Wall Street Journal.

Future PErspectives:
What’s Up Next for Manufacturing Investors

Strong appetite for M&A in the manufacturing sector has persisted following an active year of deals in 2015—industrial manufacturers announced a record-level transaction volume of $1.3 trillion in Q4 2015, according to commercial real estate services firm JLL. Several factors indicate that deal activity in the sector will remain steady, including the need for geographic expansion and strong demand in the housing market, reports Mergermarket. However, as we near the upcoming presidential election, investors will likely approach the space more cautiously due to uncertainties around the impact of future regulation on deals. In fact, investors are more optimistic in manufacturing industry deals over the long term than the short term. In Mergers & Acquisitions’ Mid-Market Pulse (MMP), survey respondents gave manufacturing deals a 12-month forward-looking sentiment score of 61.4, compared to the three-month sentiment score of 59.7. That said, consolidation in the building materials and construction sectors ramped up in May 2016, notes Modern Distribution Management, highlighting the large role that deals will continue to play in the building products sector for the foreseeable future.

This article originally appeared in BDO USA, LLP’s “Manufacturing & Distribution” newsletter (Summer 2016). Copyright © 2016 BDO USA, LLP. All rights reserved. www.bdo.com

Could a Lack of Skilled Labor Slow the Reshoring Wave for U.S. Manufacturers?

By Tom Stringer and Michelle Cammarata

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U.S. manufacturing is on the rebound, having added more than 730,000 jobs since the end of 2010. And industry analysts expect the sector to create at least another 700,000 jobs by the end of the decade, according to the Manufacturing Institute.

Many of these jobs are the result of the return of operations to the U.S. from abroad, also known as reshoring. Companies are exhibiting a strong commitment to reshoring, and a December 2015 study by The Boston Consulting Group found that:

  • 54 percent of companies with more than $1 billion in revenue are considering reshoring
  • The share of executives saying that their companies are actively reshoring production increased by 9 percent since 2014 and by almost 250 percent since 2012
  • Of manufacturers planning to add production capacity over the next five years for goods consumed in the U.S., more plan to add that capacity in the U.S. than in any other country

Perhaps no company has had a bigger impact on the reshoring trend than Walmart. The retailer has committed $250 billion to U.S.-made goods over the next decade and reshored 4,444 jobs between 2010 and 2014, according to the Reshoring Initiative. This has set in motion a chain reaction, as suppliers are reshoring their own operations to serve the retail giant.

U.S. automakers are also making significant investments. Ford, second only to Walmart in reshoring over the past five years, brought 3,250 jobs from Mexico to Michigan and Ohio and moved 1,800 jobs to Tennessee. General Motors also brought 1,800 jobs from Mexico to U.S. plants, according to analysts at the Reshoring Initiative.

Reshoring is strongest in the Southeast and Texas. Companies building new facilities frequently choose right-to-work states with comparatively lower wages and business taxes. Companies that move operations to other regions typically choose existing factories with excess capacity. For example, in 2014, Whirlpool announced it would relocate production of KitchenAid small appliances from China to an existing facility in Greenville, Ohio, adding 400 workers.

WHY BUSINESSES RESHORE JOBS

Costs

Two major costs—labor and energy—are dramatically reduced for many companies when they reshore. The cost of labor in China has increased 320 percent since 2000, according to the Reshoring Initiative. Gas and oil prices, volatile in other countries, have been lower and more stable here in the United States, and few predict that will change in the near term.

Logistics

Reshoring shortens the supply chain and cuts time to market, helping companies be nimbler.

Brand Building

Businesses boost their brands when they can market their products as “Made in America.” Companies enjoy better quality control and access to skilled labor, which can improve the product, further strengthening their brands.

WHO WILL FILL THE JOBS?

Add existing manufacturing sector growth, plus reshoring, plus the pending retirement of the baby boomers, and U.S. manufacturers say there will be as many as 3.5 million job openings over the next 10 years, according to a 2015 GE Reports study by General Electric. Meanwhile, according to the Reshoring Initiative, there are still 3-4 million manufacturing jobs abroad, offering a chance for enormous economic growth if reshoring continues.

The U.S. might not have enough skilled manufacturing labor—today or in the pipeline—to meet this demand. Several factors contribute to the gap:

Perception

After years of layoffs, plant closings and relocations to emerging markets like China and Mexico, the industry has struggled to attract younger talent. While initiatives like Manufacturing Day are making strides to cultivate a new generation of manufacturers, a 2015 study from the Manufacturing Institute reports that just 37 percent of parents would encourage their children to pursue careers in manufacturing.

Demand for technical skill

U.S.-based manufacturing jobs today focus on operating, maintaining and programming high-tech machines. Employers need problem solvers with strong technical skills. Unfortunately, inadequate investment in manufacturing education, vocational schools and community colleges, along with a decline in apprenticeship programs, have contributed to the skills gap.

Wages

Concerns about wages may push otherwise qualified workers away from a manufacturing career. While automakers have reshored jobs, for example, some have moved to areas where wages and benefits are lower. Increases in manufacturing pay are struggling to keep pace with the influx of jobs to fill.

Experts note that these hurdles are not insurmountable, and several strategies are already yielding progress. As the cost of doing business abroad continues to rise, manufacturers are heading home to take advantage of lower costs, more efficient logistics, stronger protections for intellectual property and a boost to their brands. Job opportunities abound for employees with the technical skills and problem-solving ability to operate and maintain high-tech equipment and engineer new products. By collaborating to offer educational programs and apprenticeships, leaders in business and government can grow the skilled workforce to keep pace with the rapid growth projected for the manufacturing sector for years to come.

This article originally appeared in BDO USA, LLP’s “Manufacturing & Distribution” newsletter (Summer 2016). Copyright © 2016 BDO USA, LLP. All rights reserved. www.bdo.com