CFO Seminar. August 22, 2018 Metairie. assurance - consulting - tax - technology - pncpa.com

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1 CFO Seminar August 22, 2018 Metairie assurance - consulting - tax - technology - pncpa.com Postlethwaite & Netterville, A Professional Accounting Corporation

2 2 Agenda

3 Wayfair Update Gary Dressler assurance - consulting - tax - technology - pncpa.com Postlethwaite & Netterville, A Professional Accounting Corporation

4 4 Overview

5 How Did We Get Here?

6 6 History of Physical Presence

7 7 History of Physical Presence

8 8 Recent Nexus Developments

9 What s with Wayfair?

10 10 What s With Wayfair? Background Information

11 11 What s With Wayfair? Supreme Court Opinion

12 12 What s With Wayfair? Supreme Court Opinion

13 State Response to Wayfair

14 14 State Response to Wayfair

15 15 State Response to Wayfair By the Numbers

16 16 State Response to Wayfair Specific Examples

17 17 State Response to Wayfair Specific Examples

18 18 State Response to Wayfair Specific Examples

19 19 State Response to Wayfair Specific Examples

20 20 State Response to Wayfair Other Considerations

21 21 State Response to Wayfair Other Considerations

22 Next Steps After Wayfair

23 23 Next Steps After Wayfair

24 24 Next Steps After Wayfair

25 25 Next Steps After Wayfair

26 26 Next Steps After Wayfair

27 Questions or Comments 27

28 GAAP Update Cynthia Bankston, CPA CFE assurance - consulting - tax - technology - pncpa.com Postlethwaite & Netterville, A Professional Accounting Corporation

29 29 Agenda

30 The BIG Three

31 31

32 Revenue from Contracts

33 ASU s related to Revenue from Contracts (ASC 606) Public Effective Date Annual reporting periods beginning after December 15, 2017 Nonpublic Effective Date Annual reporting periods beginning after December 15, ASU ASU (amended by ASU ) ASU ASU ASU ASU Description Revenue from Contracts With Customers Revenue from Contracts with Customers: Principal versus Agent Considerations Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients Other Income Gains and Losses from the Derecognition of Nonfinancial Assets

34 Revenue Recognition - applicability Applies to all contracts with customers, except: Lease contracts Insurance contracts Financial instruments Guarantees Non-monetary exchanges in the same line of business to facilitate sales to customers 34

35 Revenue Recognition - core principles The Core Principle, cited in the standard, is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Principles-based approach that will require lots of judgment. 35

36 Revenue Recognition - core principles The Core Principle is broken down into 5 steps: Step 1: Identify the contract(s) with the customer 36

37 Revenue Recognition - core principles The Core Principle is broken down into 5 steps: Step 1: Identify the contract(s) with the customer Step 2: Identify the performance obligations in the contract 37

38 Revenue Recognition - core principles The Core Principle is broken down into 5 steps: Step 1: Identify the contract(s) with the customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price 38

39 Revenue Recognition - core principles The Core Principle is broken down into 5 steps: Step 1: Identify the contract(s) with the customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract 39

40 Revenue Recognition - core principles The Core Principle is broken down into 5 steps: Step 1: Identify the contract(s) with the customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation 40

41 41

42 Revenue Recognition - transition Retrospective presentation to all periods presented or by recognizing a cumulative effect to opening balance of retained earnings at the date of initial application If cumulative effect is selected, entity would have to include certain additional disclosures about the financial statement line items effect. 42

43 The New Lease Standard

44 ASU s related to New Lease Standard (ASC 842) Public Effective Date Calendar year-end public companies beginning after December 15, 2018 Nonpublic Effective Date Fiscal years beginning after December 15, 2019 ASU Description ASU Leases ASU ASU ASU Leases: Land Easement Practical Expedient for Transition to ASC 842 Codification Improvement to ASC 842, Leases Leases: Targeted Improvements 44

45 Definition of a Lease Previous US GAAP Definition New Definition under FASB ASC 842 An agreement conveying the right to use property, plant or equipment (land and/or depreciable assets) usually for a stated period of time A contract or part of a contract, that conveys the right to control the use of identified property, plant or equipment (an identified asset) for a period of time in exchange for consideration 45

46 46 Overview

47 47 Short-term Lease

48 48 Leasing Transactions

49 49 Lease Classification

50 50 Lease Classification

51 51 Lease Classification

52 52 Business Implications

53 53 Business Implications

54 54 Business Implications

55 Credit Losses ASU

56 Comparison to Existing Guidance Topic Scope Topic Scope ASC (FAS 5) ASC ASC ASC Contingencies-Loss Contingencies Receivables- Loans & Debt Securities Acquired with Deteriorated Credit Quality Receivables - Overall Investments- Debt Securities ASC ASC Financial Instruments Credit Losses- Amortized Cost (CECL) Financial Instruments Credit Losses AFS Debt Securities 56

57 Comparison of Current GAAP and CECL When is a Loss Recognized? How Much of a Loss is Recognized? What Information Set Used to Determine a Loss? Current GAAP When a loss is probable or incurred Recognize the amount of loss that has been incurred Past events & current conditions CECL No recognition threshold, updated at each reporting period Recognize the current estimate of cash flows not expected to be collected -Past events & current conditions -Reasonable & supportable expectations about the future 57

58 58 Credit Losses

59 59 Credit Losses, continued

60 60 Transition

61 61 Effective Dates, Calendar Year Institutions

62 Income Taxes: Balance Sheet Classification

63 63 ASU Income Taxes: Balance Sheet Classification of Deferred Taxes

64 Other Recently Issued Standards

65 Questions or Comments 65

66 Connecting the Dots: Jobs and Performance Helene Wall, SHRM-SCP assurance - consulting - tax - technology - pncpa.com Postlethwaite & Netterville, A Professional Accounting Corporation

67 67 Note

68 68 Agenda

69 69 Session Objective

70 Organizational Alignment

71 71 Defines Structure

72 72 Defines Relationships

73 73 Establishes Connectivity

74 Job Descriptions

75 75 I m Supposed to do WHAT?

76 76 Job Description: Value

77 77 Job Description: Process

78 78 Job Description: Process

79 Job Description: Content* 79 *Note: Sample is P&N standard template, content varies based on many factors.

80 Job Description: Content* 80 *Note: Sample is P&N standard template, content varies based on many factors.

81 Job Description: Content* 81 *Note: Sample is P&N standard template, content varies based on many factors.

82 Job Description: Content* 82 *Note: Sample is P&N standard template, content varies based on many factors.

83 83 Job Description: Don'ts

84 84 Job Description: Dos!

85 Feedback and Performance

86 86 PM: WHY????!

87 87 Feedback

88 88 Formal Performance Review

89 89 Areas of Struggle

90 90 Why Both Are Important

91 Connecting the Dots

92 Connection: Accountant Job Description Basic Requirement Documented proof of P&P development Maintains CPE related to GAAP Job Description Essential Duty Maintains accounting controls by preparing and recommending policies and procedures. Job Description Competencies Analytical Problem Solving Written Communication 92

93 Connection: Accountant Recruitment (Ad, Posting) Ability to provide proof of authored P&P design and implementation practices Ability to provide proof of last 3 years GAAP CPE Interview Tell me more about your process for ensuring controls as part of P&P development. Walk me through your sample Expense Reporting policy. Selection Candidate provided best examples of required knowledge, skill and abilities 93

94 Connection: Accountant Performance Concern - First 6 Months Feedback Ongoing Employee understands and can articulate and act on P&P steps but struggles with documenting content in a logical, easy to understand manner. Action: Enroll in online business writing course in next 30 days One-on-One communication with Supervisor to discuss progress with Essential Duties and Supervisor notes that CPE is behind schedule Assigned a Mentor and work is reviewed by peers for input Annual Performance Review - Progress Employee has shown marked improvement in P&P development and with continued effort should continue to perform well in this area 94

95 Connection: Accountant Post-Evaluation Event Feedback - Disciplinary Supervisor notes that no CPEs have been logged since hire Supervisor has received complaints about steps missing in certain accounting processes Supervisor addresses concerns, evidence ties to symptoms in prior discussions and evaluations Supervisor allows Employee to explain position, implements PIP with milestones and deadline Separation Employee continues to struggle with acceptable level of performance in the Essential Duty as noted in the documented meetings Employee is separated for poor performance 95

96 Next Steps 96

97 Take Action! 97

98 Questions or Comments? 98

99 Project Management Bowen Dennis assurance - consulting - tax - technology - pncpa.com Postlethwaite & Netterville, A Professional Accounting Corporation

100 100 Agenda

101 Time Waits for No One.

102 102 Project Management