Make sure to do your research, when selecting your financial advisors

 Here at Hinkle + Landers, PC, one of the Albuquerque accounting firms; we stay up to date on news that has an impact on our community.  By keeping current on settlements and awards regarding fraud that affect members of our community, we are able to remain vigilant regarding potential risks to our clients. Investor risk is not only relevant to individuals, but also any size organization.  Many organizations rely on financial advisors, investment firms, or Foundations to manage their investments.  These investments usually make up a significant portion of the organizations assets.  As a result, due diligence regarding the person who is in charge of investing the organization’s money, can make all the difference.

Recently a hedge fund manager, Matthew Sample settled a federal lawsuit, where he was accused of defrauding five investors, two of whom were from New Mexico.  The lawsuit accused him of raising $1 million from the investors over a 3 year period.  Of that million about $500,000 was actually traded, and the remaining money was used for his personal use, or to pay other investors.  The New Mexico investors invested over $700,000 with Mr. Sample and when they requested to withdraw $500,000 from their funds, Mr. Sample gave multiple excuses as to why their money was not available. 

Although this news story relates to defrauded individuals, Albuquerque accounting firms, such as Hinkle + Landers, pass this news and others like it on to our non-profit organization clients.  Since many of our clients are involved with financial advisors and Foundations, we cannot over emphasize the importance of researching who is in charge of investing their money once they outsource that responsibility. When one of our clients is deciding whether or not to change financial advisors or Foundations, we encourage them to reach out to us, and in turn we reach out to other Albuquerque accounting firms, and see if the potential advisor or Foundation is working with other non-profit organizations, and what their reputation is.  We strive to work with our clients in order to prevent any misuses of their money, and stay ahead of anyone trying to defraud them out of their hard earned assets.

Firm Profile:  Hinkle + Landers, CPAs is one of Albuquerque New Mexico’s leading accounting firms.  Hinkle + Landers, CPAs has been operating for over 40 years in Albuquerque as well as all parts of New Mexico.  Hinkle + Landers, CPAs also provides audit, fraud and forensic accounting services as well as tax preparation and bookkeeping in Albuquerque New Mexico.

Business Valuation Methods

Some Basics on Value Measurements

As one of the top Albuquerque accounting firms, we find ourselves often confronted with questions of valuation. The different ways the IRS and other authorities value various assets are not always consistent.  Valuation professionals decide which measurement to use for a business valuation from various authoritative standards including court orders, case law, administrative law, or statutes of states or federal laws. A company’s documents, buy-sell agreements, articles of incorporation, or the like might also specify the method to use. The valuator may also use professional judgment in making this decision. Because of this, a valuation professional who is qualified and experienced is important when choosing one to hire. It can make a difference in whether or not evidence is accepted in court.

The most commonly used measurement of value is fair market value.  If you are trying to value a business interest for gift or estate tax, this is what you will probably use. Other valuation methods may include investment value, intrinsic value, or some other standard.  According to the IRS, fair market value is defined as, “the price at which the property would change hands between a hypothetical buyer and seller who have reasonable knowledge of the relevant facts and are under no compulsion to enter into the transaction.”

Fair market value is the price for which an exchange would likely happen if transacted on the valuation date. Fair market value is the value for the best use of that property on that date, considering all uses available realistically. This amount does not change regardless of the use chosen for the property.

Valuation methods can be complicated without the proper skills.  We, as an Albuquerque accounting firm with years of experience can help shed some light on this issue.

Firm Profile:  Hinkle + Landers, CPAs is one of Albuquerque New Mexico’s leading accounting firms.  Hinkle + Landers, CPAs has been operating for over 40 years in Albuquerque as well as all parts of New Mexico.  Hinkle + Landers, CPAs also provides audit, fraud and forensic accounting services as well as tax preparation and bookkeeping in Albuquerque New Mexico.

Sara Heppler is a Staff Accountant at Hinkle + Landers, PC 

Hinkle + Landers, PC, one of the leading Albuquerque CPAs and accounting firms, stays up to date on news that has an impact on the accounting industry and our community. The Previous blog is by Sara Heppler, a staff accountant of Hinkle + Landers, PC on things for business valution methods or business consulting to consider when accounting in Albuquerque.

Whistleblower Policy for Your Non-Profit Organization

According to the Association of Certified Fraud Examiners’ (ACFE) 2012 Report to the Nations, only 3% of fraud is detected during an independent audit. This same report found that 34% of workplace fraud is exposed by tips from employees, directors, members and volunteers.

These statistics emphasize the importance of having a formal policy that encourages people in or around the organization to report their concerns without fear of retaliation. This formal policy is referred to as a ‘whistleblower’ policy. Below are several items to consider in the adoption of a whistleblower policy for your non-profit organization.

- Have a policy that clearly communicates that retaliation taken against a whistleblower is not acceptable. The policy should include actions that will be taken in case of retaliatory action against a whistleblower, including termination of the offending employee.

- A whistle-blower policy should designate responsible individuals within the organization to receive and respond to tips. Response to fraud tips should involve both members of management and the governing body.

- The investigation should ensure the fair treatment and anonymity of the whistleblower during the investigation. If necessary, hire an external investigator such as a Certified Fraud Examiner or any other resource deemed necessary to conduct a full and complete investigation of the allegations.

- If a fraud tip is verified via an investigation, the organization should take timely action. Put the responsible individual(s) on leave or terminate them, based on consultation with your attorney. File a report with the local law enforcement agency. Inform oversight agencies for funding sources affected by the fraud.

- A whistleblower policy should require that tips are made in good faith and have reasonable grounds for the accusation. The act of making allegations that prove to be unsubstantiated or are made maliciously should result in disciplinary action up to and including termination of employment.

- While the employee manual is an appropriate method to communicate the policy to employees, ensure other stakeholders are made aware of the policy as well.

- Employees and volunteers are more likely to report a concern in a timely manner if it is easy to report. Organizations can create an anonymous submission form on their website or outsource a hotline service.

Firm Profile:  Hinkle + Landers, CPAs is one of Albuquerque New Mexico’s leading accounting firms.  Hinkle + Landers, CPAs has been operating for over 40 years in Albuquerque as well as all parts of New Mexico.  Hinkle + Landers, CPAs also provides audit, fraud and forensic accounting services as well as tax preparation, bookkeeping and elder care in Albuquerque, New Mexico.

Hinkle + Landers, PC, one of the leading Albuquerque CPAs and accounting firms, stays up-to-date on news that has an impact the accounting industry and our community.  The previous is a blog by Maclen Enriquez, an Audit Manager of Hinkle + Landers, PC on things for non-profit accountants or non-profit organizations to consider when compiling a whistle blower policy.

Why Should I Hire a CPA?

I always get the question, “why should I hire a CPA; what does a CPA do that’s different than a bookkeeper or accountant or software?”

I recommend to people often about searching and finding a CPA firm that has bookkeepers and accountants on staff.  This way you have the best of all worlds.  The value of hiring the CPA firm with all three housed in one place I believe can be summarized in four top reasons.

First of all, CPA’s are licensed by a state, and must keep up-to-date with tax laws in order to maintain their license in the state. Accountants are not licensed. The CPA examination is, in my opinion, the most rigorous test for anyone who’s going to be licensed to study for and to take. That’s why you may have heard that CPA actually stands for “Can’t Pass Again” because there is so much subject matter packed into four parts of an exam just to qualify for a license; then there’s the classroom education required and the hours of experience required; not to mention the continuing professional education required to maintain the license.  The only way I can describe the whole process is by comparing it to jumping out an airplane without a parachute and having to figure out how to survive the landing because you know you get to jump out of the airplane ten thousand more times this week.

Second of all, while not all CPA’s specialize in taxes, almost all of them are more familiar with the tax laws than are accountants. Knowledge of the tax code is a huge part of the CPA’s licensing examination and many CPA’s take tax courses every year to keep up-to-date on the changes in the tax code. An accountant also may be able to prepare and sign your tax returns, but being an accountant does not provide assurance of certification, nor does it give them the ability to represent their clients before the IRS, even if this person signed your tax return. Accountants are classified as “unenrolled preparers” by the IRS.  Read more from the IRS on Understanding Tax Return Preparer Credentials.

Third of all, a bookkeeper post transactions into software, the accountant reviews the postings and analyzes financial reports, then the CPA does more detailed and thorough financial analysis to advise businesses and individuals on tax or financial matters. Although the designation of “CPA” does not mean that this individual is giving the best advice, a CPA is more prepared and puts his or her license on the line when providing this advice.

Fourth of all, a CPA is eligible to represent his or her clients before the IRS, while the accountant is not. Therefore, if you are paying a professional to prepare your tax return, then make sure this person has full authority to represent you in an audit and to execute any claims on your behalf. This representation is by far, in my opinion, the most critical need an individual or business has for hiring a CPA.

The bottom line is this, the accountant is going to do the daily work and complete tax returns, while the CPA can analyze that work, represent you before the IRS, and help you make more high-level business and tax decisions. Yes, the CPAs charge more; and you get what you pay for.

I’ll leave you with one of my quotes to ponder: “a bookkeeper is going to get you to the sports arena eating the food with the other tailgaters; the accountant will get you to the seats up in the press box eating with all the celebrities and dignitaries; and the CPA will get you down on the field interacting with the players and coaches and back to the locker room eating the catered food with everyone. You get to choose where you want to be and who you get to be with.”

Firm Profile:  Hinkle + Landers, CPAs is one of Albuquerque, New Mexico’s leading accounting firms.  Hinkle + Landers, CPAs has been operating for over 40 years in Albuquerque as well as all parts of New Mexico.  Hinkle + Landers, CPAs also provides audit, fraud and forensic accounting services as well as tax preparation, bookkeeping and elder care in Albuquerque, New Mexico.