June 2008 Newsletter
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Offshore Forensic Data Capture
Recently we had a client that needed help in gaining access to a computer in a remote location, about 90 miles offshore to be precise. They needed to perform a surprise inspection on a platform computer that was at the center of a major investigation but did not want the liability of placing a technical consultant in harms way
Once they learned about Paul Price’s maritime experience with the U.S. Coast Guard and his law enforcement background, they quickly granted permission to travel to the platform and conduct the inspection. The client had the confidence they needed that Paul would be able to effectively manage in a hazardous environment. The forensic collection and preservation of the target data was successfully performed.
CPAs must undertake business valuations generally in accordance with the AICPA’s Statement on Standards for Valuation Services (SSVS). A Calculation Engagement under the SSVS presents a useful alternative to Valuation Conclusion engagements for CPAs, particularly with clients facing significant time or budget constraints.
Rather than a Conclusion of Value, a Calculation Engagement culminates in a Calculated Value expressed in a Calculation Report. The Calculated Value results from a less comprehensive analysis, with the client and the valuation analyst agreeing to limit the analysis to specific valuation methods and decide on the extent of procedures beforehand.
By virtue of being a faster, less exploratory process, the Calculation Engagement has important limitations. The resulting Calculated Value is based on more sweeping assumptions, and will not be as robust in the face of materially significant unknowns.
However, because of the less thorough analysis involved, a valuation analyst can execute a Calculation Engagement much more quickly and at lower cost than a Valuation Engagement. It is a useful tool for CPAs with sophisticated clients who can manage the inherent uncertainty of the process arising from time or budget constraints.
Make Use of the AICPA’s International Glossary of Business Valuation Terms
In order to "enhance and sustain the quality" of services rendered by business valuation professionals, the AICPA offers a comprehensive International Glossary of Business Valuation Terms. This list defines and references alternatives for over 120 terms common in business valuation and calculation engagements.
The glossary has been jointly adopted by the American Society of Appraisers, the Canadian Institute of Chartered Business Valuators, the National Association of Certified Valuation Analysts, and The Institute of Business Appraisers in addition to AICPA to ensure clear communication and smooth functioning among the comprehensive body of professionals.
The glossary is published online at International Glossary of Business Valuation Terms. It is also included as an appendix to the Statement on Standards for Valuation Services, pages 40 through 50.
International ACH Payments
Automated clearing house (ACH) is the name of an electronic nationwide network for processing batch-oriented financial transactions. ACH payments are not the same as wire transfers. All wire transfers are processed by the Federal Reserve, are typically processed within a day and are final once funds are sent. ACH payments are processed by both the Federal Reserve and the Electronic Payments Network (the only private sector ACH processor), can take a couple of days to process and can be reversed if authorization/validation of the transaction becomes an issue. ACH payments include:
- Direct deposit of payroll, Social Security and other government benefits and tax refunds;
- Direct payment of consumer bills such as mortgages, loans, utility bills and insurance premiums;
- Business-to-business payments;
- E-commerce payments;
- Federal, state and local tax payments
Effective March 20, 2009, every ACH payment entering or exiting the U.S. will be identified and formatted as an international ACH transaction (IAT). The new rule will also require that IAT payments include the following data elements: 1) originator name, address, account number; 2) originator’s depository institution name and payment amount; 3) receiver name, address, account number; and 4) the receiver’s financial institution.
On forensic accounting engagements with international ACH transactions, this will allow for more efficient and effective tracing of funds as one will be able to identify valuable information regarding both the receiver and originator of the subject payments.
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