Kevin Sickels, CPA to Support Gillette Office of Ketel Thorstenson, LLP
Kevin Sickels, CPA, Partner with Ketel Thorstenson, LLP (KTLLP) has moved to the new Gillette location. Todd Hoese, CPA, LLC in Gillette, WY and Ketel Thorstenson, LLP in Rapid City, SD announced a merger that took effect on November 1, 2018. The combined firm is operating as Ketel Thorstenson, LLP.
Kevin has moved from Rapid City to Gillette in an effort to help service the clients around that location. This merger will provide clients in Wyoming a wider array of services through more depth of expertise. The firm’s services include: audit and review services, tax planning and return preparation, bookkeeping, QuickBooks, payroll, business valuation and projections, litigation support services, fraud support services, business consulting, gift and estate planning, and more.
Kevin is a graduate of Midland University and has been with the firm since 2006. Kevin’s many years of experience in tax return preparation and planning enable him to provide excellent service for individuals and businesses. He also has significant experience in software support, manufacturing, retail, construction, and the healthcare/medical industries. Kevin has been the head of the tax department for the last two years and helped lead the firm through the changes related to the Tax Cuts and Jobs Act. He is a member of the American Institute of Certified Public Accountants (AICPA) and is licensed in both South Dakota and Wyoming.
Ketel Thorstenson, LLP began its professional practice in Rapid City in 1936. The firm has grown by merger or acquisition with over 12 smaller practices in the Black Hills region since that time, and currently has over 100 employees and 17 partners.
The Gillette office address and phone remain the same, 305 S. Garner Lake Rd., Ste. A, Gillette, WY, (307) 685-4433. Kevin Sickels can be contacted there. KTLLP also has offices in Rapid City, Custer and Spearfish, South Dakota.
Ketel Thorstenson, LLP and Todd Hoese, CPA, LLC Merge to Expand Service Offerings
Todd Hoese, CPA, LLC in Gillette, WY and Ketel Thorstenson, LLP (KTLLP) in Rapid City, SD are pleased to announce a merger, which will take effect on November 1, 2018. The combined firm will operate as Ketel Thorstenson, LLP.
This merger will provide clients in Wyoming and South Dakota a wider array of services through more depth of expertise. The firm’s services include: audit and review services, tax planning and return preparation, bookkeeping, QuickBooks, payroll, business valuation and projections, litigation support services, fraud support services, business consulting, gift and estate planning, and more.
Todd Hoese has been serving hundreds of individuals and businesses in the Gillette area since 1996. Todd will join the KTLLP partner group, and will continue serving Gillette clients with the current staff. Ketel Thorstenson, LLP began its professional practice in Rapid City in 1936. The firm has grown by merger or acquisition with over 12 smaller practices in the Black Hills region since that time, and currently has over 100 employees and 16 partners.
“We are proud of our longevity, thankful for all of our clients who are our friends, and look forward to many more years of continued growth to serve the bi-state market,” said Denise Webster, Managing Partner with KTLLP.
“Ketel Thorstenson, LLP shares the same values we do. We both have a proud tradition of excellent service and a friendly client environment,” said Todd Hoese, former owner of Todd Hoese, CPA, LLC and now partner with KTLLP.
An Open House is planned for November 1, 2018 at the Ava Arts Center (509 W 2nd Street) from 4 to 6 p.m. Food and beverages will be provided.
The merged firm will keep the same office, address and phone, 305 S. Garner Lake Rd., Ste. A Gillette, WY, (307) 685-4433. KTLLP also has offices in Rapid City, Custer and Spearfish, South Dakota.
How Has the Tax Cuts and Jobs Act Affected the Affordable Care Act?
Since the Affordable Care Act (ACA) was passed, there has always been confusion: who needs coverage and who is exempt, how much and when are penalties imposed, and what are the employer’s responsibilities? To make matters more complicated, the Tax Cuts and Jobs Act (TCJA) included a modification to ACA that many people may easily misinterpret or completely miss in light of the numerous other changes.
The goal of the ACA was to ensure all individuals and their dependents have access to minimum essential coverage that is “affordable” to them. This could be obtained through their employer, the Healthcare Marketplace, or directly through insurance agencies. If someone did not have qualified coverage and did not meet an exemption such as a short gap in coverage or they were under the poverty threshold, they would face a penalty. The penalty itself was a confusing calculation. Essentially the penalty was the greater of a) $695 for each adult per year (1/2 that for each dependent) or b) 2.5% of the taxpayer’s household income over a threshold amount.
There are two major changes in the TCJA that affect the ACA. First, the penalty explained above is permanently repealed effective January 1, 2019. This essentially makes obtaining health insurance coverage a voluntary action as there is no longer a penalty associated with not being covered. Second, for the first time since the ACA was enacted, the IRS is now requiring taxpayers to specifically state they had minimum essential coverage. In prior years, this portion of your return could be left blank without repercussions. Starting January 1, 2018, this must be disclosed or the tax return could be rejected and the taxpayer may be assessed the individual mandate penalty.
Since this is not effective until 2019, you must maintain coverage for yourself and your dependents if you do not qualify for an exemption listed in the ACA, or face a penalty. Further, the ACA itself is not repealed, only the penalty associated with minimum essential coverage has been. Two important conclusions from that are 1) the Marketplace and the premium tax credits are still available if you qualify and 2) none of the requirements for employers have changed. Employers with more than 50 full-time equivalent employees are still required to offer affordable minimum essential coverage and meet reporting requirements such as 1095-B and 1094/1095-C. Failure to do so will result in penalties to the employer that have not been repealed.
For further answers to your questions, don’t hesitate to contact the Tax Team at KTLLP.
The Child and Dependent Care Tax Credit and the Child Tax Credit
Are child/dependent care costs 100% deductible?
I was recently meeting with a new client to gather their information to prepare their individual tax return, and we came across child care expenses. The client asked, “Are these costs fully deductible on my tax return? Do I also get the Child Tax Credit?” My response was, “Sorry they are never deductible, but there are fantastic tax credits.” The Child Tax Credit and the Child and Dependent Care Tax Credit are two different credits. The Child Tax Credit can only be claimed on a minor dependent child under age 17. The Child and Dependent Care Tax Credit applies when you are paying for care for someone under the age of 13 or a spouse, or a dependent whom is unable to care for themselves.
Please note these are tax credits, not tax deductions. A tax credit reduces your tax bill dollar for dollar, which makes it more beneficial.
To claim the child and dependent care tax credit, you must meet all of the following tests:
Qualifying Person Test: A qualifying child under age 13 or a person physically or mentally unable to care for oneself.
Earned Income Test: The taxpayer must have earned income during the year. If filing a joint return, both taxpayers must have earned income.
Work-Related Expense Test: The expenses were used to allow you to work or look for work.
Payment Test: You must be making the child/dependent care payments.
Provider Identification Test: You must provide the name address and taxpayer identification number for the care provider.
Joint Return Test: Your filing status must be single, head of household, qualifying widower. If you’re married you must file a joint return.
How to figure the Child and Dependent Care Credit?
There is a dollar limit for the amount of child and dependent care costs that are eligible for the credit. If you have only one child/dependent, the most you can claim is $3,000, and for two or more children/dependents the maximum amount is $6,000.
Your credit can range from 20% to 35% of your allowable costs. If your adjusted gross income is below $15,000, your allowable costs are multiplied by 35%, while if you are on the top end of the chart with income above $43,000, then your allowable costs are multiplied by 20%. There is no phase-out above the 20% threshold, which means high-income taxpayers are still eligible.
The Child Tax Credit has different rules. To claim this credit, the IRS has six requirements:
Qualifying Person Test: The child/dependent must meet the definition of a qualifying child.
Age Test: Was the child under age 17 by 12/31?
Support Test: Did you pay for over half the support for the year.
Residence Test: Did the child live with you for over half the year?
Dependent Test: Is the dependent claimed on your tax return?
Citizen Test: Was the child a US citizen?
How to figure the Child Tax Credit?
New for 2018: The credit has increased to $2,000 per qualifying child, and the refundable portion is $1,400. The AGI income-phase outs have also increased to $200,000 filing single and $400,000 for married filing joint. This will mean that more taxpayers will be able to apply these credits than ever before.
New for 2018 is a $500 nonrefundable credit for certain non-child dependents, and children who do not qualify for the $2,000 child tax credit because they are over 16 years old. As you can see while these two credits sound similar, they are very different, and that can cause some confusion. If you have questions or would like to sit down to discuss your particular situation, please contact a KTLLP professional
What is a Bank Reconciliation and Why is it Important?
Do you know what is really in your bank account? Do you know within days if a customer’s check bounced? Do you confirm that the teller is depositing your money into the correct business bank account? My theory is to trust, but verify with the process of reconciliation.
Reconciling is a way to compare bank records to your records. This process should be done at least monthly and may be done on a weekly or daily basis if needed.
To reconcile your bank account in QuickBooks, from the task bar click on banking, reconcile, and choose the bank account, statement date, and ending balance. Look at each transaction. If the transaction matches both the QuickBooks file and bank statement, click the item in QuickBooks and use a highlighter to mark the item on the bank statement. Do this process for each deposit and each check/withdrawal. After marking off each item, the difference between the cleared balance and ending balance should be zero. The difference is shown in the bottom righthand corner of the reconcile screen in QuickBooks.
If there is a discrepancy, first look at the total deposits and total checks to see if the totals match the totals on the bank statement. This will help you narrow your search instead of looking back through each item again. Then, find which item(s) needs to be adjusted and why. This could be due to a number of reasons such as a typo, bank error, duplicate entry, or even fraud. After determining the reason for the discrepancy, you can edit the item or enter a journal entry to make the difference between your ending balance and cleared balance zero.
Reconciling the bank account is important for producing accurate and up-to-date financial statements, sales tax returns, quarterly payroll reports, and annual tax returns. It is normal to see minor differences due to the timing of outstanding checks and deposits, but you should be able to explain each outstanding item easily. This same process should also be applied to your credit card statements.
Adding bank reconciliations to your accounting routine will not only improve the accuracy of your financial statements but better assist in evaluating the cash flow of your business. Call the KTLLP QuickBooks ProAdvisor Team with any questions.
Almost every business produces Unclaimed Property. If steps haven’t been taken to identify, notify, report, and remit on an annual basis – now is a good time to start. The cost of noncompliance may be steep and result in a higher risk of being audited.
What is Unclaimed Property? Unclaimed property include the financial assets in a business’ possession that belong to another business or individual. Examples include uncashed checks (including payroll), refunds and credits, inactive bank accounts, insurance proceeds, safe deposit box contents, and utility deposits.
How Does Property Become Unclaimed? There are many ways in which property could become unclaimed. It might be due to a terminated employee forgetting to pick up the final check, an employee or vendor change of address, or because the owner simply did not know about the property.
Reporting and Deadlines There are five simple steps to ensure compliance:
Review records regularly
Make a reasonable effort to contact the Owner
Prepare the report
Submit the report and remit
Retain records
Review Records Regularly The easiest way to consistently identify outstanding payables is to review the bank reconciliation on a monthly basis, research the outstanding checks, and document the adjustments.
When researching, the goal is to determine the date of last contact or activity for each customer account or outstanding amount owed to a client, customer, vendor or employee. Once the research is complete, the next step is determining if the property is considered unclaimed.
Property is Unclaimed if both of the following are true:
The property has been uncashed for 1-3 years
There has been no contact with the Owner during the 1-3 year abandonment period
Property Categories
Number of Years Dormant
Wages/Commissions
1
Utility Deposits/Refunds
1
Safe Deposit Boxes
3
Checking/Savings Accounts
3
Traveler’s Checks
15
South Dakota Unclaimed Dormancy Matrix (Excerpt) The complete Dormancy Table is located on the Unclaimed Property Division’s website under Reporting Guidelines. However, this is only a guide. Refer to the Unclaimed Property law (SD43-41B) when reporting.
Make a Reasonable Effort to Contact the Owner Before reporting and remittance, due diligence should be exercised in efforts made to notify and return the property to the owner. Notices are to be sent no less than 60 days prior to reporting. The requirement of due diligence only applies to amounts of $50 or more – the State does not have a minimum for the requirement to report. If these attempts do not produce any activity or claim, the property should then be reported to the State.
What to include in the notification(s):
Statement/Identification of property being held.
Information regarding change of address/name of the Holder (if applicable).
Statement the property will be transferred to the state.
Letters must be sent no less than 60 days prior to transfer.
If the Owner of the property establishes activity or claim prior to the property being remitted, the Unclaimed Property Division must be notified.
Preparing the Report All property not previously reported to the Unclaimed Property Division and unclaimed for the applicable period of dormancy should be included in the report. Holders are required to report all available Owner information – including last known address, the date last contacted, and a description of the property. Submitting as much information as possible will reduce the need for further contact by the state.
Submitting Report and Remittance Property reports must be submitted to the Unclaimed Property Division via a secure file transfer portal in the NAUPA format via the Unclaimed Property Division’s website under Submit a Report. A PDF copy of the NAUPA Standard Electronic File Format can be found on the NAUPA website under Reporting. Holders failing to submit a report will be subject to a penalty.
Retain Records A record of the name and last known address of the Owner must be maintained for ten years after the property becomes reportable. If audited, and this information is unavailable, penalties may be incurred.
Voluntary Disclosure The State offers a Voluntary Disclosure Program for those who haven’t been compliant or who have discovered unclaimed property which should have been reported. This program provides a way to report those over-looked properties – without penalty or interest. Further details regarding this program are available on the Unclaimed Property Division’s website under Reporting Guidelines.
Government and Public Entities Government and Public entities have some differing guidelines. The Public Entities Reporting Manual is available in digital form on the Unclaimed Property Division’s website under Reporting Guidelines.
As business owners, you are busy bringing in new customers, taking care of existing customers, grooming employees, managing inventory, analyzing financials and the list goes on. When do you take the time to focus on succession planning, your 5, 10, or 20 year plan, expanding to a new location or developing a new product or service? Being a responsible business owner means you must pay attention to all of the day-to-day details, but it also means that you need to ensure the long-term health of your company.
When do you talk with your partners about what happens should the “proverbial bus” hit one of you? My intent is not to scare you! However, to be honest, my intent might be to make you a little uncomfortable if you have not (a) thought about it, (b) discussed it with your partner(s), or (c) worked with your attorney to create a document that outlines all aspects of what you wish to occur should one of you becomes disabled or dies.
If you already have a buy-sell agreement in place, kudos to you! However, I caution you from simply “checking the box” that you have an agreement. If it has been more than five years since you and your partner(s) have reviewed the agreement, and certainly if it has been more than ten years, it is time to pull it out of the file cabinet, brush the dust off it, and ensure ALL components are still applicable.
A buy-sell agreement outlines the steps that will be taken if an owner leaves the business, sells his/her shares, retires, or passes away, for example. These are called “triggering events.” It is a contract among shareholders that determines what happens to the business equity using previously determined understanding among the owners. The objective is to create a document that is well thought out and very specifically outlines a set of instructions of what to do when triggering event occurs. The whole point of having a buy-sell agreement is to prevent misunderstandings and keep you OUT of court! It is not the time to be vague! The agreement should not need interpretation. If the language is vague and you find yourself in court against your partner, it doesn’t matter what your intent was. The judge or the jury will decide how things will happen. Do YOU want to decide or do you want a JUDGE to decide?
Your skilled attorney will assist you with overall agreement including specifics of the transactions in the occurrence of a triggering event. That is his/her area of expertise. Work with a skilled and credentialed valuation analyst to determine the price of the stock when the triggering event occurs. The agreement can incorporate a formula to determine the stock price or it can simply state that a qualified business appraiser will determine price. Because appraisers employ significant judgment, I have seen agreements call for appraisals from two different business appraisers, of which their concluded values will be averaged. While this is an option, it may be too expensive for your situation.
Tip: Work with a skilled attorney who will listen to your wishes and concerns.
In my next article, I will outline options for determining stock price in the occurrence of a triggering event and components of value that need to be considered and outlined in a buy-sell agreement. Please stay tuned for my next article outlining more detailed information of buy-sell agreements from a business appraiser’s perspective!
Lunch and Learn Series Closes Out with Session on Opportunity Zones
Part of the mission for Ketel Thorstenson, LLP (KTLLP) is offering continuing education on all aspects of the accounting industry for the community at large. The popular Lunch and Learn series closes out its season with a session on Opportunity Zones on October 2 from noon to 1 p.m.
Opportunity Zones are a new tax incentive coming from the Tax Cuts and Jobs Act (TCJA). These zones were created with the intent to connect private investment capital to economically distressed communities. Over 8,700 opportunity zones have been designated and spread across all 50 states, with some opportunity zones located in downtown Rapid City.
Opportunity Zones are a mechanism through which investors with capital gain tax liabilities can invest in Qualified Opportunity Funds (QO Fund) to receive preferential tax treatment. These funds can be used to make real estate investments and to purchase equity in businesses. Investors have the possibility to defer all gains from the sale of any property, possible reduce the amount of gain recognized and in many instances to permanently exclude the appreciable gain in a QO Fund from taxation.
“The primary attraction for investing in Opportunity Zones is deferring and lowering federal taxes on capital gains. Opportunity zones in Western South Dakota give local individuals with capital gains an outlet to defer and reduce those gains,” said Jess Weaver, CPA, Senior Manager with KTLLP.
The presenters will be Nina Braun, CPA, CFE, Partner, and Jess Weaver. The session will be held at the KTLLP Rapid City office at 810 Quincy Street from noon-1 p.m. There is a $5 fee, which includes lunch. Seating is limited. Please RSVP by Sept. 26 to [email protected] or call 605-716-3284.
Ketel Thorstenson, LLP is a full-service firm with 16 partners, over 60 Certified Public Accountants, and offices in Rapid City, Custer, and Spearfish, SD. KTLLP has a rich history, serving clients since 1936 and a depth of knowledge and experience that clients rely on and trust. The firm offers a variety of services including tax planning and return preparation, audit services, QuickBooks support, Xero support, bookkeeping, payroll, business valuation, business consulting and estate planning.
As the end of the year approaches, nonprofit organizations have many items to plan for the new year. One of these items may be replacing members of its governing board. Often times, the strength and operational success of a nonprofit organization depends on the engagement, devotion, and knowledge of its board of directors. As such, it is extremely important for nonprofit organizations to plan for board succession. What should a nonprofit organization look for in new board members? How does a nonprofit organization solicit new board members?
In looking for new board members, an organization should first consider the size of their organization and the time commitment required. Organizations should only consider new board members who will have the ability to complete the obligations to the board. The organization should properly communicate the requirements of serving on the board to prospective board members to eliminate the possibility of board members not meeting expectations.
The type of board positions should also be considered. For example, if a treasurer position on the board is opening, organizations should look for candidates who have a financial background. Organizations may also benefit from candidates who have past experience serving on other nonprofit boards or those who have industry experience in the organization’s area of operations. Organizations should start by asking what does the nonprofit need to advance its mission right now and in the future? A board member with financial expertise? Connections in the community? Someone familiar with the individuals served by the nonprofit?
After considering the type of candidate the board is looking for, the next path is soliciting new members. Resources from existing board members is an obvious first step an organization can take. Existing board members may have a friend or colleague who would make a great board member. If a specialized board member is needed, such as a treasurer, an organization may consider reaching out to area financial institutions, accounting firms, or investment advisors to see if they have anyone who may consider serving on the board. Another great source may be reaching out to the various professional networking organizations in the Black Hills region such as the Young Professionals Group, Leadership Rapid City, or BNI International.
Current volunteers of an organization may also make good board members. They know the organization and are already loyal to the cause. Not all volunteers want to serve on a board, but others may cherish the opportunity of serving as a board member. Board members who have volunteer experience with an organization are extremely valuable. They know how the organization runs and can bring a realistic viewpoint to board meetings where other members may have only a rough idea of how things work.
Some nonprofits may have a governance committee, or a group of management and board members who are responsible for identifying and evaluating potential board members. The governance committee will monitor board members meeting term limits, be watchful for prospective board members and recruit new members. This group can also be responsible for properly training new board members.
The recruitment process requires both screening a candidate and creating interest of a potential future board member until he or she is ready to accept an invitation to become an ambassador and advocate for the nonprofit. The board of directors serve as governance of a nonprofit organization and ultimately are responsible for the oversight of operations. Being a board member is a very serious commitment and one which should be carefully considered.
For additional information, please contact any of Ketel Thorstenson’s nonprofit experts.
Audit Preparation Series: The End Stages of Your Audit and Issuing Final Reports
In our previous “Audit Preparation Series: How to Prepare for Your Audit” article, we discussed the necessary steps to prepare for your audit and what happens during the audit fieldwork. Now that audit fieldwork is over, we move into the stages of wrapping up the audit process and issuing final reports. This article will focus on what to expect during this stage.
At the end of your audit week, I highly recommend that you sit down with your auditor and have a discussion on fieldwork. How did fieldwork go? Is there anything we (both the auditor and auditee) can improve on to make the process better? Were there any significant issues encountered? How many items are still pending? When do pending items need to be received by the auditor in order to meet deadlines? Other items to follow up on are any confirmations yet to be received (i.e. debt confirmations, accounts receivable confirmations, attorney letters, etc.) If these items are still outstanding, final reports cannot be issued by the auditor.
Once all pending items are available, a timeline of when the draft can be expected should be discussed. It is ideal to work backwards when it comes to deadlines. You should allow yourself an adequate amount of time to review the final reports, and, if need be, schedule any necessary presentations (i.e. board of director meeting). For entities subject to the South Dakota Department of Legislative Audit’s (DLA) review of final reports, you will also need to factor in the time DLA will need to review and approve of any reports. During the review process, items may be encountered or requested to be changed on the final reports. Again, additional time will be needed for the auditor to make these changes. In summary, plan ahead and for adequate time between the end of the audit fieldwork, and the issuance of final reports.
Before a draft of the final reports are received, it is wise to discuss any new or different items which might be presented on the financial statements. It would also be wise to review new disclosure requirements. While in many cases an auditor prepares the financial statements, the financial statements in and of themselves are actually the responsibility of the auditee. If you do not have an understanding of an item presented, it is critical to ask your auditors in order to receive proper education on such items.
Along with the financial statements, additional reports can be issued in conjunction with the audit. The first report is a management letter. Management letters represent communication from auditors to key users of the financials (management, board of directors, etc.) regarding internal control deficiencies encountered in the audit along with the severity of the finding (a material weakness or significant deficiency). Management letters are not issued to outside users and are only for internal use. Organizations who have these letters issued have the option of including a response or corrective action plan, but these items are not included as the letters are simply to inform key individuals of internal control deficiencies found, the cause and effect of the deficiencies and recommendations from the auditors on how to correct the deficiencies.
If you are a governmental organization or subject to a single audit requirement, a form of the management letter discussed above is included in the financial statements and titled as the “Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards”. You might hear this referred to as the GAO report. Organizations subject to a single audit will also have an additional letter included in the financial statements titled as the “Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance”. You might hear this referred to as the Uniform Guidance report. The Uniform Guidance report addresses internal control deficiencies and compliance issues encountered specifically in regards to the single audit and major programs being audited. There are a few key points to the GAO letter and the Uniform Guidance report. 1.) These letters are included in the financial statements. 2.) These letters require a response and corrective action plan, written by the organization being audited, to be included in the audit. 3.) These letters lists the party responsible for the findings occurring (this could be the name of a specific member of management). Careful thought must go into addressing these items and written responses will need to be given to the auditor in order for the financial statements to be updated.
If audit reports are subject to board of director meeting approval, also strive to have drafts of audit reports issued to board members in advance so they can ask questions during that meeting. If a management letter, GAO letter, or Uniform Guidance letter is issued in conjunction with your audit, it is also wise for the board of directors to discuss the findings in detail and review any required responses and corrective action plans for approval.
Once the final drafts have been approved, there are a few final requirements before reports can be issued.
Your auditor will need to go through inquiries regarding any significant changes occurring after year end. If attorney letters were needed to be sent, follow up will need to take place between the auditor and your attorney, to ensure there are no changes. If applicable, the latest board of director minutes will need to be provided to your auditor. If anything significant is encountered, these items may need to be addressed in further audit procedures or as additional disclosures in the final reports.
A signed and dated representation letter will need to be provided to your auditor.
Of the two aforementioned items, the most confusion is generally on the representation letter. A representation letter is a letter drafted from you to your auditor verifying certain steps have been taken in order for us to have arrived at our audit conclusion. While this letter is technically from you to the auditors, we typically provide a draft of this to you for convenience purposes. Representations listed in this letter range from having provided all necessary information, certifying there were no undisclosed instances of fraud or noncompliance with laws and regulations, and that to the best of your knowledge, there were no significant items not properly accounted for. Along with the audit, is also a copy of the final audited trial balance, list of audit adjustments, list of unadjusted items, and any significant non-audit schedules we prepared for you, such as depreciation schedules. This letter should be carefully reviewed by you and must be both signed and dated by key individuals overseeing the audit in order for final reports to be issued.
After the final representation letter is received from the auditor, final reports can be issued. One important item to note on this: once your auditor has received the signed representation letter, we are under the assumption that no changes or additional adjustments are necessary. Before you sign and return the representation letter, be absolutely positive you are comfortable with the draft copies of reports issued to you. Once an auditor has issued a final report, we can not simply go back. Reissuance of an audit report is not as simple as changing the date and giving you new copies. Our professional standards dictate certain processes be taken in order to ensure previously issued reports are returned and end users are notified as to the reissuance of those reports. New drafts will need to be issued and the approval process, including the signed representation letter, will need to be performed again.
Final signed reports indicate the end of your audit. For organizations receiving federal grant dollars subject to a single audit, please keep in mind the submission of the data collection form to the federal clearinghouse are 30 days after the reports are received.
This is the last article in our audit preparation series. Hopefully you now have a better understanding of what an audit is, what assurance level you are obtaining in your audit, how to prepare for an audit and how to finish the process and receive your final end product- the final reports. We hope you have enjoyed these articles. Please contact our audit team to answer any questions you may have in the audit process.