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Accounting & Audit

The 3 Most Common Types of Credit Card Fraud and How to Prevent Them

By Accounting & Audit

Victims of credit card fraud have tripled since 2013, and recent data continues to assert that this number is on the rise. Our increasingly digital age has made the nature of technological transactions all too easy, however, it has been accompanied by more sophisticated ways of obtaining our personal information.

When was the last time you were asked to show a photo ID accompanying a transaction with a credit card? As identity verification becomes less strict, and the frequency of credit card usage in society becomes the most popular method of payment, our awareness of threats to our financial security is imperative.

In fact, 40% of all financial fraud can be traced back to credit cards, which equates to $5.5 billion of fraudulence on an annual basis. Below are some of the most common types of credit card fraud techniques, as well as tactics on how to combat them.

THE PROBLEM: Phishing & Vishing                                                           

Data breeches, in the form of phishing, retrieve financial data through fake emails. These emails typically prompt the employee to enter their company login so the hacker can access their information. A newer system, called vishing, involves calling the employee to gather information through the phone. The hacker will disclose that there is fraudulent activity occurring on their account and insist that they provide their credit card information for verification.

THE SOLUTION: Be alert.

Phishing emails often contain spelling errors. So, if “Omazon” is requesting your account information from you through email in exchange for a $10 credit, you’ll probably never see that voucher again and end up with mysterious transactions on your next statement. Don’t be afraid to use your firewall as a buffer between you and the hacker; in fact, having both a desktop and a network firewall can serve as double protection. Also, be wary of pop-up ads, and always click the “x” to exit the notification in the upper right-hand corner, as opposed to hitting the “Cancel” button.

 THE PROBLEM: Employee Refunding

Through the process of employee refunding, employees have the ability to wire refunds to their personal credit card instead of returning the money to the customer.

THE SOLUTION: Set the standard.

Including accountability in employees’ job description, and designing performance matrices based on ethical values is a preventative measure for combatting credit card fraud. Further, mandating the issuance of receipts to customers ensures all transactions are easily traceable should any discrepancies arise later. It is equally as important to consistently reconcile bank statements to ensure that nothing unusual is happening; should unusual transactions or unique reconciling items occur:  Investigate!

THE PROBLEM: Credit Card Cramming

Most individuals and businesses would not suspect fraudulent activity if it appeared in small amounts. This is the mindset that hackers have channeled through a method called cramming, where small, frequent transactions, ranging from $5-$50 are made on the card.

THE SOLUTION: Be skeptical.

Our eyes have been trained to identify large-scale activity when checking bank statements, when in fact, it is most effective to steal in small increments. Consumers often do not consider trivial transactions to be suspicious, but as this method of crime is on the rise, it is necessary that we evaluate all transactions with equal skepticism. Be sure to check your statements regularly. If you see an unknown transaction, notify your credit card company immediately – those $5 charges will start to add up.

Wanting to go the extra mile with credit card fraud prevention? Here are some quick and simple controls to ensure your account’s security:

  • Implement a segregation of duties plan for accountability purposes
  • Reconcile transactions daily
  • Spend big on a reliable malware and ransomware protection software
  • Archive any old data – do not leave it sitting on the server
  • Require a two-factor authentication when logging into any online banking or credit card accounts

Organizations fall victim to fraud most commonly due to the lack of a strong internal control system in place to prevent or detect such instances from occurring. For assistance in fraud prevention or detection, please contact Kristi Yanover, Audit Partner, at (858) 558-9200, or any member of our Accounting & Assurance Team.

Forensic Accounting; What’s All the Hype?

By Accounting & Audit

In recent years, the visibility of forensic accounting has increased, and has become a point of focus in the media, as well as pop culture. Typically, forensics is associated with criminal dramas and the process of working a crime scene. So, at first, it may seem odd to pair the word “forensic” with the word “accounting”. However, there are a wide array of forensic accounting services that Lindsay & Brownell can provide that can aid our clients in personal and business financial management, oversight, and operations.

L&B now provides forensic accounting and litigation support services to its clients. As the term “forensic” means suitable for use in a court of law, forensic accounting involves the use of accounting skills to investigate fraud or embezzlement and to analyze financial information for use in legal proceedings.

Forensic accounting is similar to auditing in that forensic accountants evaluate the accuracy and validity of financial information connected to a legal case. We possess the ability to analyze and interpret relevant financial statements and information and possess the essential traits and characteristics to assist clients with the resolution of legal issues.

Forensic services at L&B are divided into two subsets:

Fraud Investigation and Forensic Accounting Services:

  • Fraud prevention
  • Fraud risk assessments
  • Fraud investigations
  • Internal control analysis
  • Income restructuring
  • Expense analysis
  • Trust accounting
  • Partner or shareholder accounting

Litigation Support Services:

  • Asset tracing and characterization
  • Family law
  • Income calculation
  • Lost profits and damages analysis

Lindsay & Brownell’s forensic accounting services team can assist in a wide range of scenarios including financial investigations, business and marital dissolutions, and beneficiary accountings. These services can involve fraud and theft investigation, analysis of financial records, and quantification of economic loss or damages. Leveraging our professional training in this arena can assist in the understandability and clarity of financial records and transactions.

For additional information, please feel free to contact Kristi Yanover, Audit Partner, or Chris Lopez, Audit Senior Manager, at (858) 558-9200, as we would be happy to assist you.

Fending off Fraud in your Nonprofit Organization

By Accounting & AuditNo Comments

Average losses resulting from different types of fraud range from two-hundred thousand dollars to one million dollars per case. Protect your organization from potential losses by learning about the most common fraud schemes that affect nonprofit organizations.

Financial fraud can be divided into three main categories that commonly overlap: asset misappropriation, corruption, and financial reporting fraud.

Asset misappropriation is the theft of assets. Below are the most common asset misappropriation schemes that affect nonprofits:

  • Skimming: The act of stealing cash before it is inputted into the accounting system. This “off-book technique can involve unrecorded contributions, understated contributions, theft of incoming checks, and swapping checks for cash. This fraud scheme is pertinent for organizations with a large-volunteer base that may collect funds on the organization’s behalf.
  • Lapping: A method of concealing cash theft by an employee by diverting cash from one customer or donor, in the case of nonprofit organizations, to cover the receipt from another donor. Often called “robbing Peter to pay Paul,” this process repeats numerous times, covering each account with a subsequent payment. Lapping methods are often found as cover-ups of skimming schemes.
  • Expense Reimbursement Fraud: Most generally involves employees submitting inflated expenses for reimbursement. This is commonly seen in relation to travel and entertainment expenses.
  • Fictitious Disbursements: Sham disbursement schemes include, but are not limited to the following: multiple payments to the same payee, ghost employees on payroll, inflated invoices, shell companies and/or fictitious persons, and bogus claims.
  • Checking Tampering: The act of creating phony checks to make fraudulent disbursements from an organization. Common check tampering schemes include altered payee, forged endorser, and forged maker fraud.
  • Paper Hanging: A type of checking tampering fraud in which the perpetrator deliberately uses a closed account to write fraudulent checks.
  • Data Breaches: A method of stealing intangible assets, such as personnel information, from an organization through a multitude of approaches, such as computer viruses, computer worms, trojan horses, backdoors, and malware.

Corruption is the misuse of a position for personal gain. The most common examples of corruption are conflicts of interests involving contributions and distributions, bribery, illegal gratuities, and economic extortion.

Financial reporting fraud results in the highest median losses as it usually involves executive-level members of an organization who have access to the organization’s funds and resources. Financial statement fraud can be defined by “the three M’s”:

  • Manipulation and falsification of accounting records
  • Misrepresentation or intentional omission in the financial statements
  • Misapplication of the accounting principles in an intentional manner

Organizations fall victim to fraud most commonly due to the lack of a strong internal control system in place to prevent or detect such instances from occurring. For assistance in fraud prevention or detection, please contact Kristi Yanover, Audit Partner, at (858) 558-9200, or any member of our Accounting & Assurance Team.

Preparing for an Audit: How to Create Efficiency

By Accounting & AuditNo Comments

Organize, don’t agonize! Preparing for an audit may seem like a daunting and time-consuming task, but following some key steps will result in an overall more efficient audit process!

The American Institute of Certified Public Accountants (the “AICPA”) provides a ten-step approach to a successful audit. As the AICPA is thorough in its descriptive listing of this approach, we will focus on some crucial steps in achieving a successful audit below.

According to the AICPA, the first step to a successful audit is: plan ahead. This means that your organization and accounting team should devote additional time during the year-end close process to adequately prepare for questions that may arise during audit fieldwork. One way to get ahead of the curve is to treat audit preparation as a year-long process. If schedules and reconciliations are maintained and kept up-to-date throughout the year, an organization can reduce the time it takes to prepare these schedules at year-end for the auditors.

Another step noted by the AICPA is: learn from the past. An organization should make note of any prior year audit adjustments, using these as an opportunity for improvement. By referencing these adjustments as a starting point for self-review, an organization can work towards ensuring similar errors do not repeat themselves during the subsequent year under audit.

Learning from the past leads into another step: perform a self-review. Once all year-end closing entries are made, take adequate time to review schedules and supporting workpapers to ensure amounts and balances agree throughout, and will reconcile to the trial balance. Another important aspect of self-review is to read and update the footnote disclosures to the financial statements. Throughout this process, be prepared to explain any financial statement line item variances from year-to-year to the auditors.

Your auditor will undoubtedly ask you to provide certain schedules and other supporting workpapers. This brings up another step recommended by the AICPA: ask questions. If your auditor requests an item that is unclear, ask for clarification prior to the start of fieldwork, if possible.

The last step we will touch on is arguably one of the most important: be available during audit fieldwork. It’s imperative that key personnel do not schedule time off during fieldwork. During fieldwork, auditors will likely be asking for additional information ranging from supporting documents to in-person interviews to discuss processes, fraud risks and internal controls. Consider asking your auditors to provide a timeline as well as status updates as they progress through your audit.  Asking your auditor to provide an outstanding open items list at reasonable intervals (daily or weekly) will keep the audit on track and will aid in timely completion.

Although an audit may seem intimidating, organizations have the power to help the process run smoothly and efficiently. By following the AICPA’s ten-step list, not only will you help your staff have the proper support to answer auditor questions, you’ll also be prepared to provide auditors with all the support they request in a timely manner. One final tip….when supporting schedules agree, without error, to the trial balance, you are one step closer to cruising along to a prompt and pain-free audit completion and issuance.

For general questions or additional support about how to prepare for your next audit, feel free to contact Kristi Yanover, Audit Partner, at kristi@lindsayandbrownell.com, or any member of our Accounting & Assurance Team.

ASU 2016-14: Presentation of Disclosures

By Accounting & AuditNo Comments

FASB’s ASU 2016-14, Presentation of Financial Statements of Not-for-Profit Entities, was issued in an effort to provide more useful information to donors, grantors, creditors, and other nonprofit financial statement users. Additional disclosures are now required for expenses by nature and function, as well as for the liquidity and availability of resources. This article highlights these additional requirements in the reporting disclosures for nonprofit entities.

A summary of the additional nonprofit disclosure requirements aimed at enhancing the presentation of nonprofit financial statements are as follows:

  1. Net Asset Classification: Under the new standard, presentation of the statement of financial position will only include two classes of net assets: Net Assets with Donor Restrictions and Net Assets without Donor Restrictions. The reduction in the number of net asset classes is expected to reduce the complexity, while enhancing the understandability of nonprofit financial statements. This ASU update requires nonprofit entities to disclose information about the nature and amounts of different types of restrictions that impact the timing and use of donor restricted net assets. The new standard also requires nonprofit entities to disclose the amounts and purposes of board designated net assets without donor restrictions. In the case of any self-imposed limits on the use of resources resulting of actions of the governing board, disclosure must be made in the notes to the financial statements.

 

  1. Liquidity and Availability of Resources: The new standard requires disclosures of qualitative and quantitative information about an entity’s liquidity and availability of resources. Nonprofits are now required to qualitatively describe information useful in accessing the maturity of assets and liabilities as well as how the organization manages liquid resources to meet their cash needs for general expenditures. The disclosures should include quantitative information (i.e. tables, graphs) about the availability of these resources. These additional disclosure requirements will provide the necessary information to users and will increase transparency and promote a more thorough and accurate understanding of the organization’s ability to fund its operations.

 

  1. Functional Expenses & Allocation: The new standard requires an analysis of expenses by function and nature to be presented in one location in the financial statements. Nonprofit entities have the option to present this information in a separate financial statement or in the notes to the financial statements. Additionally, a qualitative description of the methods used for the allocation of costs among program activities and support functions is required to be included in the notes to the financial statements. The following footnote disclosure is an example which incorporates the new documentation requirements:

“The financial statements report certain categories of expenses that are attributable to one or more program or supporting functions of the organization. These expenses include depreciation and amortization, communications, and technology department. Depreciation is allocated based on square footage, certain costs of communications department are allocated on estimates of time and effort, and technology department is allocated based on specific technology utilized.”

  1. Underwater Endowments: In order to enhance the understandability and usefulness of disclosures for underwater endowments, the new standard requires accumulated losses in endowment funds to be included together with the related fund in net assets with donor restrictions. This differs from current guidance which requires accumulates losses to be included as a reduction of unrestricted net assets. Additional disclosure requirements under the new standard include (1) an interpretation of the relevant state UPMIFA law as to its ability to spend from underwater endowment funds and, (2) the nonprofit’s policy concerning the appropriation of underwater endowment funds.

This new guidance provides for major changes to the presentation and disclosure of nonprofit financial statements for the first time in twenty-five years. Please refer to previous articles from July through November 2018 discussing other significant changes required by the adoption of ASU 2016-14.

Effective Dates:

Nonprofit organizations are required to adopt the changes for fiscal years beginning after December 15, 2017.

For general questions or additional support about implementation, feel free to contact Kristi Yanover, Audit Partner, at kristi@lindsayandbrownell.com, or any member of our Accounting & Assurance Team.

ASU 2016-14 Part III: Reporting of Expenses Update

By Accounting & AuditNo Comments

Prior to ASU 2016-14, Presentation of Financial Statements of Not-for-Profit Entities, only voluntary health and welfare organizations were required to report expenses by both natural classification and functional classification in their financial statements. FASB’s ASU 2016-14 expands this requirement to apply to all nonprofit organizations. Our four-part series on ASU 2016-14 concludes with this article highlighting the additional requirements of reporting expenses of nonprofit entities.

ASU 2016-14, requires all nonprofit organizations to analyze and report expenses by both function and nature in one location which can be on the face of the financial statements, in the notes to the financial statements, or as a separate financial statement. Expenses shall be presented in an analysis that disaggregates by function (i.e. program, management and general, and fundraising) and within each functional classification, further disaggregated by their natural expense classification (i.e. salaries and wages, professional services, rent, utilities, and depreciation).

Additionally, a description of the methods used to allocate costs among program and support functions is required to be disclosed in the notes to the financial statements. FASB advises that salaries and benefit costs of performing activities such as operations management and oversight, recordkeeping and payroll, budgeting, and grant reporting represent supporting functions and should be reported as management and general activities. FASB also advises that the salaries and benefit costs of conducting or supervising program activities should be allocated among those functions.

Management should develop a written policy for cost allocation and should review the policy at least annually to verify that it properly reflects the organization’s current year operations. To develop a cost allocation policy, Management should consider a policy that most accurately reflects the organization in a feasible manner. As organizations typically have expenses that relate to more than one functional expense classification, the most accurate cost allocation method is directly identifying specific expenses to a function. However, in many cases, direct identification is not feasible, therefore, allocation of expenses based on either financial or non-financial data is appropriate.

This new guidance provides for an enhanced understanding of the relationship between the functional classification and natural classification for a nonprofit’s expenses. The reporting of expenses, however, is just one component of the changes resulting from ASU 2016-14. Please refer to previous articles from July, August, and September 2018 discussing other significant changes required by the adoption of ASU 2016-14.

Effective Dates:

Nonprofit organizations are required to adopt the changes for fiscal years beginning after December 15, 2017.

For general questions or additional support about implementation, feel free to contact Kristi Yanover, Audit Partner, at kristi@lindsayandbrownell.com, or any member of our Accounting & Assurance Team.

ASU 2016-14, Part III: Reporting Expenses by Function

By Accounting & AuditNo Comments

The most significant change resulting from ASU 2016-14 impacts the face of nonprofit financial statements by requiring organizations to present two net asset classes rather than three net asset classes. Continuing with our four-part series on ASU 2016-14, Presentation of Financial Statements of Not-for-Profit Entities, this article highlights the changes to net asset classifications and the FASB’s attempt to reduce the complexity and improve the overall understandability of nonprofit financial statements.

ASU 2016-14 simplifies the previous three classifications of net assets by requiring organizations to present two net asset classifications. To help reduce complexity, the three previous classifications: unrestricted, temporarily restricted, and permanently restricted net assets are now required to be presented in two broader net asset classes: net assets with donor restrictions and net assets without donor restrictions. Although distinguishing between net assets with and without donor restrictions is relatively straightforward, this distinction is important as donor stipulations will be the only factor in determining how net assets are classified. ASU 2016-14 does not change current guidance as management, the board, or another governing body will not be able to designate the classification of a gift as donor-restricted. Additionally, a board-designated endowment is required to be presented in net assets without donor restrictions.

This new, two net asset requirement represents the minimum disaggregation required to be presented in the statement of financial position. An organization may choose to further disaggregate its net assets into additional subclasses if deemed beneficial to the readers of the financial statements.

Nonprofit organizations have some flexibility in the presentation of net assets on the statement of activities so long as the requirements of ASU 2016-14 are met. Financial information may be presented in a single column, in multiple columns or in two separate statements. An organization should choose the presentation determined most useful to the users of the financial statements.

The classification of net assets, although arguably the most significant, is just one component of this change. In October, we will conclude our four-part series on ASU 2016-14 and discuss updates to reporting requirements for functional expenses.

Effective Dates:

Nonprofit organizations are required to adopt the changes for fiscal years beginning after December 15, 2017.

For general questions or additional support about implementation, feel free to contact Kristi Yanover, Audit Partner, at kristi@lindsayandbrownell.com, or any member of our Accounting & Assurance Team.

ASU 2016-14 Part I: Statement of Cash Flows Updates

By Accounting & AuditNo Comments

In August of 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-14, the first major change in nonprofit reporting in more than 25 years. Last month, we provided a brief overview of the ASU. This month, we will discuss the changes specific to the statement of cash flows, and how this portion of the ASU can be implemented in your organization.

Although ASU 2016-14, Presentation of Financial Statements of Not-for-Profit Entities, includes major changes to nonprofit financial reporting, the statement of cash flows is minimally impacted by this update. Nonprofits still have the liberty to prepare the statement of cash flows using either the direct method or the indirect method of reporting cash flows from operations. The major change related to cash flows in this update is that nonprofits who elect to use the direct method are no longer required to reconcile the change in net assets to net cash provided by (used in) operating activities. FASB concluded that removing the requirement to prepare the reconciliation when the direct method is applied might encourage more nonprofits to choose the direct method of reporting cash flows.

The direct method provides a more accurate picture for users of an organization’s cash flow situation than the indirect method as some specific cash flow items are difficult to identify when using the indirect method. By lifting the requirement to prepare the additional reconciliation under the direct method, many nonprofits may prefer to elect the direct method to create a better and more accurate representation of their cash flows. In the end, both methods provide the same information, but in slightly different ways. It is up to each organization to determine which method proves the most beneficial.

Conclusion

In conclusion, ASU 2016-14 lays out some sweeping changes to the ways that nonprofit organizations prepare their financial statements. The statement of cash flows, however, is just one piece of this change. In September and October, we will discuss how ASU 2016-14 updates reporting requirements for net assets and functional expenses.

Effective Dates:

Nonprofit organizations are required to adopt the changes for fiscal years beginning after December 15, 2017.

For general questions or additional support about implementation, feel free to contact Kristi Yanover, Audit Partner, at kristi@lindsayandbrownell.com, or any member of our Accounting & Assurance Team.

With the First Major Change in Nonprofit Financial Reporting in Over 25 Years, Are You Ready?

By Accounting & AuditNo Comments

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-14, Presentation of Financial Statements of Not-for-Profit Entities. This is the first major change in nonprofit financial reporting in over 25 years. Below is a brief overview of the changes resulting from the new guidance. ASU 2016-14 is designed to reduce complexity, increase understandability and use to stakeholders, and assist nonprofits with improved financial reporting.

A summary of the changes included in this update is as follows:

  • Statement of Cash Flows: Although both the direct method and indirect method of presenting the statement of cash flows may still be elected; when using the direct method, presentation of the indirect reconciliation is no longer required.
  • Net Asset Classification: The new ASU requires that nonprofits report under two net asset classifications in the statement of financial position and statement of activities: Without Donor Restrictions and With Donor Restrictions, rather than three net asset classifications required under the current guidance: Unrestricted, Temporarily Restricted, and Permanently Restricted Net Assets. The amounts of each of the two net asset classes and total net assets must be reported on the statement of financial position. Nonprofits may break down the net asset classes further as deemed necessary. Additionally, nonprofits must report the amount of the change in each of the two new classes of net assets rather than the current three classes of net assets on the statement of activities.
  • Functional Expenses: Under the new guidance, nonprofits must report expenses by both natural classification (salaries, rent, depreciation, etc.) and functional classification (program, management and general, and fundraising). The method used to allocate cost among program and support functions must be disclosed. Nonprofits may present expense classifications in the following permitted formats:
    • On the face of the statement of activities
    • As a schedule in the notes to financial statements
    • In a separate financial statement
  • Enhanced Disclosures: There are a handful of new footnote disclosures or changes to footnote disclosures that relate to a wide array of topics:
    • Self-imposed and donor-imposed restrictions
    • Qualitative and quantitative information about management of liquid resources
    • Expenses detailed out by natural classifications and functional classifications
    • Methods used to allocate costs among programs and support functions
    • Policies and values of underwater endowment funds
  • Investment Return: Investment returns are to be reported net of external and direct internal investment expenses. Internal investment expenses that have been netted against investment returns should not be included in the functional expense analysis. Disclosure of netted expenses is no longer required.
  • Placed-in-Service Approach: In the absence of explicit donor stipulations, the FASB now requires the use of a placed-in-service approach for reporting expirations of restrictions on gifts of long-lived assets (or cash to acquire long-lived assets). The amounts should be reclassified from net assets with donor restrictions to new assets without donor restrictions for long-lived assets that were placed in service as of the beginning of the period of adoption. The current option to release restrictions over the estimated useful life of the acquired asset is eliminated.We will discuss in further detail the impact of ASU 2016-14 on the statement of cash flows, net asset classification, and functional expenses in our August, September, and October 2018 web articles. Stay tuned!

Effective Dates:
Nonprofit organizations are required to adopt these changes for fiscal years beginning after December 15, 2017.

For general questions or additional support about implementation, feel free to contact Kristi Yanover, Audit Partner, at kristi@lindsayandbrownell.com, or any member of our Accounting & Assurance Team.

Simplified Employee Benefit Plan Financial Reporting; Have you complied?

By Accounting & AuditNo Comments

In August 2015, the Financial Accounting Standards Board (the “FASB”) issued an accounting standards update (“ASU”) to help simplify the reporting on employee benefit plan financial statements. The update became effective for plan years after December 15, 2015. Employee benefit plan administrators commonly have raised questions related to the implementation of this standard. Let’s go over a “refresher” to ensure your plan is in compliance with this standard.

ASU 2015-12 aims to reduce the cost and complexity in employee benefit plan financial reporting and disclosure requirements. Upon adoption of this standard, benefit plans will no longer require the following:

  1. Measure fully benefit-responsive investment contracts (FBRIC’s) at fair value
  2. Simplify the investment disclosure requirements
  3. Provide a measurement date practical expedient for employee benefit plans

During their simplification initiative, the FASB created the following update to help enhance the information and effectiveness of the financial statements for users. With this update, employee benefit plans will begin to present their FBRIC’s at contract value in the statement of net assets available for benefits. For every investment contract, the plan will need to disclose a description of the nature of those investment contracts, how the contract operates, by the type of investment contract, events that limit the ability of the plan to transact at contract value with the issuer, and a description of the events and circumstances that would allow issuers to terminate contracts at an amount different from contract value.

This update also simplifies investment disclosures. Certain changes in disclosures include:

  • Plans are no longer required to provide disclosures by investment class, but must instead provide such disclosures by general type.
  • Plan investments representing 5% or more of net assets available for benefits are not required to be presented individually.
  • Presentation of net appreciation or depreciation for each general type of plan investment is no longer required; however, plan investment appreciation or depreciation must still be presented in the aggregate.
  • Employee benefit plans are not required to disclose the investment strategies of plan investments that are: measured at fair value by using the net asset value practical expedient and are in a fund entity that directly files Form 5500 with the U.S. Department of Labor.

Lastly, the ASU permits plans to use an alternative measurement date for plan investments; the month-end date closest to the plan’s fiscal year-end when the fiscal year-end does not coincide with a month-end.

For assistance in implementing this accounting standard, or for additional information, please feel free to contact Kristi Yanover, Audit Partner, at (858) 558-9200 or any member of our Accounting & Assurance Team as we would be happy to assist you.

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