Tag Archives | compliance

What You Should Know About Breaking Debt Covenants

What You Should Know About Breaking Debt CovenantsThe end of the first quarter of 2015 is approaching, and quarterly debt covenant compliance certificates are coming due. If your business is like many in our area, this thought probably fills you with dread. With so many businesses in Houston tied to the energy industry, the effects of the free fall in oil prices that started last summer will begin to be seen in this quarter’s results. Watch the video below to discover what you should know about breaking debt covenants.

What You Should Know About Breaking Debt Covenants

So what can you do if you’re out of compliance? Even though the situation may look bleak, there are several things a business can, and should, do when faced with broken debt covenants. Check out this video that addresses:

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What You Should Know About Breaking Debt Covenants

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What You Should Know About Breaking Debt Covenants

See also:

Daily Cash Report

Flash Report

Dynamic Cash Flow Projections

Bank Covenant Violations

How to Be More Credit Worthy

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Securities Act of 1933

See Also:
Primary Market
Securities Exchange Act of 1934
Investment Banks
Secondary Market
Initial Public Offering (IPO)

Securities Act of 1933

The Securities Act of 1933 was a landmark decision in the United States to regulate the issuance of newly issued shares into the market – an initial public offering. The act is also there for companies to register before the issuance as to ensure reliability.

Securities Act of 1933 Meaning

The Securities Act of 1933 followed the stock market crash in 1929. It was a movement to regulate the markets as to not mislead investors. Furthermore, the idea requires due diligence so that the best possible information would hit the market. The 1933 Securities Act was also meant to do away with insider information. By requiring this information to be provided pre-issuance investors presented with the opportunity to buy shares of the firm, during the investment banker’s road show, can make well informed decisions. The due diligence required by the 1933 Securities Act is to have a full audit and compliance with Generally Accepted Accounting Principles (GAAP). Without registration and a following of the 1933 Securities Act rules a firm cannot be listed on a U.S. stock exchange until the requirements are satisfied.

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securities act of 1933

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Professional Employer Organization (PEO) FAQs

See Also;
What is a PEO?
Advantages of Professional Employer Organizations
How to Select a PEO
PEO Compared to Outsourcing Payroll
National Association of Professional Employer Organizations

Professional Employer Organization FAQs | PEO FAQs

Refer to the following Professional Employer Organization FAQs for more information about PEOs.

What Kind of a Business Uses a Professional Employer Organization (PEO)?

The PEO business arrangement will literally work for any type of business including both For-Profit and Not-for-Profit entities. Co-employment relationships range from professional offices to high technology to retailing to manufacturing. In terms of size, PEO customers include the two person professional office, as well as, the one to three hundred person manufacturing firm.

How will a PEO arrangement affect My Employees?

Your Employees maintain their eligibility for benefits, pay rate and job seniority that they have accumulated and in many cases find that they have access to better benefits through the PEO business arrangement.

How will a PEO arrangement affect control of My Employees?

Your Employees are under Your Direct Control and Supervision. The Business Owner determines wage rates, working hours, job responsibilities, job performance, compliance with rules and regulations, etc.

How will the change from my current system to a PEO arrangement take place?

The PEO will conduct an orientation for all of your Employees. This is the time to answer questions and explain the benefits of the Business Owner/PEO Management Model. Furthermore, employees always feel more comfortable when they know the who, what, when, where and why of the change.

Are PEOs recognized as employers at the state and federal levels?

Yes, PEOs operate in all 50 states. The State of Texas has legislated specific licensing, registration, and regulation for PEOs. Texas statutorily recognizes PEOs as the employer or “co-employer” of employees for many purposes, including workers’ compensation and state unemployment insurance taxes. In addition, the IRS has accepted the right of a PEO to withhold and remit federal income and unemployment taxes for employees. The IRS has also promulgated specific guidance confirming the authority of PEOs to provide retirement plans to workers.

How will a PEO arrangement help the Business Owner to control costs?

The PEO provides significant technology, service infrastructure and platforms to assure compliant delivery of contracted services. In addition, the PEO provides time-savings by handling routine and redundant tasks associated with the following:

Who is responsible for the payment of wages and employment taxes?

By contract, the PEO assumes responsibility and liability for payment of wages and compliance with the rules and regulations governing the reporting and payment of federal and state taxes on wages paid to its “co-employees”. PEOs have long established their role as reporting income and handling withholding, FICA, FUTA and SUTA. In 2002, the IRS issued guidance confirming the ability of PEOs to offer qualified retirement benefits.

Who is responsible for employment law and regulatory compliance?

As co-employers, both the Business Owner and the PEO have compliance obligations. The Customer Service Agreement (CSA) addresses specific co-employer responsibilities regarding employment laws and regulations, including the following:

  • Federal, state, and local discrimination laws
  • Title VII of the 1964 Civil Rights Act
  • Age Discrimination in Employment Act
  • ADA
  • FMLA
  • HIPAA
  • Equal Pay Act
  • COBRA

Is a PEO required to have in-force Current Workers’ Compensation Insurance?

The “Staff Leasing Services Act” does not require a Professional Employer Organization to maintain current Workers’ Compensation Insurance for its’ “co-employees”; however, private employers that contract with governmental entities are required to provide Workers’ Compensation coverage for each employee working on a public project.

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Professional Employer Organization FAQs, PEO FAQs

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Professional Employer Organization FAQs, PEO FAQs

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Nexus Overview

Nexus Overview

“Nexus” is a connection between a state and a taxpayer, sufficient enough to allow the state to subject the taxpayer to its taxing jurisdiction and require the taxpayer to file tax returns and pay taxes.

The concept is fairly straight forward, and easily understood, by companies doing business solely within the boundaries of their home state. But for companies engaged in interstate commerce, the determination of nexus becomes a more critical component in taxation matters. Certain activities can trigger nexus for both sales/use tax and income tax compliance, thus requiring an out-of-state vendor to register, report, and remit the appropriate tax to a state where nexus has been determined to exist.

Business Activities That Create Nexus

Typical business activities that create either sales tax or franchise tax nexus include, but are not limited to:

Sellers often fail to register and comply with a state’s taxing requirements due to the mistaken belief that activities of a division and or sub-contractors do not create nexus, that product displayed or available for sell on a consignment basis does not create nexus or that salesmen calling on customers for orders accepted out-of-state does not create nexus. In reality all of these activities do, in fact, create nexus.

The virtual markets and the internet have expanded the proliferation of nexus questions traditionally brought forth by mail-order activity. An understanding of nexus and proactive state tax planning, prior to business expansion into other states, may eliminate burdensome filing requirements and costly penalties and interest for failure to comply.

Nexus Overview

See Also:
Managed Sales and Use Tax Programs
Audit Committee
Carried Interests
Net Sales
Market Positioning

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Compliance Audit

See Also:
Audit Scope
Charge Account
Managed Sales And Use Tax Audit Programs
How to Control Annual Audit Fees
Role of a Company Back Office
Planning Your Exit Strategy

Compliance Audit Definition

The compliance audit definition is an audit which serves the purpose of ensuring that a company meets the requirements of an outside governing body. It is commonplace in many industries. Any time a company has to meet licensing requirements for a governing body, either governmental or non-governmental, a compliance audit process occurs. This audit is done by either internal or external personnel.

Explanation

Compliance audits, explained as the method to meeting certification requirements placed upon a business, take place for a variety of purposes. In one instance, governments require compliance audits. These could be for health code, workplace safety, and more. Furthermore, the government requires certification to prove that a business meets the standards of operation it places. Compliance audit guidelines let the business know how it can best plan for this.

For non-governmental organizations, compliance audit solutions are equally as common. These serve the purpose of gaining certification through networking groups, industry groups, customer advocacy organizations, and more. As an example, the better business bureau has a certification process for qualified businesses. Furthermore, companies require a compliance audit methodology to be better business bureau certified.

Compliance Audit Example

For example, Don is the manager of a major chemical plant. This business, dealing closely with the major petroleum companies, has many requirements for operations.

Recently, Don’s business is due for workplace safety certification. This certification requires close scrutiny from government agents and therefore, it will not be easy to pass. To prepare for this, Don hires an outside consultant to perform a compliance audit. This audit will clearly spell out, through an after-audit report, how the plant must improve to meet governmental requirements. Included in the price is a compliance audit handbook with detailed instructions on the requirements of the license.

After Don’s compliance audit process, he is thrilled; his company has to make only a few inexpensive changes. Don is happy that his company protected profits by hiring a well trained expert for help. In conclusion, passing this test will lift a huge weight off of his shoulders.


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compliance audit
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Capital Project

See Also:
Cash Flow Projections
Return on Capital Employed (ROCE)
Return on Invested Capital (ROIC)
Paid in Capital (APIC)

Capital Project Definition

A capital project, defined as any project which requires capital flows for completion, usually refers to a project which requires large sums of capital. It is generally any project which requires consistent flow and management of capital to ensure successful completion. Due to this fact, an example of a project would be the building of a sky scraper, creation of an oil pipeline, or in the context of government, the building of a highway system. Capital project analysis is a constant struggle in works or large scale.

Capital Project Explanation

A capital project, explained sometimes as a function of “big” government or business, requires excellent skills of project management. If a sky scraper were to be built, a management team would have to be put in place. Materials, subcontractors, government permits, and many other issues would have to be solved for everything to receive a finishing touch. For this reason, capital project management must be executed to a “T”. There must be a team of human resources for every sub project, say permits and compliance. In this way, a capital project justification starts from an initial opportunity and flows from the initial founder to the detail oriented specialist. Obviously, this would require large amounts of capital.

Capital Project Example

Vince is the owner of a large commercial real estate firm. He has grown his success, over time, and now owns buildings in many major cities. Vince wants to see where his luck will take him. Essentially, Vince works on capital project planning all day long.

Vince starts by creating a plan. Once he has decided how he will finance, build, and market the building he steps into action. He begins by speaking with an investment banker. To keep it all in place, he begins the process of capital project accounting now by hiring an accounting team as soon as possible.

Vince has used the connection he has with an investment banker to receive funds from the investment branch of a major corporation. Only a company of massive size will be able to assist in an operation this large. He will need to control his capital project fund carefully to ensure a smooth process.

Vince begins the next project by speaking with an architect. The company he finds eventually provides blueprints and referrals to quality contracting companies.

Vince knows he has his work cut out for him. Still, he appreciates growing the scale of his work. Vince wants to challenge his boundaries and sees this as an excellent opportunity. Though Vince has a lot of stress at work, he leaves every day with a smile.

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capital project

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What is Audit Committee

What is Audit Committee? An audit committee is a subcommittee of a public company’s Board of Directors. A Board of Directors can have several subcommittees. The audit committee focuses on corporate governance, specifically, the company’s internal controls and financial accounting systems.

What is Audit Committee Membership?

A company’s audit committee typically includes a number of outside directors, or non-executive directors, preferably including individuals with financial accounting expertise.

What is Audit Committee Purpose?

An audit committee has several responsibilities. An audit committee is responsible for overseeing the company’s financial reporting as well as its financial accounting policies and procedures. The duties also include selecting and overseeing external auditors, ensuring regulatory compliance, monitoring the company’s internal controls, and overseeing risk management.

what is audit committee

See Also:
How to Control Annual Audit Fees
Managed Sales and Use Tax Audit Programs
Double Entry Bookkeeping
Direct Method Allocation
Company Life Cycle

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