Archive for the ‘Ohio’ Category

Outright Shale Sales Are Another Option For Landowners

Tuesday, August 26th, 2014

The work to unearth valuable minerals from the Utica and Marcellus shale deposits in Eastern Ohio continues to move forward at full speed. While many of the area’s landowners entered into mineral land leases years ago, some chose to put off the leasing process for later – it is now 2014. Several years have passed and the landowners who chose to wait are now facing a different set of choices and options concerning their land and the minerals found within.

What Has Changed?

If you’re looking to cash in on the shale boom, the traditional land/mineral lease alternative is no longer your only option. Today, some landowners are considering the outright sale of their mineral interests to an acquiring entity. While both options have their merits, this discussion is not intended to weigh the economic consequences when comparing land/mineral leasing versus the outright sale of your mineral interest. You should be aware of a few points surrounding the sale of mineral interests that may help govern your decision.

  • Outright sale agreements typically state that the landowner will agree to sell their mineral interests, specific to formation or generic, to an acquiring entity.
  • Per the agreement, the seller typically relinquishes all incidents of mineral ownership – and usually all rights to any future income streams based on the future production from the minerals in question.
  • If you choose to sell your mineral interest outright, your decision to do so may trigger tax planning opportunities, such as the “like-kind exchange” tax treatment for real estate transactions also known as the IRC1031 exchange. In other words, this particular transaction could qualify your gain from the sale of mineral interests to be deferred into the acquired “like-kind” real property. The acquired real estate must be held for trade, business or for other investment purposes.

Proceed With Caution

Before jumping the gun and making a decision based on the possibility of triggering the like-kind exchange, understand that the rules governing IRC1031 are very complex. The sale of mineral interest just adds to the complexity. It’s important that you speak with an advisor concerning a “like-kind exchange” before closing on the mineral interest sale, or the replacement property.

The like-kind exchange opportunity is not for everyone. For those who qualify, however, a mineral sale scenario with the right fact pattern coupled with a properly executed 1031 exchange could result in a significant tax planning opportunity for landowners who are seeking ways to minimize the current tax consequences.

While it’s great to have a range of choices when dealing with matters such as these, the larger selection has a tendency of making it harder to zero in on the information needed to make an informed decision. If you’re considering a land/mineral lease or an outright sale alternative, email Rea & Associates to get more information about these options.

Author: Jim Fracker, CPA (Zanesville office)

 

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Fraud Hotlines Deter Occupational Fraud

Monday, August 25th, 2014

When it comes to your business or organization, you are passionate about making sure your staff embodies your mission and objectives. You take care to select only the best candidates; and when you find them, you conduct thorough interviews, background checks and offer extensive training and timely performance reviews. Months later, now that you have invested significant resources into finding, training and polishing your new employee, you can finally rest easy knowing that you created a team dedicated to common goals and objectives – right?

Fraud Happens

In its most recent version of The Report to the Nations on Occupational Fraud and Abuse, the Association of Certified Fraud Examiners (ACFE) analyzed 1,483 cases of occupational fraud, which resulted in losses totaling more than $3 billion. Of those cases, the ACFE found that businesses with 100 employees or less are more susceptible to financial losses as a result of the three categories of occupational fraud – corruption, asset misappropriation and financial statement fraud.

Here’s A Tip

Maybe, like so many other business owners, you have already considered these facts and have taken steps to deter fraud in your own offices by establishing and implementing codes of conduct and external audits. While those measures provide a good foundation, you may be surprised to learn that of the nearly 1,500 cases of fraud that were reviewed, auditing only revealed a few instances of fraud. On the other hand, 42 percent of these cases were detected by tips. These tips were frequently reported on fraud hotlines and resulted in a 50 percent quicker response time when it came to detecting and stopping fraud.

The Value of a Fraud Hotline

Be proactive about fraud prevention, instead of reacting when you’re caught in the middle of it. A fraud reporting hotline service, such as Red Flag Reporting, has helped clients stay informed about what’s going on in their businesses. Services like Red Flag provide businesses with an opportunity to focus on building relationships, increasing revenue and improving community outreach instead of chasing down occupational fraud in the workplace.

Fraud hotlines are utilized by small and large businesses alike and can help identify and deter other types of unethical behavior before it grows out of control. Fraud hotlines can result in:

  • Fewer OSHA violations
  • Lower Workers’ Compensation costs
  • A decreased likelihood of employment practices lawsuits
  • Zero-tolerance of discrimination in the workplace

Not all employees are bad and not everybody is looking for an opportunity to financially ruin their employer. In fact, fraud hotlines are great because they prove that you are have a team made up of responsible, honest, hard-working men and women. These professionals are the eyes and ears of your business or organization and you not only depend on them to help identify instances of fraud, you need them to report issues to you before they explode into situations that severely damage your financial well-being, employee morale and reputations. By providing your team with a hotline, they will be even more inclined to provide you with a tip or two without feeling like they are rocking the boat.

Are you concerned about the potential for fraud in your organization? Email Rea & Associates to learn more about how a fraud hotline could work for you.

Author: Annie Yoder, CPA, CFE, CFF (New Philadelphia office)

 

Related Articles:

Fraud: Could It Happen To You?

Does Your Audit Process Protect You From Fraud?

How Can Analytics Help Reduce Fraud Risk At Your Business?

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How Can Super Circular Reforms Work For Your Non-profit Organization?

Thursday, July 31st, 2014

When it comes to maintaining a high level of transparency and accountability, not-for-profit organizations face a lot of challenges. Not only does the community look to your organization to provide high-quality services and resources, the government expects your organization to utilize federal funding responsibly. The ability of not-for-profit organizations to secure federal assistance is critical, which is why industry leaders are seeking more clarity pertaining to a wide range of recent reforms made to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. These reforms are scheduled to take effect the Dec. 26, 2014. Here’s some insight into what you can expect moving forward.

Super Circular Reforms

Last December, the Office of Management and Budget (OMB) passed sweeping reforms to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, also known as the Super Circular or the Omni Circular. The goal for these reforms is to help the federal government streamline its guidance concerning administrative requirements while strengthening the oversight of federal funds. By ensuring compliance of these reforms, the OMB hopes to reduce financial waste, fraud and abuse.

Whether you’re the director of an organization that seeks federal grants and/or assistance, an accountant who serves such an organization, or a citizen who benefits from the organization’s government funding, the Super Circular is a big deal. The federal government awards more than $500 billion every year, and it is the OMB’s responsibility to ensure that every dollar spent is a good use of taxpayer funds.

What Do Super Circular Reforms Mean For You?

  • This newer guidance effectively consolidates eight federal circulars into one, which makes guidelines, cost principles, and audit requirements easily accessible. Having one “Super Circular” to thumb through – even though it tops 100 pages – is a welcome change to grant seekers, grant recipients and awarding agencies.
  • Now that the grant guidance is easily accessible and transparent, the OMB anticipates increased competition among agencies and organizations that are eligible for monetary assistance.

For example: If you have never applied for aid in the past, but you think your organization or government agency may be eligible for federal assistance, you can now easily find out. More agencies and organizations are expected to take advantage of the fact that these guidelines are easily accessible, which means there will be more people vying for government money.

A comprehensive list of federal assistance programs is available in the programs tab of the Catalog of Federal Domestic Assistance (CFDA) website. This site not only provides a list of programs and grants available, it provides key information about what is required to apply and qualify for federal assistance.

  • New provisions have established a higher threshold for an A-133 audit. The threshold for an A-133 audit is now $750,000 – which is higher from the previous threshold of $500,000. This means that not-for-profit organizations that bring in less than $750,000 annually are not required to complete an A-133 audit, which will provide some relief to about 5,000 non-federal organizations. This doesn’t mean the OMB will stop monitoring the federal aid that is distributed to these organizations, the OMB says 99.7 percent of aid awarded to organizations and agencies will still be subject to single audit oversight.

Please Note: If your fiscal year ends in December, the $750,000 single audit threshold won’t go into effect until your Dec. 15, 2015 audit. And if your fiscal year ends in June, it won’t go into effect until December 30, 2016.

  • The Super Circular significantly reforms how organizations and agencies will maintain their cost principles. Specifically, in its guidance, the OMB places a greater emphasis on internal controls. The Super Circular effectively defines what organizations and agencies can consider indirect costs, administrative salary direct costs, compensation, and costs associated with materials and supplies.

For example: While the salaries of your administrative and clerical staff may have been treated as indirect costs in the past, the OMB says that it may now be more appropriate to consider them as direct costs if the work performed is specifically outlined within the grant-funded project or initiative.

  • The deadline for organizations and government agencies to comply with the OMB’s reforms is Dec. 26, 2014.

Because the reform-laced Super Circular was written with the goal of helping organizations and agencies apply for aid, manage funds and prepare for audits, it is anticipated that the OMB will succeed in its efforts to increase competition among organizations and agencies that are eligible to receive aid. As a result, more insight and accountability will be demonstrated by recipients of federal assistance.

Super Circular Help

The OMB has repeatedly said that these reforms will make the process of obtaining federal funds easier and more transparent. If you have specific questions as to how the Super Circular will affect your organization or government agency, contact Rea & Associates. Our Ohio not-for-profit team can help you make sense of these revised regulations.

Author: Brent Ardit, CPA (Dublin office)

 

Want more not-for-profit business advice? Check these posts out:

Ohio Bureau of Workers’ Compensation To Pay Small Business Claimants $420 Million 

How Effective Is Your Nonprofit Organization?

How Do You Build a Strong Not-for-Profit Board?

 

 

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Were You Overcharged By The Ohio BWC?

Wednesday, July 30th, 2014

Countless small businesses soon may find that they have money coming back to them. The Ohio Bureau of Workers’ Compensation (BWC) has decided to settle a class action lawsuit alleging that the BWC, over the course of many years, had a system of group rating in place that improperly overcharged many Ohio businesses. A lower trial court originally ruled in favor of the plaintiffs with possible damages exceeding $800 million. While the ruling was upheld on appeal, the appeals court sent the decision back to the initial court to better address the issue of damages.

Now the BWC has agreed to pay out $420 million to those affected by the state agency’s practice of overcharging for workers’ compensation premiums between the years of 2001 and 2008.

To fulfill its obligation under the settlement agreement, the BWC said it will create a fund that will be specifically used to pay: claims made by employers found to be participants in the class action lawsuit, attorney fees, court costs, and costs associated with administering the fund. According to the settlement agreement, any unclaimed money will be returned to the bureau.

Can You Make An Ohio BWC Claim?

In order to make a claim, you must have been a private, non-group rated employer at some point during 2001-2008 who:

  • Subscribed to the state workers’ compensation fund
  • Was not group-rated
  • Reported payroll and paid premiums in a manual classification for which the non-group effective base rate was “inflated” due to application of the group experience rating plan

Employers who were non-group rated for at least one policy year between 2001 and 2008 are eligible to claim a portion of the settlement.  Eligible employers should be receiving a notice that indicated their status as class members and how to make a claim.  A website where claim information can be submitting is currently under development.

Class members are required to submit their claims to Judge Robert McGonagle of the Cuyahoga County Court of Common Pleas. Claims must be postmarked no later than Sept. 22, 2014. More information on this ruling can be found here. More details are coming, so stay tuned!

If you’re entitled to a portion of the BWC settlement, make sure you understand your rights and know how to follow the transaction process. If you’d like more information about how to claim what’s yours, email Rea & Associates and ask for information about this process.

Author: Joseph Popp, JD, LLM (Dublin office)

 

Stay up-to-date on other recent business advice blog posts. Check these out:

Be On Guard For IRS Phone Scams

Is Your Business Running On Microsoft 2003 Servers? It’s Time To Update 

Why It’s Important To Have A Good Banker As Part of Your Business Advisory Team

 

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How Effective Is Your Nonprofit Organization?

Tuesday, June 10th, 2014

You’re busy. Your staff is busy. Everyone is busy. It’s easy to get bogged down in the day-to-day tasks and responsibilities of your organization. Meeting with prospective donors, educating groups on the mission of your organization, and managing volunteers. But let me ask you, when did you last spend time evaluating the effectiveness of your nonprofit organization? Has your donor base increased? Are you seeing an increase in volunteers and people who want to support your organization? Are you truly living out your organization’s mission and vision?

Evaluate Your Not-For-Profit’s Effectiveness

Can’t remember the last time you considered the effectiveness of your organization? Now is probably a good time. If after evaluating you discover that your organization has some areas for improvement, considering asking yourself the five questions below. Addressing these questions and areas may help you create a more effective nonprofit organization.

  1. Are we communicating our organization’s accomplishments?

    Many organizations make a lot of effort to communicate how much money they’ve raised, and how they use their funds. The focus seems to mostly be on the money and percentages. And while it’s important to communicate this information, don’t forget to talk about what your organization is actually doing. How are you carrying out the mission of your organization? What key accomplishments has your organization achieved? Place a greater emphasis on communicating your organization’s accomplishments.

  2. Is our organization’s board of directors actively engaged in the organization?

    When you conduct board meetings, do you sense that your board in engaged in the meeting? Are your board members asking questions and providing insight on how to strengthen the organization? Are they participating in and attending organization activities and fundraisers? If you can’t provide answers to these questions or the answer is “no,” then maybe you need to evaluate how you’re communicating and interacting with your board. A strong, engaged board can help drive the effectiveness of your organization.

  3. Is our organization’s mission and vision statements clearly defined and communicated to our audiences?

    If you were to survey your donor base, prospective donors, volunteers and others throughout the communities you serve, would you find that people understand your organization and its mission? Not sure what kind of responses you would get? One reason that your organization may not be as effective as it could be is because your audiences may not fully understand the mission and vision of your organization. Take a look at your mission and vision statements and see if you need to make some revisions.

  4. Do we clearly and timely communicate to our board of directors?

    This question really ties into whether or not you feel like you have an engaged board. One of the reasons you may not have an engaged board is because you’re not clearly and timely communicating with them. If there are important decisions that need to be made, make sure that you providing them with the necessary information to make the decision within a timely manner.

  5. How strong are our organization’s internal controls?

    Unfortunately, internal fraud is a real concern within nonprofit organizations. Few nonprofits have strong internal controls. As organizations grow, the internal controls need changing. Make sure the controls are operating at a level that will deter and detect fraud. Establish a code of conduct that will create a clear understanding of what is expected of all employees. Even if your organization only has a few employees, it is still possible to implement a system of checks and balances. These controls should help safeguard assets, produce accurate reports and improve administrative effectiveness. 

Ohio Non-For-Profit Help

Effective nonprofit organizations are impacting the communities they serve. If you are questioning the effectiveness of your organization, contact Rea & Associates. Our Ohio non-for-profit team can help you evaluate your organization and where you can increase your efficiency and effectiveness.

Author: Mark Van Benschoten, CPA (Dublin office)

 

Looking for more nonprofit organization tips and best practices? Check these blog posts out:

Which 990 Policies Do Non-Profits Need?

How Do You Build a Strong Not-for-Profit Board?

How Do You Protect Your Non-profit’s Donations from Fraud?

 

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