Business North Carolina and Cherry Bekaert & Holland, L.L.P. (CB&H) are please to announce the “NC Mid-Market FAST 40“, a program to honor those middle-market companies headquartered in North Carolina that have had the greatest growth in revenue and employees over the last three years.

Often overlooked as not among the largest corporations nor the smallest enterprises, mid-market businesses provide the backbone for sustained growth in North Carolina. Finally, there is a program to honor their achievement and contribution to economic growth in the state.

Top honorees will be featured in the December issue of Business North Carolina and designated as a “North Carolina Mid-Market FAST 40″ company.

“We are very excited to recognize and reward those companies in North Carolina that are catalysts for growth,” said Scott Duda, Partner with CB&H. “Mid-market businesses are crucial to the nation’s ongoing economic recovery and the future of our state.”

Eligible businesses must:

• be headquartered in North Carolina,
• be either a commercial enterprise or nonprofit,
• be either privately owned or publicly traded,
• have annual revenues in the $15 million $500 million range, and
• demonstrate sustained growth in revenues and employment over the past three years.

To nominate a company online, visit www.cbh.com/NC40. There is no fee associated with nominating a company or receiving this recognition.

A selection committee will evaluate all interested applicants and contact the finalists to schedule brief appointments to validate the submitted information and interview an executive for the related article. The deadline to nominate a company is July 8, 2011 and all applications are due in by July 29, 2011. Winners will be by selected September 1, 2011.

Cherry, Bekaert & Holland, L.L.P. (CB&H), one of the 30 largest accounting firms in the U.S., is pleased to announce that it has acquired the CPA firm Burrus Paul & Turnbull, PLC (BP&T).

Effective February 1, 2011, CB&H expands its presence in the Hampton Roads area with the addition of two partners and nine professionals. After the acquisition, CB&H will have nine partners and more than 80 professionals serving clients from offices in Virginia Beach, downtown Norfolk and Newport News.

With established offices beyond Hampton Roads in Richmond, Tyson’s Corner, Lynchburg, and Roanoke, CB&H ranks among the largest non-Big 4 accounting firms in Virginia with more than 235 accounting, tax and consulting professionals to serve the needs of the Firm’s growing client base.

Formed in 1954, BP&T has a long-standing reputation for providing objective and actionable advice to private businesses, mid-market organizations, entrepreneurs and high-net-worth individuals. With a focus on client service, BP&T adds to CB&H’s recognized accounting and tax expertise in the specialized areas of government contracting, manufacturing & distribution, real estate & construction, not-for-profit, and estates and trusts.

“Hampton Roads is one of CB&H’s key markets,” said Howard Kies, Firm Managing Partner of CB&H. “We are pleased to add the resources and talent of BP&T through this acquisition. Expanding our service reach into Norfolk and Newport News provides us with a solid foundation to support our continued growth and enables us to better meet the needs of our local clients.”

“We are excited about joining CB&H,” said Stephen Turnbull, formerly a Partner with BP&T and now a Partner with CB&H. “Combining forces with a strong regional firm gives our clients access to a wide spectrum of highly valuable services and presents expanded opportunities for our staff.”

With established offices in Richmond, Tyson’s Corner, Hampton Roads and Lynchburg, CB&H is among the largest non-Big 4 accounting firms in Virginia with more than 225 accounting, tax and consulting professionals to serve the needs of our growing client base.

F. Fulton Galer, CEO of McLeod & Company

Formed in 1986, McLeod has been a leading firm in the local market, serving growth-oriented, private businesses; mid-market corporations; entrepreneurs; and high-net-worth individuals. “CB&H represents a great cultural fit for our Firm and will provide expanded growth opportunities for our people and our clients,” said F. Fulton Galer, CEO of McLeod.

With a focus on the middle market, McLeod has an excellent reputation for technical quality and client service, with service expertise in the areas of manufacturing & distribution, mining & extraction, real estate & construction, technology, and health care.

“Expanding our service coverage in the state of Virginia is a key strategic initiative for our Firm,” said Howard Kies, CB&H’s Firm Managing Partner. “McLeod’s 25-year reputation for integrity, quality and service made them an ideal match for us to enter the Roanoke market. The talent and expertise within McLeod builds upon our growing presence and expands our industry knowledge for key practice areas in the state of Virginia.”

This new standard, which was designed to enhance transparency and consistency, will replace the previous Statement on Auditing Standards No. 70, Service Organizations (SAS 70) for all service auditors’ reports for periods ending on or after June 15, 2011, with earlier implementation permitted and encouraged.

To help you prepare for compliance with the new standard, the Risk Management Group at Cherry, Bekaert & Holland has prepared a regulatory bulletin (click here to download the pdf) that summarizes some of the notable similarities and differences between SAS 70 and SSAE 16. The bulletin also includes a breakdown of the key changes that Management will need to consider.

For example, perhaps the most important change is that under SSAE 16, Management will be required to provide a written assertion stating that the controls are fairly presented, suitably designed and operating effectively (for a Type 2 report) to achieve the specified control objectives.

This assertion will need to be included in, or attached to, management’s description of the system. If a subservice organization is included under the inclusive method, their report along with the corresponding management assertion must also be included.

The bulletin includes a sample of this assertion for your reference. If you have any questions or concerns about your current SAS 70 needs or how your company should prepare to comply with these new requirements, please don’t hesitate to contact your CB&H advisor.

Click here for a pdf of the bulletin.

The sell-side due diligence process enables prospective sellers to examine their businesses from the perspective of a potential buyer. Sellers benefit from a sell-side due diligence process in their ability to identify and address issues that could impact a transaction before they are uncovered by a buyer’s due diligence team. Additionally, this process provides potential buyers access to more credible financial information that can reduce the amount of time needed to successfully close a transaction.

While there continue to be changes in the broader economy, the critical aspects of selling a company remain relatively unchanged. In order to assess a company’s true profitability, interested buyers will typically request three years of historical financial statements to better assess a company’s operating profitability, but there are a number of business situations that can interfere with a buyer’s ability to make that determination. Understanding these issues outlined below and preparing an appropriate response to potential questions in advance can help you achieve a successful sale.

Click here to read the rest of the article online at the ACG blog.

To learn more about Cherry, Bekaert & Holland’s Transaction Advisory Services group and their extensive experience providing due diligence engagements, please contact Scott Moss at smoss@cbh.com or visit us at www.cbh.com/tas.

Since 2007, the Securities and Exchange Commission (SEC) has allowed certain foreign issuers to register their financial statements using IFRS without reconciling to U.S. GAAP. The SEC has also outlined a plan that could lead to a requirement for U.S. issuers to comply with IFRS as early as 2014. While the daunting challenge of adopting IFRS is clearly ahead for public companies, private organizations are at a crossroads.

One unique aspect of IRFS principles that may factor into this decision is a “simplified” version of the standards for private companies. IFRS policy makers recognize that private companies have fewer resources to dedicate to financial reporting and struggle justifying the cost of complying with complex accounting standards.

In addition, end-users of private company financial statements have different needs than those of a publicly traded enterprise. Private companies’ reports tend to focus more on short-term decision making and emphasize cash flows, liquidity and solvency more than the long-term perspective of their public company peers.

In response to these conditions, IFRS standard setters issued IFRS for Small and Medium-Sized Businesses (SMEs). These standards eliminate some the complexities in presentation and disclosure and simplify accounting for matters such as revenue recognition, goodwill, investments and income taxes. The result is a set of concept-based rules totaling approximately 250 pages compared to the thousands of pages companies face in complying with GAAP. For U.S. companies considering the transition to IFRS, these simplified rules are a viable option.

What impact does adoption of IFRS have on my business?

A move to IFRS will undoubtedly affect a company’s financial reporting systems. In addition to restructuring the chart of accounts and reporting models, finance executives will have to become familiar with the consolidation and measurement concepts contained in IFRS. These shifts will impact how financial executives gather data, prepare budgets and forecasts, and report results. The measurement changes can also potentially affect compensation plans and management objectives.

Existing contractors will also be heavily affected. Vendors would have to be informed of the change so that credit decisions could be made appropriately. In addition, lending arrangements often stipulate a basis for external reporting and determining compliance with covenants. The legal documents supporting these agreements would require amendments to permit a transition to IFRS.

The differences between GAAP and IFRS may also have an impact on corporate culture. While GAAP tends to include bright line tests centered on detailed rules, IFRS principles attempt to reflect the essence of transactions and tend to be more judgmental. Organizations will have to gain an understanding of how these judgments are made and how the principles are applied to specific situations. Management teams accustomed to having hard and fast rules on which they can “hang their hat” will have to undergo a fundamental change in their mindset.

Is IFRS right for my company?

Like any change that requires an investment of time and money, company executives should weigh the benefits of adopting IFRS with the potential costs (both monetary and opportunity costs). Some points to consider:

Benefits

• Simplified standards – IFRS for SME may lower the cost of compliance due to reduced complexity, particularly if a company is engaged in international business.
• Consistent reporting with foreign parent – Entities owned by foreign companies may eliminate GAAP to IFRS conversions, thereby easing consolidations of US based subsidiaries into parent organizations operating off shore.
• Greater access to global markets – Companies seeking capital may broaden their search to the wider international markets by presenting information in a format recognized by the international investing community.

Costs

• External – Conversion will likely require the purchase of new accounting software and systems in addition to hiring experts familiar with IFRS requirements. Legal and professional fees would also be incurred to address the impacts on existing contracts and agreements discussed above.
• Internal – Hiring new talent and training existing personnel will require time, effort and money.
• Tax implications – Currently, IFRS rules to not recognize last-in-first-out (LIFO) methods of valuing inventory. Conversions from LIFO to acceptable IFRS methods present one of the biggest hurdles because the accounting change frequently results in negative tax consequences. Congress is currently considering the repeal of LIFO methods for tax reporting however, further legislative action would be necessary to eliminate this barrier.

Depending on the size, complexity and expertise of a company’s staff and outside professionals, preliminary estimates indicate that a full IFRS conversion could run as much as one percent of revenues. Due to the significance of these costs, the decision to switch to the international reporting model should be considered carefully.

Moving Forward

While the path toward a conversion decision begins to take shape, private companies should monitor developments and begin their assessments now in order to avoid a hasty, reactive determination. In developing their analysis, the costs and benefits described above should be quantified to the extent possible and considered along with any intangible advantages or burdens.

Once the direction seems clear, firms should create a timetable of key milestones to serve as a roadmap to guide the process. Working back from the expected issuance date of the initial IFRS statements, the timetable should include programs to build awareness of the change and communicate with the parties expected to be impacted by conversion.

Conclusion

Adoption of the IFRS model requires a thoughtful analysis focused on providing stakeholders with the most relevant and reliable information possible. Developing an approach that considers the impacted parties and net benefits to an organization will clearly point the right direction and allow private companies to effectively meet their financial reporting needs.

Enforcement of unclaimed property regulations has evolved to include not only large corporations, but also small to midsize businesses. Entities that were previously off the auditing radar are now facing fines, penalties and interest for non-compliance. This is a direct result of states’ rapidly changing escheatment laws and their use of third-party contingent fee based auditors in 40 states.

Escheatment laws affect a wide variety of property types. Frequent targets include the following:

• accounts receivable credit balances
• un-reconciled inventory
• unredeemed rebate property
• unused gift card or stored value card balances
• un-cashed checks

CB&H will be presenting this seminar in three cities.

Please select the event you’d like to attend from the list below.

Tampa, FL
February 11, 2010

SunTrust Financial Center
401 East Jackson Street
2nd Floor
Tampa, FL 33602

Click here to register.

Charlotte, NC
February 23, 2010

1111 Metropolitan Avenue
Suite 1000
Charlotte, NC 28204

Click here to register.

Raleigh, NC
February 24, 2010

2626 Glenwood Avenue, Suite 200
Raleigh, NC 27608

Click here to register.

Any employer maintaining deferred or equity compensation arrangements for employees, directors or contractors or considering adopting such a plan should be aware of the major tax and design issues involved. The past five years have seen a number of special rules following the 2004 Tax Act that created Section 409A of the Internal Revenue Code.

Join us as we discuss these highly technical rules and outline effective strategies designed to assist you in creating the kind of retention and reward compensation program you need to help position your company to emerge from the economic recovery stronger than before.

Date

Wednesday, September 16, 2009
12 noon – 1pm

Seminar Leader

Gil Weiner – Managing Director,
Compensation and Benefits Solutions
CB&H’s National Specialty Tax Practice
An attorney with extensive benefits and compensation experience, Gil assists employers throughout the Southeast in optimizing their employee, executive and director compensation and benefit arrangements to achieve tax efficiencies; ensure competitive practices; mitigate business, fiscal and tax risk; and improve their potential post-transaction market positions.

Click here for more information or to register.

Are you interested in setting up your company to do business with the Federal Government? The American Recovery and Reinvestment Act of 2009 (ARRA) includes over $100 billion in stimulus funding for transportation infrastructure, energy-related public infrastructure modernization, clean water, flood control and environmental restoration, and the repair and upgrade of federal facilities.

Join us on June 18th as the government contracting specialists from CB&H’s Government Contractor Services Group discuss:

• How the U.S. Government buys goods and services
• How selling to the U.S. Government is different from selling in the commercial marketplace
• How your company can tap into ARRA funds
• What requirements you should be aware of when doing business with the U.S. Government

Date & Time
Thursday, June 18, 2009
12:00 noon to 1:00 pm

Click here for more information or to register.

On April 24, 2009, the Internal Revenue Service (IRS) issued Rev. Proc. 2009-26 to supersede previous guidance issued in March regarding the net operating loss (NOL) carryback election for “electing small businesses” (ESBs). This new guidance was issued in an apparent response to a large number of NOL carryback claims that were not appropriately elected on original tax returns.

The new pronouncement allows additional time to make important NOL elections in many scenarios, specifically for tax returns that were filed by either the March 15th corporate deadline or the April 15th individual deadline. If the NOL carryback election was not appropriately made on a taxpayer’s original return, the election can be made by filing either Form 1045, Application for Tentative Refund, for an individual return, or Form 1139, Corporation Application for Tentative Refund, for a corporate return. However, the election must be filed via these forms no later than six months after the original due date. Forms 1045 and 1139 are normally due by December 31st for calendar year taxpayers.

As a result of this guidance, if an NOL election was not appropriately made on an already filed return, taxpayers have additional time to make the NOL carryback election as long as the Form 1139 or 1045 is filed by September 15th or October 15th, respectively, for calendar year taxpayers.

Please note that the Rev. Proc. does not change the initial guidance that allowed taxpayers who had already elected to forgo the NOL carryback period to unwind that election – as long as it was done by April 17th. No additional time was added to the April 17th deadline for that issue.

For more information, please contact your local CB&H tax specialist.

Last week, the Rockefeller Institute of Government released a report stating that the sales tax decline during the fourth quarter of 2008 was the worst in 50 years. The report demonstrates the ongoing impact of the economic downturn on state and local government budgets, which often rely heavily on sales tax revenues. In response to such significant decreases in tax revenues nationwide, many state and local governments are increasing tax rates and implementing new fees.

A recent study published by tax software developer Vertex, Inc. found that over 500 cities in the United States either increased existing city sales tax rates or instituted new local sales, use and transit taxes last year. The study goes on to cite four states (Indiana, Iowa, Maryland and North Carolina) that increased their state’s sales taxes in 2008.

More changes are expected for 2009. According a recent report in The Wall Street Journal:

At least 10 states are considering some kind of major increase in sales or income taxes: Arizona, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Washington and Wisconsin. California and New York lawmakers already have agreed on multibillion-dollar tax increases that went into effect earlier this year. Fiscal experts say more states are likely to try to raise tax revenue in coming months, especially once they tally the latest shortfalls from April 15 income-tax filings, often the biggest single source of funds for the 43 states that levy them.

Many states and localities are also looking to fee revenue as a way to offset budget shortfalls without raising taxes outright. As reported in The New York Times, some have established new fees, such as Winter Haven, Florida’s new accident response fees, or increased existing fees, such as Ohio’s proposed fivefold increase in livestock license renewal fees.

The State and Local Tax Group at Cherry, Bekaert & Holland, L.L.P. (CB&H) offers state and local tax specialists that can assist your company with its multistate tax compliance, consulting and cash recovery needs. As a reliable outsourcing partner, CB&H will work to ensure that your organization complies with state and local tax laws, meets critical compliance deadlines, prepares tax returns cost effectively, and is not overpaying.

Contact us to learn more about how CB&H’s tax outsourcing solution may offer you a viable tool for managing your state and local tax compliance needs and reducing overall compliance costs.

You can improve your cash flow in an uncertain economy.

Debt foreclosures, reductions and restructurings can create unexpected income tax consequences from Cancellation of Indebtedness (COD) income — whether in a solvent, insolvent, or bankruptcy workout situation. While these consequences can reduce the cash on hand you need for future deals and operations, there are tax planning opportunities available to corporations, partnerships and sole proprietors to defer or even eliminate such income tax liabilities and maximize your cash flow.

Solvent taxpayers can explore options for accelerating losses and Net Operating Loss Carrybacks. Under certain circumstances, debt may be contributed to partnerships in exchange for equity. Insolvent taxpayers and taxpayers entering Bankruptcy pursuant to Chapter 11 may eliminate COD Income in exchange for reducing certain tax attributes, such as Net Operating Loss Carryforwards, basis of depreciable assets, etc.

Click on the following to learn more about how we can help you.

• Bankruptcy Tax Planning
• Partnership Debt-For-Equity Interest Transfers
• The Taxation of Cancellation of Debt Income

Let Cherry, Bekaert & Holland’s Real Estate & Construction Industry Group help you explore the possibilities. Or click here to learn more about our Workout Services.

“Making Work Pay” Tax Credit

For 2009 and 2010, the Act creates a refundable tax credit of up to $400 for working individuals or $800 for couples with modified adjusted gross income (MAGI) that does not exceed $75,000 or $150,000 respectively. Qualified taxpayers will receive this credit either in the form of reduced withholding from their paychecks during the year or when they file their annual tax returns.

AMT Patch for 2009

The Act includes an alternative minimum tax (AMT) patch for 2009, which raises AMT exemption amounts above 2008 levels to $70,950 for joint filers and surviving spouses (up from $69,950 in 2008); and $46,700 for single filers and heads of households (up from $46,200).

First-Time Homebuyer Tax Credit

The Act expands the first-time homebuyer tax credit, originally enacted under the Housing Assistance Tax Act of 2008, increasing the maximum amount of the credit to $8,000 and eliminating the repayment obligation for qualified principal residences purchased from January 1, 2009 through November 30, 2009.

New Car Deduction

Effective for new vehicle purchases on or after February 17, 2009, the Act allows qualified taxpayers an above-the-line deduction for all state, local sales and excise taxes paid relating to the first $49,500 of the purchase price of a new car, light truck or other vehicle through the end of the year.

“American Opportunity” Education Tax Credit

For 2009 and 2010, the Act expands and renames the existing HOPE education credit, increasing the credit amount (subject to income limits) from $1,800 to $2,500 a year and applying the credit to all four years of college. The Act also makes 40% of the credit refundable and adds course materials as qualifying expenses.

Bonus Depreciation

The Act extends the first-year 50% bonus depreciation enacted under the 2008 Economic Stimulus Act for new business equipment purchases through December 31, 2009. The Act also extends through 2010 bonus depreciation for other qualified property.

Section 179 Expensing

The Act extends through 2009 the Section 179 depreciation deduction, originally enacted under the 2008 Economic Stimulus Act, for new and used business equipment, increasing the expensing amount to $250,000 and the threshold for reducing the deduction to $800,000.

Net Operating Loss Carryback

The Act enables qualified small business with average gross receipts of $15 million or less to carry net operating losses (NOLs) back for up to five years. The carryback provision applies to any NOL for tax years beginning or ending in 2008.

Cancellation of Indebtedness

The Act allows qualified businesses to recognize cancellation of indebtedness income over five years, beginning in 2014, for specified types of business debt repurchased or forgiven by the business after December 31, 2008, and before January 1, 2011.

Qualified Small Business Stock

The Act allows investors to exclude, through 2010, up to 75% of the gain from the sale of qualified small business stock acquired after February 17, 2009 and before January 1, 2011 and held for more than five years.

S Corp Built-In Gain Period

For C corps that become S corps, the Act reduces the holding period to seven from 10 years for assets subject to the built-in gains tax in 2009 and 2010.

This short summary is by no means a comprehensive review of the new law. Look for more details soon about how these and other provisions of the Act may provide you and your business with considerable opportunities to maximize tax savings, or contact your local CB&H tax professional today to ensure that you and your business receive the maximum possible benefit of these provisions.