Happy Thanksgiving

Sending good wishes to you this Thanksgiving! Good food that fills your table, good health as you work hard, and good times with family and friends. May you have all the best delights in life. Happy Thanksgiving!

Don’t forget to enjoy some football!   Go Buckeyes!


ARM is Hiring!

ARM is hiring full-time staff auditors, a summer audit intern and a winter tax intern to join our growing firm! Full-time employment opportunities are available upon completion of successful internships. Check out our job postings on our website at www.armcpa.com/careers.

 ARM will also be attending the upcoming Ohio University 2018 Business Conference on September 6th from 3pm – 6pm. Please be sure to stop by our booth to learn more about our current employment opportunities.


Thanks for Being a Part of Our Firm’s Family!

At this time of year, we sit down with our families to acknowledge all the many things that have made us thankful throughout the year. Since we consider you a member of our firm’s family, we want to take the chance to express our gratitude to you for giving us the opportunity to serve you.

We get a great deal of satisfaction from working with clients, whether we’re helping you identify tax-saving opportunities, plan for college or retirement, address critical business concerns or tackle any number of other financial issues. So please accept our sincere thanks for your business! We look forward to continuing our valued relationship with you in the coming year. Please remember that we’re always here to help when you need us.


Ary Roepcke Mulchaey (ARM CPA) was among the more than 50 global accounting firms attending BKR International’s annual Americas Regional Meeting in Louisville, Kentucky, June 3-6. ARM CPA is an independent member of BKR, one of the world’s leading global associations of accounting and business advisory firms. For more than 25 years, BKR has connected members and their clients with global experts and resources.

With the theme of “Racing to Excellence,” the conference featured experts on accounting firm innovation and transformation. Monday keynote speaker Gary Adamson, a nationally renowned consultant and former managing partner of a top CPA firm, shared new insights on linking firm strategy to compensation. Dr. Roman Yampolskiy, associate professor at the Speed School of Engineering, University of Louisville, covered artificial intelligence (AI) and how AI is directly affecting the accounting profession. Other topics presented included outsourcing options for commodity work and using data to drive growth strategy.

“Accounting is a data-driven profession, and this conference highlighted how we can better leverage this data to improve all aspects of leading successful firms,” noted David Goldner, BKR International’s Americas Regional Chair and managing partner of Gross, Mendelsohn in Baltimore, Maryland.

Eric Mulchaey, Assurance Partner at ARM CPA, said, “All of our fellow members in BKR are more than willing to share their successes and failures for our mutual benefit. It’s a unique opportunity to meet with colleagues who are our peers, not our competitors, and truly want us to succeed.”

“BKR events are structured to support continual learning and member collaboration,” said Maureen Schwartz, BKR’s Executive Director. “We strive to keep our members at the forefront of the ever-evolving accounting profession through cutting-edge programs and opportunities to learn from one another in a fun and dynamic environment.”


Ary Roepcke Mulchaey makes it a point to know your markets, capabilities and expectations so that we can anticipate and respond to your rapidly changing business needs. We have the experience, resources and knowledge to build on your organization’s assets while ensuring that your values and vision drive the process.

Responsive, resourceful and practical, we are always looking out for your interests and providing proactive advice, often ahead of market trends. We measure our success by one essential benchmark – client satisfaction. We pride ourselves on the number of long-term relationships we have with our clients, many of whom have been with our firm since our founding in 1979.

About BKR

BKR International is one of the Top 10 leading global associations of independent accounting and business advisory firms, representing the expertise of more than 160 independent accounting and business advisory firms in over 500 offices and 80 countries. For more information visit www.bkr.com or follow BKR on LinkedIn.

Volunteer Tax Breaks

If you are a volunteer worker for a charity, you should be aware that your generosity may entitle you to some tax breaks.

Although no tax deduction is allowed for the value of services you perform for a charitable organization, some deductions are permitted for out-of-pocket costs you incur while performing the services (subject to the deduction limit that generally applies to charitable contributions). This includes items such as:

  • Away-from-home travel expenses while performing services for a charity (out-of-pocket round-trip travel cost, taxi fares and other costs of transportation between the airport or station and hotel, plus lodging and meals). However, these expenses aren’t deductible if there’s a significant element of personal pleasure associated with the travel, or if your services for a charity involve lobbying activities.
  • The cost of entertaining others on behalf of a charity, such as wining and dining a potential large contributor (but the cost of your own entertainment or meal is not deductible).
  • If you use your car while performing services for a charitable organization you may deduct your actual unreimbursed expenses directly attributable to the services, such as gas and oil costs. Alternatively, you may deduct a flat 14¢ per mile for charitable use of your car. In either event, you may also deduct parking fees and tolls.
  • You can deduct the cost of a uniform you wear when you do volunteer work for the charity, as long as the uniform has no general utility (e.g., a volunteer ambulance worker’s jumpsuit). You can also deduct the cost of cleaning the uniform.

No charitable deduction is allowed for a contribution of $250 or more unless you substantiate the contribution by a written acknowledgment from the charitable organization. The acknowledgment generally must include the amount of cash, a description of any property contributed, and whether you got anything in return for your contribution. This presents a problem where you as a volunteer make a contribution on behalf of rather than directly to a charity. One way around this is for the charity to pay for the expenses and then be reimbursed by you (or you can make the donation before the expense is incurred). If this isn’t possible, you can safeguard your deductions as follows:

  • Get written documentation from the charity about the nature of your volunteering activity and the need for related expenses to be paid. For example, if you travel out of town as a volunteer, get a letter from the charity explaining why you’re needed at the out-of-town location.
  • If you are out-of-pocket for substantial amounts, you should submit a statement of expenses and, preferably, a copy of the receipts, to the charity, and arrange for the charity to acknowledge in writing the amount of the contribution.
  • You should maintain detailed records of your out-of-pocket expenses—receipts plus a written record of the time, place, amount, and charitable purpose of the expense.

Upcoming Changes to Not-for-Profit Accounting

In August of 2016, after receiving over 250 comment letters since its exposure draft from preparers, auditors and other users abroad, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-14 – Not-for-Profit Entities (Top 958): Presentation of Financial Statements of Not-for-Profit Entities (ASU 2016-14).  The overall goal of the update was to enable Not-for-Profit’s (NFP’s) to better “tell their financial story”.  While this update is not considered to be an overhaul of the current model, ASU 2016-14 will be the most significant update to NFP financial reporting in years.

The key provisions of ASU 2016-14 are as follows:

  • Net Asset Classes
  • Liquidity and Availability
  • Expense Reporting
  • Investment Return
  • Statement of Cash Flows

Net Asset Classes

Under the current model, there are three types of net asset classes: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. These three classifications were confusing to many readers as the term “unrestricted net assets” was misunderstood.  Therefore, the new presentation will combine net assets into two classes: net assets without donor restrictions and net assets with donor restrictions.  Note that NFP’s will still be required to disclose donor/grantor-imposed restrictions, including how and when the resources may be used.

Liquidity and Availability

One of the more interesting provisions to ASU 2016-14 (interesting in the fact that it would be specific to NFP’s only) is the requirement to disclose qualitative and quantitative liquidity information. Specifically, information regarding how a NFP manages its available liquid resources and the availability of financial assets at the balance sheet date to meet upcoming cash needs (within 1 year).

A unique aspect of NFP financial reporting when compared to other types of industries is the requirement to show donor restrictions to its net assets. While this may be beneficial and informative, it can also mask the liquidity of an otherwise healthy balance sheet.  For example, if an NFP were to have $25 million in cash, $50 million in PP&E, no debt and very few payables and accruals, this would indicate a very healthy balance sheet, right?  However, what if that same NFP had a $20 million donor-imposed restriction on its cash and anticipated a $10 million loss in the next year?  Would the NFP be able to meet its cash needs for general expenditures within 1 year?  Probably not.  These types of scenarios have occurred frequently and are the reason for the liquidity and availability disclosure as part of ASU 2016-14.  To see an example of this disclosure click here.

Expense Reporting

The new requirements for expense reporting will require all NFP entities to present their expenses either on the face of the financial statements or in the disclosure notes by function and natural classification.  Previously, this was only a requirement for voluntary health and welfare entities but now will affect all NFP’s (i.e. private foundations).  The ASU also provides enhanced guidance on allocations from management and general expenses regarding activities that represent direct conduct or direct supervision.

Investment Return

Currently, NFP’s are required to disclose gross investment income and expense. Under ASU 2016-14, NFP’s are now permitted (but not required) to net investment expenses against investment return on the face of the statement of activities.  This provision is the only update in ASU 2016-14 that was made in an effort to simplify NFP financial reporting.  Note that this does not apply to programmatic investing activities (i.e. NFP’s that are in the business of making affordable loans to low-income families).

Statement of Cash Flows

The hottest topic under discussion from the FASB’s exposure draft was the potential measure to require NFP’s to present their statement of cash flows (SCF) using only the direct method. Those for the measure argued that the indirect method was confusing to readers whereas those against the measure argued that the SCF was not useful as part of the financial statements in general and that the direct method would be too cumbersome to produce.  This was also evidenced at the AICPA’s most recent Governmental and Not-for-Profit Training Program in Las Vegas, where in a room full of 200+ CPA’s, when asked how many in the audience prepared the SCF using the direct method, two hands went up.

Fortunately, the FASB decided to leave this one alone (for the most part) and both the indirect and direct methods are still allowed under ASU-2016-14. The only change related to the SCF under ASU 2016-14 is for those few NFP’s that report the SFC using the direct method; they are no longer required to show the indirect reconciliation in the notes to the financial statements.

ASU 2016-14 is effective for fiscal years beginning after December 15, 2017 (calendar year 2018 and fiscal year 2018-2019) with early adoption permitted. Also, it is important to note that all of the amendments must be incorporated in the year of adoption.  ASU 2016-14 is considered to be Phase I of a two part deliberations plan.  Phase II is expected to be released for discussion soon and includes projects for further consideration including the statement of cash flows, expense reporting, and other various operating measures.

The full version of ASU 2016-14 can be accessed through the FASB website here.

If you have any questions regarding the FASB ASU 2016-14 update, please contact Chris Soderberg at ARM.


ARM is pleased to announce the promotion of Carrie Hoover to audit senior.  Carrie is a graduate of Ohio Dominican University and has been with the firm for two and a half years.

Lease Accounting Overhaul Makes Headway

What started as a convergence project to assimilate lease accounting between U.S. GAAP and IFRS became a reality on November 11, 2015 as FASB Board Members voted 6-1 to send the standard for final drafting.  Those impacted the most will be companies that work with leases as a key part of their business, however, the new accounting rules will affect any U.S. company that deals with leases.  The lease overhaul will be the most significant since FAS No. 13 was released in 1976 and is expected to add trillions to balance sheets across the U.S.

Under the existing accounting model, leases are treated as either capital or operating.  Capital leases are required to be capitalized and amortized while operating leases are not.  Critics of the current model claim that operating leases result in “off-the-books” accounting as balance sheets do not reflect these lease obligations, which in some instances can be over many years and for billions of dollars.  For example, at December 31, 2014, Chipotle Mexican Grill, Inc. (CMG) had operating lease obligations of $3.044 Billion whereas their balance sheet showed a mere $534 Million in total liabilities.  The effect of adding Chipotle’s operating lease obligations to their balance sheet would increase its liabilities nearly sevenfold.  Furthermore, the new operating lease requirements would significantly alter many key ratios including return on assets and debt to equity.  It also could trigger violations of debt covenants with banks and other lenders.

Even though the accounting changes will be significant, they will not create any new obligations for companies; they merely change the way these lease obligations are reported.  FASB Board Members are currently drafting the new standard, which is expected to affect public and private companies for fiscal years beginning after December 15, 2018 and 2019, respectively.  Early adoption will be permitted and there is not expected to be any alternative recognition or measurement.

Chris Soderberg, CPA


DOL Releases Report on Audit Quality

In May of 2015, the Department of Labor released a report on the level and quality of audit work performed by independent public accountants with respect to audits of employee benefit plans.  The assessment involved a sample size of 400 plan audits for plan years beginning in 2011.  Since the population of plan auditors is so diverse and heavily skewed to those CPA firms that audit a small number of plans, the sample was designed to look at the relationship between auditor characteristics and audit quality.

The results were not good.  The report found that 39% of the audits had major deficiencies with respect to one or more relevant GAAS requirements which would lead to rejection of a Form 5500 filing.  It found that there was a clear link between the number of employee benefit plan audits performed by a CPA and the quality of the audit work performed.  Furthermore, CPA’s who performed the fewest number of employee benefit plan audits annually had a 76% deficiency rate.  To the contrary, firms performing the most plan audits had a deficiency rate of only 12%.

The report emphasized the need and responsibility of a plan sponsor, the fiduciary, to hire a qualified CPA firm.  Ary Roepcke Mulchaey is a PCAOB registered firm with a benefit plan audit practice that has earned a strong reputation among clients for being efficient, effective and responsive.  ARM has audited hundreds of employee benefit plans over the past 30 years and has developed a depth of expertise to deliver quality audits for all of our clients each and every year.

Upcoming Changes to Not-for-Profit Accounting

Those who prepare not-for-profit financial statements face significant changes, thanks to a new guidance proposed in April of 2015 by FASB. Practitioners have until August 20 to comment.

The changes are intended to improve the information provided in not-for-profit financial statements and notes to financial statements. It’s been 20 years since not-for-profit statements have had changes of this magnitude.

“We believe that these changes will refresh the model in ways that will make not-for-profit financial statements even more useful to donors, lenders, and other users,” stated FASB member Lawrence W. Smith.

The document outlines the FASB’s proposed improvements to current net asset classification requirements and information presented in financial statements and notes to financial statements about a not-for-profit organization’s liquidity, financial performance, and cash flows.

Specifically, they are intended to:

  • Better reflect financial performance in the statement of activities by showing—in two measures of operating performance—available amounts that have been generated by or directed at carrying out the mission of a not-for-profit in the current period, both before and after any governing board actions affecting that availability.
  • Simplify the existing net asset classification scheme along with enhanced note disclosures.
  • Enhance information in the notes to help financial statement users better assess a not-for-profit’s liquidity and how it is being managed.
  • Make information about expenses more comparable and useful by requiring that all operating expenses be reported by both function and nature and investment return be reported net of related expenses.
  • Make the statement of cash flows more understandable by (a) presenting cash flows provided by operating activities using the direct method of reporting, rather than the indirect (reconciliation) method, and (b) classifying cash flows in ways that are more consistent with classifications in the statement of activities.

The FASB first undertook this project in 2011 based on input provided by its Not-for-Profit Advisory Committee (NAC) and other stakeholders. The NAC members said they believed that, while sound, existing standards for financial statements of not-for-profit organizations could be updated and improved to provide better information to donors, creditors and others*.

For more information on the summary of decisions made to date (April 7, 2015), click here.

* Source: www.ohiocpa.com