Financial Advisory Blog

Armanino’s Financial Advisory blog is your source for thought leadership around cloud ERP and accounting solutions and integrations. Supported by the Cloud Accounting Institute and numerous experts in cloud, finance, reporting, integration, compliance, and technology, Armanino’s Financial Advisory blog features must-read content on what’s happening in the finance industry, case studies, white papers, and much more.

June 3, 2020

Senate Unanimously Passes PPP Changes — President’s Signature Expected Shortly

Posted by COVID-19 Rapid Response Team

Senate Unanimously Passes PPP Changes — President’s Signature Expected Shortly
In swift moves Wednesday, the Senate unanimously approved the bill passed last week by the House of Representatives that significantly modifies the Paycheck Protection Program (PPP) rules. With this action, the bill makes its way to the President’s desk for signature into law, which is widely expected.

Major changes to the PPP program include:

  • Borrowers now have 24 weeks to use their PPP funds, extended from the original eight weeks.
  • The forgiveness threshold requiring 75% of funds to be spent on payroll was lowered to 60%. However, where the prior rule allowed for graduated forgiveness if payroll costs fell below 75% of the total, the new, lower mark is a cliff that must be scaled to receive any forgiveness at all — for now.
  • The deadline for rehiring workers in order to qualify for safe harbor from the reduction factors was moved from June 30 to December 31.
  • Employers can exclude from the FTE Reduction Factor calculation any positions that, during the period between February 15 and December 31, they were unable to fill because they either could not find qualified employees to hire, or, could not restore their business to a comparable level of activity because of social distancing or other federal health guidance.
  • For new loans issued after this amendment takes effect, the payback period for any unused funds was extended from two years to five years, with repayments to begin upon receipt of a final forgiveness determination from the SBA. For existing loans, it is up to the borrower and lender to agree to an extension to five years.
  • Granting of forgiveness will no longer disqualify a business from electing to take payroll tax deferrals under the CARES Act.

Borrowers who have exhausted their entire PPP funds are not required to wait until the 24 weeks have passed to file their forgiveness applications. Those who are in this position may very well wish to get the debt off their books in case they will need additional bank financing, and/or get forgiveness before the rules change again.

Promises were also made to Sen. Johnson of Wisconsin that additional changes he wishes for the program can be implemented at a later date. So stay tuned for more changes to this program in the weeks ahead.

May 28, 2020

Proposed Changes to PPP Program Pass First Congressional Hurdle

Posted by COVID-19 Rapid Response Team

The House passed the Paycheck Protection Program (PPP) Flexibility Act (H.R. 7010) on May 28 with an overwhelming bipartisan vote — a first step toward it becoming law. The bill was sponsored by Rep. Chip Roy (R-TX) and included a few key changes to the PPP:

  • Extending loan repayment period from 2 to 5 years
  • Extending the Covered Period to 24 weeks or December 31, 2020 (which means any loan funded by July 17, 2020)
  • Revising the percentage of forgivable spending on non-payroll costs
  • Allowing payroll tax deferrals even with loan forgiveness

It is important to note that passage of the bill in the House does not mean these changes have become the law. Ultimately, the Senate will need to take up the legislation, approve it and forward it to the President for signature. Until those steps are taken, the PPP program and guidance remain unchanged.

The Senate is currently considering several bills to amend the PPP, so the details of what, if anything, ultimately gets signed into law may change.

In addition, the House generally voted along party lines against another PPP-related bill, the Small Business Transparency and Reporting for the Underbanked and Taxpayers at Home (TRUTH) Act (H.R. 6782). This legislation would have required the SBA to publish significant identifying information about borrowers and lenders.

We continue to monitor the ongoing PPP legislative proposals and will provide updates as they arise.

March 30, 2020

Reforecasting for Sudden Changes Using Adaptive Insights

Posted by Reena Driver

During these unpredictable times, you might have to switch around your normal processes. We’ve been hearing from our clients about the need to do quick forecasts in Adaptive Insights. Here are some step-by-step instructions with screen shots to show you reforecasting for Sudden Changes for your business.

  1. Roll Out a Live Forecast Version
    • Confirm you are copying from the correct Original Budget Version.
    • Select the boxes for: Copy All Data, Copy Formulas, Copy Splits, Copy Modeled Rows and Copy Audit Trail History.
    • Update the Start of Plan setting to pull in Actuals through the prior month.
    • Review the user access settings.
      • Does this version need to be hidden for certain users?
Reforecasting for Sudden Changes Using Adaptive Insights
  • Update Input Sheets
    • Review and update the Personnel Sheet for Headcount impact and updates to Personnel Assumptions (i.e. merit and bonus attainment assumptions).
Update Input Sheets
Reforecasting for Sudden Changes Using Adaptive Insights
  • Review marketing, conference and event budgets — looking at the impact of cancelled events and tradeshows as it relates to both Revenue Pipeline and Operating Expenses.
  • High-Level Adjustments: set up custom or assumption accounts to hold management increase/decrease % adjustments to incorporate into current modeled or cube formulas.
High-Level Adjustments
  • Review Impact of New Forecast Version.
Review Impact of New Forecast Version.
  • Utilize Weekly Forecasting
    • Always keep Live Forecast open as working forecast.
    • At the start of each week, clone this version and rename the previous Live Forecast to [Date] – Flash and name the new version Live Forecast.
Review Impact of New Forecast Version.

Have questions or need some help? Don’t hesitate to reach out to our experts. For more information on how to keep your business running through disruption, visit our COVID-19 Resource Center.

July 25, 2019

Three Ways to Fail at Change Management

Posted by Judy Clarke

Many companies have a culture of closing deals and providing great customer service. But typically, there’s zero focus on improving their own internal systems, until a process breakdown occurs. Once a company is broken, the rush is on to implement a software solution to fix all the problems. But this never works without engagement throughout the entire organization—which requires Change Management.

The majority of change initiatives fail, according to McKinsey, Bain, Gartner, Harvard Business Review and others. But leadership teams that embrace their pivotal role in operational and organizational change management do much better. Those teams, says Willis Towers Watson, are 2.5 times more likely to outperform their peers.

So, what should or shouldn’t you do? Here are three common change management mistakes we see, and how to avoid them.

Change Management

Failure Strategy #1:
Don’t involve stakeholders with the selection of a new system until the purchase has been made.
On the implementation side of our practice, the project kickoff meeting is sometimes the first time stakeholders have heard any details about the new system that was selected to solve all their problems. Not surprisingly, being kept in the dark often leads to resentment and even project sabotage. If employees refuse to engage and adopt, the chance of a successful project is compromised. It’s much harder to get stakeholders back on track once this happens. They feel left out and disrespected. 

What you SHOULD do:
We find discovery workshops with all stakeholders work well to expose all the current-state pain points and gain early buy-in. Knowledge from the day-to-day operations team members has great value and will improve the selection process. This approach will also identify “project champions” who can become power users of the new system.

Failure Strategy #2:
After the requirements meetings, don’t communicate the status of the project to all stakeholders.
  Shock the finance sponsor after the timeline slips. Surprise the area leads with an email saying they need to redo all the data conversion next week, every evening after 5pm.

What you SHOULD do:  
A weekly project newsletter is an excellent communication tool to keep the entire team up to date. There can be links to training sessions, upcoming timelines, accomplishments, staff recognition, etc. The regular cadence will reduce fear and doubt and show the team the project is moving forward.

Regular team check-in meetings are also helpful.  We recommend surveying users just after key milestones to gauge user sentiment and get valuable feedback on what is working and what needs improvement. To track trends, have some control questions that you repeat in every survey, such as “Will the change have a positive impact on the company?” 

Failure Strategy #3:
Require all area leads to train their team members, with no support.
Don’t give the leads any help preparing materials, or even determine whether they have training skills.

What you SHOULD do:  
Okay, this is a hot button for me. The “train the trainer” approach is a means to lower a services estimate, and it seldom succeeds. The expectation that a key employee can fully participate in a major project, continue their day job and prepare comprehensive training materials is not realistic. Add in the fact that most people do not have training skills, and it becomes ridiculous. 

We have seen this approach work if time is added to the project for us to help the appointed trainers prepare their materials and hold practice training sessions. A culture of trust must exist so that leads feel comfortable asking for a consultant to train with them if they feel overwhelmed. 

More to Come

There are many more ways to fail—or alternatively, to succeed—at managing change. I will share three more in my next post. Change management is my passion, so feel free to reach out with any questions or suggestions!

December 2, 2017

Part 2 Blockchain & Cryptocurrencies: 4 Ways It Will Change How We Do Business

Posted by Andries Verschelden

Blockchain and Cryptocurrencies 1Cryptocurrencies and blockchain have emerged as an exciting alternative to regular money. (We covered the basics here if you need a refresher.) But, this technology could be much more than an alternative currency. It also has the potential to revolutionize the way we do business. Here are four areas where we may see big changes in the near future.

  1. Transfer of information

Blockchain uses a shared, decentralized ledger stored on a number of nodes (computers). This shared ledger makes it much easier to transfer not just funds, but also private information between users. Take your medical records, for example. If medical records were stored on a decentralized database, all different medical professionals, regardless of their organization, could update your medical file.  Since the information is encrypted, it would remain private even as it’s updated by different medical providers. Compare that to now, where hospitals have different databases and even store information on paper files.

  1. Supply chain tracking

Blockchain could also improve supply chain management. All parts of a transaction, from start to finish, could be recorded and easily reviewed if there’s a problem. For example, imagine that Walmart sells some contaminated pork. Their supply chain has multiple layers, with potentially dozens of companies in each part of the process, and may reach to another country. A pig might be raised outside Shanghai, processed at a plant in Hong Kong, shipped to California, then trucked to a U.S. store.

Under the current system, Walmart must work backwards, through the records of each company in the supply chain, to find the source of the outbreak. If one part of the chain has faulty records, Walmart may never identify the source of the problem. On the other hand, if everything was recorded on a decentralized blockchain, Walmart could immediately review the history and know that it is uncompromised. Each time the pork went through part of the supply chain, it would be recorded on the public ledger. Walmart could quickly review the blockchain to see exactly where the contaminated pork originated and remove the faulty supplier.

  1. Accounting

Maintaining accounting records on a decentralized blockchain could speed up the financial reporting process and reduce errors. Under the current system, every time companies record a transaction, such as an inventory purchase, all subledgers of the parties involved need to update their individual accounts on their accounting system. Internally we can reconcile subledgers to ensure the transaction is properly recorded, and externally we can also verify the information is accurate and reliable (the auditor).

If we could have the different parties involved work off the same decentralized database, we would be able to ensure a transaction is recorded correctly throughout the ecosystem without needing reconciliation or external validation. Transactions would automatically balance out through the code in the blockchain, and there would be virtually no chance of error in recording the transaction.

  1. Smart contracts

In our current electronic payments system, if you fill an order, you need the help of a trusted third party to ensure you will receive your funds. Even if the purchaser pays by credit card or direct deposit, there still needs to be a third party to process the transaction, which slows things down and adds an extra cost. With cryptocurrency and blockchain, you can set up a smart contract, where payment goes out immediately once the customer receives your goods (assuming this can be validated electronically).

Watch for more uses

When the internet was introduced, it took years before it became a common part of doing business. It’s quite possible that we’re at the same point with cryptocurrencies and blockchain today. Watch out for these potential applications―and more―as the world gets better at using this exciting new technology.

Find more helpful insights from Armanino’s Outsourced Finance & Accounting team.

November 18, 2014

FASB and SEC Issue Changes for Pushdown Accounting

Posted by Armanino Financial Advisory Team

The Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) has issued a standard allowing an acquired entity to elect pushdown accounting whenever there is a change of control. The SEC simultaneously rescinded its guidance that allowed pushdown accounting in certain circumstances, forbade it in certain circumstances, and required it in others. Public companies will now follow the FASB standard, which makes it an election.

For full details, check out Accounting Today’s full explanation.

July 7, 2020

Why Your Organization Should Rethink Its Data Migration Process for ERP Implementation

Posted by Derrick Magdefrau

Rethinking Your Data Migration Process for ERP Implementation

Organizations switch their enterprise resource planning (ERP) systems to improve their financial and operational data reporting capabilities and help their finance teams become better strategic partners. These implementations are major projects, and many organizations encounter complications that might be easy to avoid. One of the most prevalent barriers to a seamless ERP implementation is data migration. Extracting and validating data from legacy systems into a new ERP can be arduous for most users, but it’s crucial for getting the new solution off the ground to address your core business needs quickly, effectively and without errors.

Why Is Effective Data Migration Important?

Organizations need to address data migration issues to improve their ERP implementation and their long-term health. A reliable implementation allows your users to start utilizing the new system’s features more efficiently. Technology is only effective if people adopt it, and a slow and complicated implementation diminishes users’ trust in the solution and postpones the time when they can start training and integrating it into processes as needed.

Beginning with a solid foundation of accurate data also is essential to managing business operations properly. Business needs can change quickly, and you must be able to handle them in the same manner.

What Holds Most Organizations Back?

Many organizations can’t successfully migrate legacy data because of a few crucial barriers. Most don’t have in-house data migration experts or staff with the skills needed to accomplish the migration effectively. So typically, you’re trying to achieve a quick and accurate data migration without the right people.

Without the right resources, you significantly increase your risk because imported data isn’t necessarily validated or verified correctly. Then, teams need to review the inputted data manually to pinpoint the errors. Or worse, errors aren’t caught, and you make future decisions based on shaky data.

Data reverification just adds more time for the migration team, which highlights a larger issue of in-house data migration: it takes employees away from strategic tasks that truly enable the organization to thrive.

Business leaders are consistently trying to glean better insights from their data. But you can’t do this with antiquated systems and information. And when you invest in a new solution to aid data analysis and reporting, it’s essential to set it up properly rather than struggling to get it off the ground due to a lack of expertise or time. This lack of planning prevents your finance team from focusing on the strategic work they excel at and causes downstream risks.

Benefits of a Successful Data Migration

By outsourcing the data migration process to experts, you can eliminate many of the complications associated with an ERP implementation and dramatically lessen future risks. Outsourced data migration can reduce the time spent on the implementation from start to finish, by mitigating downstream data entry errors and reducing downtime in the implementation by minimizing back-and-forth communications and eliminating data reverification. As a result, you can begin leveraging your optimized solution sooner and rest assured that the migrated data is accurate for future insights.

When you are sure you have verified data, your finance team can focus on the core strategic tasks necessary for your business operations. They also don’t need to wait on troubleshooting erroneous data or backtracking to fix errors during the implementation, which means a much faster time-to-value for your investment.

These mitigated challenges can help your organization lower employee overhead requirements. Those saved hours and efforts can help employees return to strategic tasks, while also benefitting from an improved solution that allows more informed and quicker insights into your organization’s core business needs.

Armanino helps clients navigate data migration and achieve their end goals using a combination of next-generation technologies and expert data migration strategies. Contact us to learn more. Discover more helpful insights throughout the Armanino Financial Advisory blog.

June 17, 2020

SBA Issues New PPP Forgiveness Instructions

Posted by COVID-19 Rapid Response Team

Today, SBA and the Treasury Department released new guidance and application forms for PPP loan forgiveness. Fortunately, they cleared up a few big questions people have:

  • Maximum total compensation if electing 24 weeks is now $46,154 (24/52 * $100,000)
  • The safe harbor restoration date is now theearlier of the date the forgiveness application is submitted or December 31, 2020 for both reduction factors
  • There is no provision for selecting a Covered Period between 8 and 24 weeks; it’s one or the other

Other important changes:

  1. Introduced an EZ form, to be used only by borrowers with any of the following:
    • No employees included in their original loan application
    • No salary reductions >25% (same calculation as originally instructed) AND no reductions in number of employees (not FTEs) or in average paid hours of employees from 1/1/20-End of Covered Period (this is a brand new calculation and no guidance is given on the comparison period for the “average paid hours” test nor for what constitutes a reduction; for instance, if one employee is paid for only 38 hours in one pay period, is that a reduction?)
    • No salary reductions >25% AND they were unable to restore to the 2/15/20 level of business activity solely due to requirements set by HHS, CDCP or OSHA – note that state, county or city requirements do not meet this test
  2. In the EZ application, they now allow retirement insurance contributions on behalf of owner-employees “capped at 2.5 months’ worth of the 2019 contribution amount.” But in the main application, they do not indicate this is allowable or limited if allowable.

We anticipate that the majority of borrowers using the EZ form will be the ones who meet test 1a above. Many businesses will struggle with the “average paid hours” issue in test 1b, and we expect few will be impacted by test 1c all the way through the end of the year.

You can find more information in our detailed PPP FAQs.

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