With 2011 quickly coming to an end, there are some financial moves you can make to maximize the impact on this year’s financial statements and taxes.

If you don’t take advantage of some of these tips, it may affect you financially in 2012 or later.

Click here for a list of things you need to do before you ring in the new year.

With the holidays approaching, people everywhere are looking for ways to give back to the community. Donating to charities is one of the easiest forms of philanthropy but how can anyone be sure if a certain charity is financially viable.

A recent article in the Wall Street Journal provides ways for donors to learn more about the charities they donate to. To see the full article, click here.

Even for the comfortably wealthy, it’s hard to know which way to turn when investing in a crisis-filled world. To gauge how high net worth individuals are reacting to current events, the Daily Business Review invited a half dozen South Florida-based experts in investment management and tax planning – among these panelists was Fiske & Company’s very own, Sheri Schultz.

To read about the panel discussion, click here.

Requirements for testing goodwill are revised

This past September, the Financial Accounting Standards Board (FASB) revised the requirements for testing goodwill impairment for public and private entities. Because the new qualitative pretest is optional, managers and directors may wonder if they still need an outside appraiser to gauge impairment.

To minimize the use of subjective estimates and maximize the ability to audit goodwill and other intangibles, many are staying the course — especially in light of ongoing economic uncertainty.

Impairment refresher

When a business reports acquired goodwill and other indefinite-lived intangibles on its balance sheet, the business must be tested at least annually for impairment under FASB Topic 350, Intangibles — Goodwill and Other. Impairment occurs when the book (or carrying) value of an asset exceeds its fair value.

Testing for impairment is a two-step process.

First, the business (or reporting unit, if multiple lines exist) is valued. If the company’s fair value exceeds its book value, no impairment has occurred and testing stops. If the company’s book value exceeds its fair value, however, step 2 is the allocation of value to all identifiable assets and liabilities. Any remaining fair value is assigned to goodwill.

Goodwill impairment equals the difference between the fair value and the book value of goodwill.

Impairment reduces the amount reported as an asset on the balance sheet and generates a loss on the income statement. These losses can’t be recovered in future periods, even if value recovers.

New qualitative pretest

Many private businesses have argued that quantitative impairment testing is time-consuming and costly, especially if they operate multiple lines of business. Unlike their publicly traded counterparts, private businesses can’t use market capitalizations to estimate fair value. Instead, they must hire outside appraisers.
FASB recently issued Accounting Standards Update (ASU) No. 2011-08 to simplify impairment testing. The update introduces a qualitative pretest to assess whether it is “more likely than not” that the fair value of the company or reporting unit is less than its book value. If not, no further testing is required. But if impairment is more than 50% likely, the company must proceed with the quantitative impairment test.

ASU 2011-08 provides a wide range of events and circumstances that an entity should consider when performing its qualitative pretest. Examples include:
• Macroeconomic conditions — such as access to capital constraints and foreign exchange rate volatility,
• Industry trends — such as raw materials and labor cost increases, and
• Company-specific events — such as declining cash flows or changes in key personnel.

FASB’s list isn’t all-inclusive, and none of the scenarios, in isolation, represent a reason to proceed with quantitative impairment testing. Companies also must consider positive mitigating events that may affect their qualitative assessments.

Joel Mutnick answers some questions about the insurance industry and about what Fiske and Company can do for you.

Q: How long have you been providing services to the insurance industry?

A: I’ve been a CPA in the insurance industry both within the State of Florida and numerous other States of Domicile since 1980.

Q: Can you give some specific examples of the types of services you provide?

A: One of the “key” services the industry requires is the annual statutory of sometimes GAAP audits of the insurance carrier. To that end I’ve performed in excess of 70 or 80 such audits in my career as the engagement partner. In addition with our involvement throughout the insurance industry we provide: reinsurance negotiation and evaluation services, 3rd party SAS #70 Internal Control Evaluations, act as chief accountant, risk based capital computations, perform internal audits for carriers in areas of concern, prepare business valuations, projections and even assist in the preparation of the initial financial documentations for applications for licenses to the state insurance departments!