It’s funny how your audit practice can get involved with tax credits. We recently attended the GSCPA Southeastern Accounting Show (click here). An interesting sessions was on the new FASB five step model for revenue recognition audit rules, presented by Chris Rouse of Windham Brannon. Even though these standards will not be effective until Dec. 2017 for non-public companies, auditors and their clients need to start analyzing business process, systems, and workflow changes soon to prepare. These changes will require employee training and may provide an opportunity for a retraining tax credit. Here is an overview:
- Auditors need to understand how the client’s business operatestoday & its plans for the future.
- Requirements such as “probability-weighted estimates” and other historical data-intensive analysis may require new software (and employee training) to collect and analyze revenue and related data.
- Key processes and controls that support the client’s internal control structure would need to be updated, and their IT systems and manual processes that support the accumulation and reporting of data would need to be modified (more employee training).
- Your firm may be able to proactively consult with your clients in reviewing, gap analysis, planning and implementing these changes(and provide training to employees).
Your audit partners and staff should reach out and engage clients in planning and implementing these changes. The retraining tax credits from the employee training may be able to finance a significant $ portion of the time and costs associated with this effort. But watch out — your audit partners may think they have become tax credit experts!