The CalCPA Education Foundation recognized the following instructors with awards at the June Council meeting:

  • 2016-17 Award for Instructor Excellence: Jeff Lenning, CPA, CITP
  • 2016-2017 Award for Outstanding Course Materials: Summer Taylor, CPA
  • 2016-17 Outstanding Conference Speaker: Justin T. Miller, J.D., LL.M., TEP, CFP
  • 2016-17 Outstanding Conference Volunteer: Darlene L. Elmore, CPA, ABV, CFF
  • Award for 2016-2017 Meritorious Service: Robert H. Jones, CPA

CAMICO Tip of the Month: Engagement Letter Do’s and Don’ts

Engagement letters help improve communication with clients, document engagements and protect you from litigation. By clearly defining an engagement’s scope and services, you can better avoid misunderstandings.

What you should do:

  • State the purpose of the engagement;
  • Define the scope of the engagement (specifically what you will and won’t do);
  • Specify known negative conditions or adverse situations;
  • Note client instructions, responsibilities, deliverables and dates;
  • Note reliance on facts provided by client;
  • Outline terms of fee collections and the consequences of late payment;
  • Include a stop-work clause;
  • Indicate your record retention policy;
  • Include third-party service provider language, if applicable; and,
  • Confirm client’s acknowledgment to the terms of the engagement and request client’s signature.

Additional areas to consider:

  • Include warnings regarding inadequate internal controls;
  • Explain limitations regarding financial statement distribution;
  • Include alternative dispute resolution language (i.e., mediation for all disputes and an arbitration clause for fee disputes only); and,
  • Review efficacy of limitation of liability clauses with your risk advisor or legal counsel.

Avoid all-encompassing language that expands rather than limits the scope of your work. Avoid legal jargon, ambiguity, abbreviations or words only a CPA would understand. Make your engagement letter easy for your client to understand. Review the letter with your client and get a signature before beginning any work.

For more information and guidance about CPA firm insurance issues, visit www.camico.com.


Last Month to Apply to CalCPA Leadership Institute

Leadership comes in many forms. Gain insight into what type of leader you are by taking part in CalCPA Leadership Institute.

Discuss, analyze, reflect and build your leadership skills through this program, during which you’ll learn leadership fundamentals and identify personal leadership styles, as well as gain insight on strategic planning, goal setting and client management, among other topics.

The 2017-18 program will be held Nov. 9-10 in San Diego, Dec. 6-7 in Burlingame and Jan. 16-17 in Sacramento.

Interested? Grab more information and an application online. Applications are due Aug. 31.


California Competes Tax Credit Application Period Open Until Aug. 21

California Competes Tax Credit applications will be accepted from July 24-Aug. 21. The California Competes Tax Credit is an income or franchise tax credit available to businesses that come, stay or expand in California.

Go to GO-Biz Programs for more information on the California Competes Tax Credit.


FASB Simplifies Accounting at PCC Recommendation

The Financial Accounting Standards Board (FASB) issued an Accounting Standard Update (ASU) that simplifies the accounting for certain financial instruments with down round features—a provision in an equity-linked financial instrument (or embedded feature) that provides a downward adjustment of the current exercise price based on the price of future equity offerings. The ASU is based on recommendations from the Private Company Council (PCC).

The new ASU requires companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. Companies that provide earnings per share (EPS) data will adjust their basic EPS calculation for the effect of the feature when triggered (that is, when the exercise price of the related equity-linked financial instrument is adjusted downward because of the down round feature) and also will recognize the effect of the trigger within equity.


FTB’s 2017 Filing Update

The FTB has released the 2017 Filing Season Update. Some highlights for the year:

  • Personal income tax (PIT) returns filed increased by 1 percent this year, with 88 percent being e-filed.
  • Fiduciary returns increased 3.5 percent from last year. This is the fourth year fiduciary returns have the e-file option.
  • Business entity (BE) returns filed increased by 1 percent this year with 80 percent being e-filed.
  • The FTB issued more than 10.9 million PIT refunds totaling $10.4 billion and 87,000 BE refunds totaling $309 million.
  • The FTB allowed more than 348,000 Earned Income Tax Credit claims for $181 million in credit.
  • The FTB’s overall deposits were $27.1 billion, including $18.9 billion in electronic payments.
  • More than 56,000 new users registered for MyFTB account and 96,000 new users registered for CalFile online self-service. Taxpayers also used the “Check Your Refund Status” web application more than 3.4 million times.
  • The Tax Practitioner Hotline answered more than 113,000 calls, representing 74 percent of the calls received.
  • The Filing Compliance Bureau focused their education efforts on the escrow community in an effort to improve the real estate withholding process and accuracy of information received.