ASSURANCE & ADVISORY____________________________________________________________

CFO Essentials Briefing: I’m Going to Live Forever

TAX____________________________________________________________

Tax Cuts 2012: Congress Extends the Payroll Tax Cut to the End of 2012

ENTERPRISE RISK MANAGEMENT SERVICES____________________________________________________________

Why It’s OK if an Elephant Sits on My Laptop

From the Managing Partner

TIME TO REFLECT

March 2012

Contents______________________________________________________________________________________________________________________________________________________

FROM THE MANAGING PARTNER2 T IME TO REFLECT

Can you believe that we are already into March and Spring is just around the corner? This time of year is always a good time to reflect back on what has happened and, more importantly, be proactive in looking at what the remainder of the year looks like. The following are just a few items you may want to consider as the season changes...

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ASSURANCE & ADVISORY3 CFO ESSENT IALS BRIEF ING: I ’M GOING TO L IVE FORE VER

In September 2011, the FASB amended its Goodwill Impairment rules to allow (but not require) an initial assessment of qualitative factors to assess the likelihood that the fair value of a reporting unit is less than its carrying amount. The assessment is used to determine whether it is necessary to perform the first step of the impairment test.

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TAX5 TA X CUTS 2012: CONGRESS E X TENDS THE PAYROLL TA X

CUT TO THE END OF 2012Congress passed the Middle Class Tax Relief and Job Creation Act of 2012 on February 17, 2012. Under this new Act, the payroll tax reduction is further extended. Specifically, the two percentage point reduction in payroll tax rate is now extended to the end of 2012.

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ENTERPRISE RISK MANAGEMENT SERVICES6 WHY I T ’S OK IF AN ELEPHANT SI TS ON MY L AP TOP

Are you ‘Clouded’ by today’s virtual technology? If you are, then dropping your laptop in a pool of water, out of a moving car, or even if it was stolen, wouldn’t really matter would it? Of course not! If you have embraced cloud computing, then your data is still safe in the Cloud, not where it doesn’t belong – on your laptop!

March 2012

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F R O M T H E M A N A G I N G PA R T N E R

TIME TO REFLECTBY DAVID KRAJANOWSKI | MANAGING PARTNERdkrajanowski@singerlewak.com | 949.261.8600

Can you believe that we are already into March and Spring is just around the corner? This time of year is always a good time to reflect back on what has hap-pened and, more importantly, be proactive in looking at what the remainder of the year looks like. The following are just a few items you may want to consider as the season changes:

Profit Plans – How is the busi-ness doing according to the plans for this year that were set up at the end of last year? Is the busi-ness ahead of plan, behind plan or on plan? What needs to be changed now? Are you coming off your season and need to cut back in certain areas? Are you going into your season and need to be ramping up? What is your backlog looking like? What ini-tiatives need to be put into play or adjusted from what you put into play during the first quarter?

Cash Flow Projections – Just as important if not more so, how is your cash position looking? Are your two major drains of cash, accounts receivable and inven-tories, in line with your expec-tations? As the economy still

remains a bit of a guess, proper monitoring of these two crucial areas is essentials. Nothing hurts worse than having a great quarter only to lose it by bad debts or getting stuck with obsolete inven-tory because no one was watch-ing the details.

Taxes – Yeah it is that time of year -whether it be personal or business! How many times do you say I never will defer tax planning again only to be divert-ed early in the year and then be forced to do a lot of late year-end planning because “things got in the way”. Now is the time to have that crucial tax planning meeting to make sure no opportunities are missed, especially with all the various tax incentives that are out there for the asking. Or to manage risk by making sure you are compliant in all the states you do business in before they come knocking on the door as strapped for cash, as most states are.

Financing – As calendar busi-nesses usually have their bank lines maturing in the second quarter, what is your story going to be? How did you preform compared to last year’s projec-

tions? What does your future hold? What needs are you going to require from your financial partner? Now is the time to get the story and all the supporting material together to put your best foot forward.

Estate Taxes – 2012 will be winding down sooner than any of us think, are you comfortable in your estate planning and gift-ing before the huge exemption limits expire at the end of the year? If selling your business was a high priority, you should be well into the process now if you want it completed by yearend.

Vacations – Something we all forget to plan but is needed as dearly as anything else in our lives to recharge our batteries. What are your plans to get away and remember why we do what we do? What is on your bucket list that you would like to scratch off this year?

We will be meeting with all of our clients over the next sixty days to review these points and others. Make it a great change of seasons!

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I’M GOING TO LIVE FOREVERBY JIM PITRAT, CPA | PARTNERASSURANCE & ADVISORYjpitrat@singerlewak.com | 310.477.3924

In September 2011, the FASB amended its Goodwill Impair-ment rules to allow (but not require) an initial assessment of qualitative factors to assess the likelihood that the fair value of a reporting unit is less than its carrying amount. The assessment is used to determine whether it is necessary to perform the first step of the impairment test. The issuance of the rules may have

created internal inconsistency related to other indefinite-lived intangible assets. In order to ad-dress these inconsistencies, the FASB has proposed to alter the rules similarly for indefinite lived intangible assets. The proposed guidance is Proposed ASU No. 2012-100, Intangibles—

Goodwill and Other (Topic 350)—Testing Indefinite-Lived Intangible Assets for Impairment. The proposed rules would permit an entity to conduct an initial qualitative assessment to deter-mine the likelihood that a non-goodwill indefinite-lived asset is impaired as a basis for assessing whether it is necessary to perform the quantitative impairment.

Analysis

Under the proposed guidance, FASB Accounting Standards Codification (ASC) Section 350-30-35, Intangibles—Good-will and Other—General Intan-gibles Other than Goodwill—Subsequent Measurement, would be amended. These amendments are meant to make the analysis of goodwill and indefinite-lived in-tangibles consistent. A summary of the proposed amendments is as follows:

•Companies could elect to per-form an initial qualitative as-sessment to determine whether it is more-likely-than-not that

an indefinite-lived intangible is impaired. If it meet the more-likely-than-not criteria, it would be necessary to calculate the fair value of the asset for purposes of comparing it with the asset’s carrying amount.

• Companies may choose not to perform the qualitative assessment for any indefinite-lived intangible in any period and proceed directly to the quantitative impairment test. In the event a company does this, it would still be able to resume performing the qualitative assessment subsequently.

•For the assessment, the com-pany would have to take into account all relevant events and circumstances that could af-fect significant inputs used in determining the fair value. This would include the following:

• Macroeconomic conditions such as a poor economy, access to capital, foreign exchange rates, state of the equity or credit markets.

• Industry and market conditions such as the environment in which

The assessment is used to determine whether it is necessary to perform

the first step of the impairment test

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A S S U R A N C E & A D V I S O R Y

the entity operates, competition, demand for the entity’s products, regulatory or political develop-ments, or a decline in market-dependent multiples or metrics either relative to the entity’s peers or in absolute terms.

• Increases in the costs of raw ma-terials or labor, having a negative impact on earnings or cash flows.

• Declining financial performance

• Other entity-specific events such as changes in management, strat-egy, or customers, among other factors.

• In addition to the foregoing factors, companies would also have to consider the following:

• Positive and mitigating circum-stances and events

• Recent fair value calculations (if relevant), when the value and the intangible asset’s carrying amount differ.

• Changes in the asset’s carrying amount

•Note: these factors are identical to those to be considered when performing the initial qualita-tive assessment in respect of goodwill.

After making the initial qualita-tive assessment, if it is more-like-ly-than-not that the intangible asset is impaired, then company would be required to calculate the asset’s fair value and compare with the asset’s carrying amount to determine whether an impair-ment loss would be recognized.

Conversely, if it does not meet the more-likely-than-not thresh-old, the calculation of the asset’s fair value would not be necessary.

The proposal not change the cur-rent requirement that non-good-will intangible assets not subject to amortization must tested more frequently if events or changes in circumstances indicate impair-ment.

The current impairment rules would also be amended to ex-empt nonpublic entities from the

requirement to disclose quantita-tive information, about signifi-cant unobservable inputs used in measuring the fair value of an indefinite-lived intangible catego-rized within Level 3 of the fair value, following initial recogni-tion.

Effective Date and Comment Period

The proposed rules would be effective for annual and interim impairment tests performed for fiscal years beginning after June 15, 2012.

Early adoption would be permit-ted, including for impairment tests performed as of a date prior to issuance of the final ASU un-der certain circumstances.

The proposal is subject to com-ment through April 24, 2012.

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CONGRESS EXTENDS THE PAYROLL TAX CUT TO THE END OF 2012BY MARISOL CASEY | TAX MANAGERmcasey@singerlewak.com | 949.261.8600

Congress passed the Middle Class Tax Relief and Job Cre-ation Act of 2012 on February 17, 2012. Under this new Act, the payroll tax reduction is further extended. Specifically, the two percentage point reduction in payroll tax rate is now extended to the end of 2012.

The two percentage point reduc-tion in payroll tax rate applies to Old-Age, Survivors, and Dis-ability Insurance (OASDI) taxes for employees and self-employed individuals. Employees will con-tinue to pay OASDI taxes at 4.2 percent for the entire 2012 year. For self-employed individuals, the tax rate stays at 10.4 percent to the end of 2012.

The impact of this extension is expected to reach many wage earners and self-employed indi-viduals. The Joint Committee on Taxation estimates about 170 million wage earners and self-employed individuals will benefit from this additional payroll tax cut extension in 2012.

In addition, the new Act repeals the recapture provision included with the original two months extension under the 2011 Act.

This recapture of the reduction in payroll taxes would have applied to individuals earning more than $18,350 from January to Feb-ruary in 2012 and would have been payable in 2013 with their income tax returns for 2012 year.

As your tax and business advi-sors, we want to make sure you are aware of the planning oppor-tunities currently available. Please feel free to contact any of our tax professionals with any questions you have regarding this or any other tax issues.

The two percentage point reduction in payroll tax rate is now extended to

the end of 2012

The impact of this extension is expected to reach many wage

earners and self-employed individuals

TA X

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WHY IT’S OK IF AN ELEPHANT SITS ON MY LAPTOPBY RICK MARK | SERVICE AREA MANAGERrmark@singerlewak.com

Are you ‘Clouded’ by today’s vir-tual technology? If you are, then dropping your laptop in a pool of water, out of a moving car, or even if it was stolen, wouldn’t really matter would it? Of course not! If you have embraced cloud computing, then your data is still safe in the Cloud, not where it doesn’t belong – on your laptop!

I know this sounded strange, but storing your data and running your applications in the Cloud can give you the ultimate in disaster recovery potential, data security and protection, and just about ‘anywhere use and ac-cess’ to your corporate data and applications. Today’s advanced applications delivery and integra-tion services in the Cloud are managing the loss of data risk for you, effectively and efficiently.

Cloud services from hosted Exchange email, accounting and ERP applications, to data backup and archiving tools are just the tip of the iceberg. If you are not sure you trust 3rd party provid-ers just yet, well, you can move your corporate server architecture to a local datacenter to accom-plish the same thing. Granted the latter solution still keeps you focusing on I.T. versus your business objectives, but at least you can minimize your carbon footprint and give yourself some better choices in how to utilize that expensive office space.

The Real Estate advantage is huge for Cloud adopters. No longer do you need extensive en-

vironmental controls, enterprise power redundancy, and complex business continuity planning and physical security. Whether you host your own or utilize one of the many “X as a Service” offer-ings, Cloud adoption will mini-mize your reliance on that server room and the responsibility and maintenance that goes with it. Even if you start small by testing the waters with outsourcing your email services, the amount of overhead and management cost you will save will be noticeable almost immediately.

When you lose that laptop, or its hard drive dies, or it’s just time to upgrade to a new computer – think of how much work you have to do now to migrate your data and applications, versus just turning the new computer on and browsing the internet to your provider…sound easy? It is and sure can be that easy.

Storing your data and running your applications in the Cloud can give you the ultimate in disaster

recovery potential

E N T E R P R I S E R I S K M A N AG E M E N T S E R V I C E S

W W W.SINGERLE WAK .COM | 877.754.4557

DAV ID KR A JANOWSKI dkrajanowski@singerlewak.com | 949.261.8600

J IM PI TR AT jpitrat@singerlewak.com | 310.477.3924

DAVE FREE dfree@singerlewak.com | 310.477.3924

HARMEE T SINGH hsingh@singerlewak.com | 310.477.3924

GLENN CARNIELLO gcarniello@singerlewak.com | 949.261.8600

SingerLewak is a leading regional accounting services firm in California with offices in Los Angeles, Orange County, Wood-land Hills, Monterey Park, San Diego, Silicon Valley and San Francisco. Serving California since 1959, SingerLewak has established a reputation for excellence as professionals with unparalleled expertise in the Accounting and Management Consulting industry. Providing the services of a large firm with a blended environment of practices, industry specializations and particular attention to hands-on service, SingerLewak continues to demonstrate leadership and industry growth year-over-year. Our client relationship approach and industry excellence is renowned.

We are nationally recognized as active community and profes-sional services partners, working among many sectors of the business world. Our core services deliver results whether it’s auditing, accounting, entrepreneurial business services, tax preparation, business management, SEC filings, transactions, enterprise risk management, forensic accounting, business valuation, litigation support, or consulting.

THE SKILLS YOU NEED. THE SERVICE YOU EXPECT.

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