MARIELA RUIZ, CPA, PLLC

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Tag: business audit

Accounting for Nonprofits: Unique Considerations and Reporting Requirements

February 9, 2024 / / 0 Comments

Nonprofit organizations play a crucial role in addressing social issues and making a positive impact on our communities. However, when it comes to financial management, nonprofits face unique considerations and reporting requirements that set them apart from for-profit businesses. Proper accounting practices are essential for nonprofits to demonstrate transparency, accountability, and maintain the trust of their donors and stakeholders. In this blog post, we will explore the distinct aspects of accounting for nonprofits and shed light on the specific reporting requirements they must adhere to.

Classification of Funds & Compliance with Reporting Requirements

One of the key differences in accounting for nonprofits lies in the classification of funds. Nonprofits often receive contributions that are restricted for a specific purpose, such as a capital campaign or program funding. These funds must be carefully tracked and reported separately from unrestricted funds. Nonprofits must also consider the treatment of in-kind donations, which are non-cash contributions like services or goods. While these donations can be valuable, they require specific accounting treatment to reflect their fair value accurately.

Another crucial aspect of nonprofit accounting is compliance with reporting requirements. Nonprofits are subject to various regulations, including filing annual reports with the appropriate government agencies and providing financial statements to donors and the public. Additionally, depending on the size of the organization and the amount of funding received, nonprofits may need to undergo independent financial audits. These audits provide an objective evaluation of the organization’s financial statements, enhancing transparency and accountability.

Related: “Best Bookkeeping and Accounting Practices for the Success of Your Business”

Revenue Recognition

Nonprofit organizations must also pay attention to their revenue recognition practices. Unlike for-profit entities that primarily focus on revenue generation, nonprofits rely heavily on contributions and grants. When recording these funds, nonprofits need to determine whether they should be recognized as revenue immediately or over a period of time. This consideration ensures that the financial statements accurately reflect the organization’s financial health and performance.

Related: “Tips For Keeping Accurate and Organized Financial Records”

Conclusion

At Mariela Ruiz, CPA, PLLC, we understand the unique accounting challenges nonprofits face and are here to help. Our experienced team has the expertise and knowledge to navigate the complexities of nonprofit accounting and reporting requirements. Whether you need assistance with fund classification, compliance, revenue recognition, or any other accounting matter, we are committed to providing tailored solutions to meet your organization’s needs. Contact us today at (956) 997-0067 or visit our website mruiz-cpa.com to learn more about our services and how we can support your nonprofit’s financial success.

How Forensic Accounting Saves Your Business from Fraud

August 26, 2022 / / 0 Comments

No company in the world is completely safe from a variety of internal and external threats such as fraud and misinformation. As such, it is critical for a business to work with forensic accountants to make sure everything is in order regarding accounting and bookkeeping operations. Forensic accountants have keen minds and they like figuring out what really happened! In this month’s blog, we will discuss how forensic accounting keeps your business away from fraud and how to choose the right accountant for this task.

You May Benefit From A Forensic Accountant If…

First of all, before hiring a forensic accountant, you have to determine when and why you need their services and help. Well, if you have been robbed, are suffering from commercial damages, or even if you catch one of your employees stealing from your business, then it’s time to seek their assistance. A forensic accountant is a trained professional that combines a set of skills to investigate financial cases from the inside out.

Related: Learn more about the main role of a forensic accountant here.

How to Hire the Right Forensic Accountant

A forensic accountant must have many skills to be able to do their job to the fullest and provide the desired results. Nevertheless, forensic accountants can specialize in a variety of industries. Therefore, hire someone who has undertaken similar cases before. Not to mention that you have to research their portfolio, experience, and credibility.

The Objectives of Forensic Accounting

While forensic accounting primarily aims to detect fraud in financial activities, it has much more far-reaching implications than simply identifying fraud.

Below are four forensic accounting objectives:

  • It can help the company reduce losses significantly.
  • Forensic accounting ensures that business activities are legitimate.
  • It can help businesses avoid a range of legal threats.
  • Forensic accounting can help a company develop value-added economic policies.

Related: Learn more about forensic accounting and how it works here.

Conclusion

Nowadays, our news feeds are constantly flooded with stories regarding fraudulent acts. The age of the internet has given scammers and cybercriminals an opportunity and a channel to fraud businesses. This is where a forensic accountant comes in handy. If you need seasoned a forensic accountant in Mission, TX, choose MARIELA RUIZ, CPA, PLLC. We have many years of experience in the industry and specialize in all accounting areas. To learn more about our accounting firm and services, visit our website.

Ways to Help Your Clients Survive an Audit

June 24, 2022 / / 0 Comments

Audits can happen to anyone and at any time and can easily stress and petrify any client or tax professional. As a result, it is your responsibility to look after your client and ensure that they face the situation with caution. With your assistance, advice, and support, your clients can deal with audits professionally. Not only this, but with your necessary accounting and tax services, your clients can easily overcome late tax payments, fines, and other issues. To help you out, we have created a guide that will help you know what to do if your client ever goes through an audit.

You can be a representative.

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At times, tax rules can be complicated and can vary depending on the situations and clients. Therefore, it becomes necessary to have adequate counsel from a professional and well-experienced tax specialist. If you are a CPA or an enrolled agent, then you can easily be a volunteer and represent your client. This way, you can ease the stress of your client and seek out better solutions for audits.

Related: “How to Minimize Your Chance of an Audit”

Assist your client with their tax record.

Try to assist and work with your client to make sure all the valid records are arranged in the correct order and can easily be submitted to the IRS for a successful audit. You can also advise your clients to keep clear and transparent records throughout the year. This way, you have all the important information readily available if the IRS needs it.

Everything is written in black and white.

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Ask your client to demand their auditors capture their contacts on paper or with narrative explanations. Not only that, but you can also encourage your clients to keep records of all their formal and informal contacts with their auditor. This allows you to easily take care of the official requests and document exchanges that may likely appear in the future.

Related: “What is the Audit Process?”

Plan ahead of time.

Instead of rushing at the end, encourage your client to plan ahead of time. Ask them to arrange all the paperwork correctly and provide support for the position they have taken or plan to take. Though time extensions are frequently granted on legitimate requests, it is still better to take the proper time to plan ahead because you might not know what circumstances and challenges you might encounter in the future.

The Bottom Line

If you need professional auditing advice, rely on MARIELA RUIZ, CPA, PLLC. We are here to make the process easy and stress-free for our valued clients. Just let us know your requirements and we will ensure all your audit needs are successfully met. Learn more about our services by visiting our website or by calling us at (956) 997-0067.

How the Landscape of Internal Auditing Will Change in Coming Years

May 27, 2022 / / 0 Comments
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COVID-19, undoubtedly, affected the entire work dynamics and environment on a global level. Every field had to adapt to new circumstances. Internal auditing faced a number of unprecedented challenges. It brought a number of opportunities and challenges alike. It has, in fact, become a race against time to be prepared for the inevitable. The following are the key risks we believe that internal auditors will need to focus on.

Cybersecurity

Cybersecurity is an elephant in the room and we need to address it fast. With COVID-19, we saw an increased dependance on technology among all organizations, no matter what field you choose to review. Cybersecurity has become one of the greatest concerns among corporations and businesses. Data security should be the first concern of internal auditors in 2022.

Other Risk Factors That Require Auditing Efforts

Apart from cybersecurity, the following are growing key risk factors that all internal auditors must be prepared for by 2030:

  • Continental drifts in the global economy
  • Diversity of the workforce
  • Efficacy of management from the top hierarchy
  • Inevitable climate change
  • Rising artificial intelligence and its implementation

Strategies and Resources to Overcome the Upcoming Challenges

There is always a silver lining to a dark cloud. Amidst the crisis, resources have grown considerably in favor of internal auditors to tackle the aforementioned risks of the future. Here are some tactic driven approaches to take out the problem in a constructive manner:

  1. Proactively prepare for the key risks by considering their solutions right now rather than later.
  2. Figure out the necessary skills required for the future and train your staff, so everyone is equipped with an adequate skill set for a relevant job market.
  3. Develop a communication link between the workers and stakeholders in the organization for a better understanding of the company’s future goals.
  4. Introduce and adopt technology and the latest methods and practices of the trade to maximize results and stay up to date with the market.
  5. Gather all the experience and data retrieved through remote working and test possibilities with a hybrid-working environment.
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Conclusion

Internal audit requires many qualifications and years of experience to develop an insight on how finances run through the market and corporations. Are you looking for a public accountant to take care of your financial affairs? Let a professional do it for you. MARIELA RUIZ, CPA, PLLC offers professional accounting, bookkeeping, and tax preparation services at affordable rates in Mission, TX. Visit our website to learn more about our services or simply give us a call at (956) 997-0067 for further assistance.     

What is the Audit Process?

September 29, 2021 / / 0 Comments

Usually referred to as a financial statement audit, an audit is an unbiased examination and evaluation of the financial records of an organization. This process ensures that all records, statements, and transactions are fair and accurate to what the organization reports. Audits can be conducted internally by the organization’s employees or conducted externally by an outside CPA firm. In this month’s blog, we examine the four main phases of the audit process and how it is conducted.

Planning and Preparation

During the planning phase, the auditor will notify the client and discuss the scope and objectives of the evaluation in a formal meeting with the organization’s management. The auditor will also request a copy of the previous audit report, original bank statements, receipts, ledgers, and other necessary files. After gathering background information and meeting with key personnel, the auditor will begin preparing a draft of the audit plan and how it will be executed.

Fieldwork

The fieldwork phase, also known as the execution phase, involves the auditor speaking with staff members and reviewing procedures and processes. There will be tests conducted for compliance with policies and procedures as well as evaluating internal controls. The auditor will also identify and discuss any problems that arise.

Audit Report

After conducting all of the necessary interviews and tests, the auditor will then finalize their audit report draft for review. This report outlines the objective and scope of the audit, relevant background information, the findings, any errors, and recommendations for improvement or correction. During this time, the draft will also be sent to management for their review and will give them a chance to respond to the report. Their responses should include their plans for improvement or correction and what steps they plan to take.

Closing Meeting and Follow-up

Finally, a closing meeting is scheduled with management and the entire report, responses, and any revisions will be reviewed and discussed. If there any issues, they will be resolved in this meeting and once all parties have come to an agreement, the audit report will be finalized. The final audit report including the management responses will then be distributed to all department personnel involved in the audit as well as to the CPA firm if an external auditor was enlisted.

After approximately six months to a year, a follow-up review will be performed to ensure the corrective measures were implemented. The effectiveness and timeliness of actions taken by management since the start of the audit will be evaluated.

Learn More

When you need an audit conducted, call on the reputable services of MARIELA RUIZ, CPA, PLLC. We have many years of experience executing audits and strive to help companies improve their operations and internal workings. We are here to help you accomplish your objectives and improve the effectiveness of management and other procedures. Learn more by visiting our website or by calling (956) 997-0067 for any questions.

Accounting for Small Business Owners

June 30, 2021 / / 0 Comments

One of the most challenging jobs entrepreneurs and small business owners are responsible for is accurately managing their finances and taxes up to legal standards. From payroll services to tax preparations most small business owners find that investing in expert outside help is well worth ensuring meticulous perfection throughout the books. Below we review some key points you or your CPA should be aware of when managing the finances for your small business.

Bookkeeping

It’s crucial for small business owners to keep accurate financial records regarding all aspects of their business through bookkeeping. Bookkeeping can include anything from payroll services and financial statement preparation to reviewing invoices and managing expenses and revenue. It provides vital data that can help with management decisions, taxes, and getting approved for business loans.

Audits

Nearly all successful businesses will perform regular internal and external audits to ensure authenticity and search for any inconsistencies. External audits are more effective than internal audits than because they eliminate any possible conflicts of interest, must be completed by a CPA, and provide impartial results.

Taxes

When it comes to small business taxes there is so much more involved than just the tax preparation itself. Many small business owners benefit from strategic tax planning and audit representation to further ensure their business is safeguarded by the best. Texas is home to the second largest economy in the country and with that comes unique tax conditions for franchise owners, limited liability companies, sole proprietorships and other small business owners.

Final Thoughts

Over the years Mariela Ruiz, CPA, LLC has provided countless business owners in Hidalgo County, TX with affordable and convenient bookkeeping and payroll services including audits, tax preparations, financial consulting, forensic accounting and much more. Visit our website for a full list of our array of services or call (956) 997-0067 for any questions you may have.

How to Minimize Your Chance of an Audit

March 2, 2020 / / 0 Comments

Tax season is upon us. Whether you intend on getting money back from the government or paying in, every citizen is at risk of being audited if the IRS is tipped off by discrepancies or other suspect information on your tax return. Read the following tips to learn how to avoid an audit this tax season.

Inaccurate Donated Amounts

The IRS encourages individuals to donate clothes, food and even used cars to charities. It does this by offering a deduction in return for a donation. The problem is that it is up to the individual owner to determine the value of the item. As a general rule, the IRS likes to see individuals value the items they donate anywhere between 1% and 30% of the original price. Unfortunately, many taxpayers ignore this guideline or simply aren’t aware of it.

There are several other ways that the taxpayer can ensure that they are valuing donated goods at an equitable price.  One of the ways is hiring an appraiser to write a letter, naming their opinion on the worth of the item.

Simple and Avoidable Math Errors

Many returns are selected for audit due to basic mathematical mistakes. When filling out your tax return (or double-checking your accountant’s work) make sure that the numbers add up. Also, make sure that the total dollar value of and/or losses are properly calculated. Even the smallest errors can alarm the IRS.

Failure to Sign

A surprisingly large number of people simply forget to sign their tax returns. Don’t be a part of this group. Failure to sign the return will almost guarantee additional examination because the IRS will wonder what else you might have forgotten to include in your records.

Under-Reported Income

It is vitally important that you report all income that you received throughout the year from work and/or from the sale of an asset. If you fail to report income and get caught, you will be forced to pay back-taxes plus penalties. While it may be tempting to not report some income, it’s better to be safe than sorry.

Home Office Deductions

Be careful with home office deductions. Deductions that are too large in proportion to your income can raise a huge red flag. For example, if you earned money as an accountant working from home, extravagant home-office related deductions will raise the ire of the IRS.  Deduct only items that were used in the course of your business.

Conclusion

When it’s time to file your annual taxes, make sure you cover all your bases to avoid scrutiny from the government. While there is less than a 1% chance you will be chosen for an audit, there’s no reason to not take every precaution just to be safe. For exemplary accounting services and tax services you can trust, contact the experts at Mariela Ruiz, CPA, PLLC.

3 Types of Small Business Audits

July 25, 2019 / / 0 Comments

All business audits share things in common, but do you know what they entail? The auditor, whether someone within your business or an external auditor, will do a thorough evaluation of your accounting books and financial statements. They usually check an entire year’s worth of financial data, including income and expenses. If you’re a small business owner, or maybe just curious about the auditing process, keep reading to learn about the different audits for businesses.

Internal Audit

An internal audit is a self-audit that’s scheduled and conducted by a representative of your own company. Many businesses do an internal audit once a year to ensure the accuracy of their books and financial statements. An internal audit is for your own purposes, and to check for errors or other issues.

Larger companies usually have audit departments, but a smaller business might employ just one or two people to conduct audits. Internal auditors don’t just check business finances; they also check company policies, procedures, and processes to check compliance with internal guidance and federal, state, and local laws.

External Audit

An external audit, also known as an independent audit, is an audit conducted by someone outside the organization. This is called an independent audit because the auditor has no loyalty or responsibility to the business that could create a conflict of interest. In their report, they’ll have to provide an opinion as to whether your company passed the audit. An auditor might take one of the following stances in a business audit:

  • Clean opinion – The business’s books and financial statements accurately represent the company’s financial position.
  • Qualified opinion – The auditor disagrees with parts of the company’s financial records, but the audit was too limited in scope or access to come to a definitive conclusion.
  • Adverse opinion – The auditor found that the business financial records materially misrepresent the company’s financial position.
  • Disclaimer of opinion – In this type of report, the auditor doesn’t give any opinion on certain financial records.

IRS Audit

An IRS audit occurs when the IRS finds potential errors in your tax return. Usually, the IRS schedules audits for tax returns that were filed in the last three years. A few factors can trigger an IRS audit. For example, if you claim losses for multiple years in a row or report high income levels, you may be subject to an IRS audit. 

Conclusion

As you’ve read above, small businesses go through the audit process to check on financial records and other important documentation. Whether it’s an internal or external audit, it’s best to let a professional do the job. At MARIELA RUIZ, CPA, PLLC, we have the audit services you need to keep your business in check. Contact our team today!

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