Templeton & Company

Templeton & Company, a 50-person CPA firm headquartered in South Florida, implemented Microsoft Dynamics CRM in 2002.  Although the company has a subsidiary firm, Templeton Solutions, which a Microsoft Dynamics Partner, the accounting practice still dealt with its own struggles and challenges in rolling out the solution firm-wide.  Here are their lessons learned: ... View Full Article

By: Steven Templeton, CPA, CVA, Managing Partner ... View Full Article

Providing nonprofit leaders in Palm Beach and Broward counties with the opportunity to seek advice and to listen to how similar organizations were able to overcome the obstacles they are currently facing is the goal of Templeton & Company's Quarterly Nonprofit Roundtable Luncheons. Templeton & Company's May luncheon series will feature a presentation on Grant Writing by Rick Dunion from the Executive Service Corps of Broward. The Palm Beach event will be held on Wednesday, May 19, from Noon to 1:30 p.m.; the Broward event will be held on Wednesday, May 26, from Noon to 1:30 p.m.

"Our local nonprofit organizations do so much to help the community, we are happy to host events that can provide them with information that could make their jobs a little easier," said Isabella Lunsford, Tax Partner, Templeton & Company.

For more information on these events, please e-mail info@templetonco.com. ... View Full Article

 

In the winter of 2007-2008, sweeping new financial reporting standards were launched - directly into the path of an unforeseen perfect storm.

Known as fair value accounting, these new rules had been years in development.  They were designed to unify global standards and provide greater transparency through market-based, rather than earlier cost-based, methods of valuation.

But no sooner had fair value gone into effect than markets worldwide all but evaporated in the worst economic crisis in over ninety years.  As asset values drifted erratically into what analysts called a "no man's land," accurate fair value reporting was put to the test.  And one obscure provision was taken head on by regulators.

We're talking about Level 3 Inputs as defined by Accounting Standards Codification Topic 820: Fair Value Measurements and Disclosures (ASC 820), the least understood and thorniest area of fair value asset valuation, yet a category now critical to many organizations.

Do a quick internet search and you'll get millions of hits on Level 3 Inputs, ranging from hard-to-follow bureaucratic explications to biased (often misinformed) broadsides in the blogosphere.  Our purpose here is to sift reality from perception and shed some light on this important area of financial reporting.

First, let's briefly define terms.

As outlined by the ASC 820 (f/k/a Statement on Financial Accounting Standards No. 157: Fair Value Mearsument), fair value reporting provides for three distinct levels of inputs.

Level 1 Inputs, which in theory comprise the preponderance of most organizations' portfolios, can be valued using independent observable market inputs: for example, stock prices as reported by the Wall Street Journal on a daily basis.  The idea is to peg an asset's value to what it would fetch today - right now - in an "orderly transaction" between "willing market participants."  Those two phrases are important.  Fair Value presumes the absence of compulsion or duress.

Level 2 Inputs don't have readily-available market inputs, but can be accurately valued using comparable and observable data points.

Level 3 is unique.

This tier was created as a kind of "none of the above" category for perceptible yet hard-to-value assets with no observable inputs.  Generally speaking, Level 3 Inputs either are illiquid or traded so rarely there is no independent market price.  Examples might be private equity investments or certain long-term derivative contracts (typically managed by hedge funds).

To put all this in basic language:  Inputs in Levels 1 and 2 are "mark to market," but assets in Level 3, where this is no market, are "mark to model."

Constructing those models is what makes Level 3 asset valuation so exceedingly complex.  To meet fair value disclosure requirements, these valuations involve a combination of management forecasts, various macroeconomic and internal data, sophisticated mathematical models and other proprietary techniques - in other words, experience and specialized expertise from your accounting and audit firm.  Including a coordinated effort from both your accountant and your investment managed to insure that you have obtained full and adequate disclosure regarding those assets. 

Sound accounting and audit procedure for Level 3 isn't astrophysics, but in some respects it's not far off either.

There's an irony here.  While Level 3 assets are by definition hard to value, they are often precisely the types of investments one would expect in a widely (and wisely) diversified portfolio.  Many large organizations - foundations, for example - hold significant and sound assets in this fair value tier.  But in the current economic environment, Level 3 also is home to distressed assets such as complicated mortgage-backed securities for which markets seized up and have remained stagnant, making "orderly transactions" arguably impossible.

Thus Level 3 reporting is not only complex, it can be controversial.

What's at stake for you?

Ultimately an organization's board, investors, creditors and stakeholders comprise the real-world "jury" for any financial statement.  Credibility is the lynchpin of quality financial statements.  Our experience with a wide range of clients has shown, when done properly, Level 3 financial reporting can ensure a high degree of transparency and confidence going forward. ... View Full Article

 

Templeton & Company hosts quarterly CFO Forums in the South Florida area that are dedicated to challenge, assist and develop the area's top Chief Financial Officers. Now this resource is available online at www.southfloridacfos.com.  ... View Full Article

One of the main challenges young individuals face when entering the field of accounting is the decision of when to take the CPA Exam, and how to balance the demands of life in the real world. The article below, discusses how our firm, Templeton & Co. ... View Full Article

Most CPA firms have yet to establish a social media policy, as they are likely considering the best approach to bring social media into the marketing mix.

Truth be told, there is no hard and fast rule on how companies should approach this. The accounting industry is no exception, and faces particular challenges in creating social media plans, such as whether to include client references, and giving tax or other consulting advice in a public forum and later being held responsible for it. ... View Full Article

If you don't really know what CRM (Customer Relationship Management) stands for or what it does exactly, don't worry because you're not alone. In fact, take a look at this blog by high technology marketing expert John Ryan, Accountant's CRM Use Just Doesn't Add Up. You'll see that CPAs have been one of the last professional services fields to see the value of customer relationship management tools. ... View Full Article

As a fellow marketer, I am engaged with many moving parts of the firm from overall strategic planning to the day-to-day execution needed to reach those goals.  Have you ever needed to start out from square one with outdated or incomplete databases every time you are about to execute a new campaign?  Do your Partners and Business Development team have sufficient information prior to meeting with prospects and/or delivering proposals? Please know this: you are not alone! ... View Full Article