Thursday, May 17, 2012

Manufacturing & Distribution E-News December 2011

mandisenews-headerv2
DECEMBER 2011

RubinBrown's Manufacturing & Distribution E-News is published 
to inform our clients and contacts about relevant
manufacturing and distribution-related accounting information.

Tax Incentives to Drive Sales

PDFPrintE-mail

Many companies are effectively incorporating the current tax incentives into their sales efforts to generate more sales.  Because these incentives start to expire at the end of 2011, it is important to deliver the message to your potential customers now.

One of the most popular incentives businesses currently can take advantage of is bonus depreciation.  Companies can deduct in 2011 100% of qualifying depreciable property that is placed in service, which results in a lower tax burden in the current year for the company that purchased the property.

To qualify for the deduction, the depreciable property’s use must begin with the taxpayer, the tax life must not be greater than 20 years, the new property must be predominantly used in the United States and it must be acquired by the taxpayer before Jan. 1st, 2012 with no written binding contract entered into before Dec. 31st, 2007.  Beginning in 2012, the bonus depreciation deduction is set to decrease to 50% and is set to expire at the end of the calendar year.
   

Conducting Effective Inventory Counts

PDFPrintE-mail

Preparing for an inventory count can be a large task that involves many parties.  Below are a few suggestions in conducting an effective count and how to work with an auditor.

CONDUCTING THE COUNT
To facilitate accurate inventory counts, your company should ensure the following:

The inventory is well organized and is arranged for easy access and counting.
  • Any obsolete or consigned inventory is segregated and identified.
  • Movement of goods is stopped or controlled during the count.
  • A systematic approach to counting the inventory is used.
  • Detailed, written count instructions are provided to all parties contributing to the count.
  • Maintain notes on the number of count teams and the duration of the count, and make recommendations for adjustments to the process for the next year physical count.
If inventory tags are used:
  • Use them sequentially and systematically, and make sure all inventory tags are accounted for as used, unused, damaged, or voided.  
  • Also make certain these tags are not removed until the final inventory count adjustments are completed.

WORKING WITH AN AUDITOR
If your inventory count will be observed by an auditor, here are a few things that you can do to make that process go smoother:
  • Identify key controls in the inventory count process and communicate them to the auditor.  This may improve the efficiency of the inventory observation process.
  • Auditors will often ask for information such as invoices, shipping records or receiving reports.   Make sure someone is available to pull these items during or after the observation.
  • Identify someone who will work with the auditor during the observation and to assist with the understanding of work-in-process inventory stages and movement.
A few more things to keep in mind about auditors:
  • The observation of inventories is a mandatory generally accepted auditing procedure.  The goal of the auditors is to review and evaluate the reliability of the client’s inventory procedures, and not to recount the entire inventory themselves.
  • If inventory is counted by an independent outside party, auditors may still need to observe the physical inventory counting process.
   

ST. LOUIS
Jim Mather, CPA
Partner-in-Charge
Manufacturing & Distribution Group
314.290.3470
jim.mather@rubinbrown.com

KANSAS CITY
Todd Pleimann, CPA
Managing Partner-Kansas City Office
Manufacturing & Distribution Group
913.499.4411
todd.pleimann@rubinbrown.com

DENVER
Russ White, CPA
Partner
Manufacturing & Distribution Group
303.952.1247
russ.white@rubinbrown.com
bakertilly
<