MNCPA General Industry Task Force recap
Revenue recognition and PPP loans top the list of most common issues
Gina Schneider, CPA, Lawrence Cumpston & Associates, PLLP | April/May 2022 Footnote
Editor's note: Updated March 29, 2022
Every year, an experienced group of accounting professionals volunteer their time and talents to the MNCPA General Industry Task Force. This year, there were 23 financial statements submitted from firms across the state. Here are common issues that were noted during the group’s review of the financials.
Revenue recognition
This was a common issue because the disclosure requirements are fairly new. Many disclosures were missing the beginning-of-year balances of contract assets and contract liabilities.
Several others did not have any disclosures regarding the accounting policy change or a revenue recognition disclosure that adequately covered the newly required policy.
Disclosures (excerpt from FASB ASU 2014-09)
An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative information is required about:
- Contracts with customers — including revenue and impairments recognized, disaggregation of revenue, and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations).
- Significant judgments and changes in judgments — determining the timing of satisfaction of performance obligations (over time or at a point in time) and determining the transaction price and amounts allocated to performance obligations.
- Assets recognized from the costs to obtain or fulfill a contract.
Paycheck Protection Program (PPP) loans
Several financial statements had confusing wording regarding the PPP loans received and/or loan forgiveness. Also, a few financial statements had forgiveness recognized when the PPP loan had not been forgiven yet with no disclosure about using the grant option or reflecting it correctly in the financials.
Small items
Consistent wording and references should be matching throughout the financials.
We encourage firms across Minnesota to take advantage of this MNCPA program for any financials they are unsure of or would like professional confirmation of their choices.
Gina Schneider is a partner at Lawrence Cumpston & Associates, PLLP with more than 15 years of experience in accounting, tax and business consulting. She is a board member of the Duluth Superior Transportation Association and a member of the Wisconsin Motor Carriers Association. Gina is licensed in Minnesota and Wisconsin.
What is the MNCPA General Industries Review Task Force?
The task force is a group of MNCPA members who annually assist firms with improving the quality of their financial reporting. The task force reviews audited, reviewed and compiled financial statements, voluntarily submitted by Minnesota CPA firms, and supplies constructive, educational and confidential feedback to the firms. The reports and financial statements are given to task force members anonymously and are considered confidential. The task force, composed of volunteers, is not part of the MNCPA Peer Review Committee or any other sanctioning authority.
Volunteer for the task force
Now’s the time to consider volunteering for the General Industries Review Task Force. One-on-one and group discussions take place with other task force members, providing a great opportunity for professional growth. Contact Heidi Janssen at hjanssen@mncpa.org if you are interested in volunteering.
