National Society of

Accountants for

Cooperatives

Pacific Northwest Chapter Newsletter

Winter 2016

2016 is coming to a close as I write this letter on December 14. I hope it was a good year for you personally and professionally. Seems the older I get, the faster the years pass, I swear it was Thanksgiving just last week and summer the week before. I sup-pose our perception of the passage of time highly correlates to our busier than ever lives. School, work, family, community, whatever it is that fills your days, as the holiday season approaches remember to take some time out for yourself and those that are im-portant to you. There are seven days in a week, but “someday” isn’t one of them, so you’ve to make the time to make it happen today. Well, that was your moment of inspiration for the day, now back to the NSAC. Lots of great things happened in our chapter of the NSAC this year, we’ve added several new board members with fresh perspectives, we had a great annual meeting in Yakima, many of us enjoyed the National NSAC meeting in Washington D.C. and we can look forward to the Fruit Industry Seminar coming up in early January in Wenatchee. I am convinced there still is no better organization than the NSAC to help you navigate you’re cooperative’s legal, accounting and tax needs. Be sure to take advantage of all the NSAC has to offer, you’ll be a better professional and your cooperative or coopera-tive clients will benefit. So, as 2016 comes to a close, on behalf your chapter’s board of directors, I wish you

the best holiday season and a healthy, safe and prosperous 2017!

-Jeff Dieleman

Register

285 Technology Center Way Wenatchee, WA

January 11, 2017

2017 Annual Fruit Industry Seminar

Cooperative Learning NetworkCooperative Learning NetworkCooperative Learning Network

Preparing Form 1094-C and Finalizing Forms 1095-C

February 04, 2016 – “Preparing Form 1094-C and Finalizing Forms 1095-C and for the IRS” – Timothy Goodman, Partner, Dorsey & Whitney LLP and Rebecca Smith, Tax Director, CliftonLarsonAllen LLP

Date: Thursday, February 04, 2016 Time: 11:00 AM ET / 10:00 AM CT / 09:00 AM MT / 08:00 AM PT Presenter(s): Timothy Goodman, Partner, Dorsey & Whitney LLP and Rebec-ca Smith, Tax Director, CliftonLarsonAllen LLP Objective: This one hour session is designed to help attendees understand the changes to Form 1094-C

Advanced A&A Seminar

Date: Wednesday, February 17, 2016 Time: 11:00 AM ET / 10:00 AM CT / 09:00 AM MT / 08:00 AM PT Presenter(s): Phil Miller, Retired and Don Frederick, Retired Objective: Training designed for hires that may be new to the cooperative and other employees of cooperatives and firms serving cooperatives.

Click here to Register

Click here to Register

February 17, 2016 – “Advanced A&A Seminar” – Phil Miller, Retired and Don Frederick, Retired

On the financial front NSAC has maintained our overall financial position even though

membership is down and the conference registrations were down, and the conference ex-

penses were up.

The Chapter Development Committee has conducted calls to review the CRP, or

Chapter Recognition Form. Revisions have been made for 2017 and the revised CRP is now on

the website and in the updated Leadership manual for 2017 also on the website. Of note in

2016 six chapters earned the top award available which is a complementary registration for the

national conference, and three chapters earned $100. Out of 10 chapters, 9 earned an award.

The membership committee has also continued to conduct quarterly committee calls reviewing

past due members, new members and methods of contact and follow up. The Committee has

remained committed to new members and we will be giving away gift cards to randomly select-

ed members that have sponsored a new member in NSAC from August of 2016 through July

2017. The sponsoring member does not need to be present to win.

The National Program Planning Committee has been actively working on the joint conference

in Salt Lake City. The conference schedule continues to be developed and the committee is now

having regular bi weekly calls. If anyone is interested in being on the committee, we always

have room for more.

Continued...

National Office Update for National Directors

December 2, 2016

...Continued

The Tax Committee has been meeting regularly to identify, develop and support the tax track in

the upcoming conference. They have also identified the likely chance of significant changes to

the code, and they are preparing a special session at conference to discuss.

The Marketing Committee will begin to have conference calls again to consider ways to

enhance the value of membership for existing members, and to consider outreach to those

who could help encourage others to join NSAC.

The number of people sitting for CLN’s continues to increase even though the number being

offered has settled into the 2 per month average. We also anticipate the electric chapter devel-

oping several CLN’s that are focused on electric coops.

Bill Erlenbush has continued to add articles to the Best Practices section that is intended to

function a little bit like a Wikipedia format. Unlike Wikipedia where an update can occur

online, etc. We are hoping that as members read and review the position papers that comprise

the best practices, that should a member feel the need to update a Best Practice, they can send

an edit to the national office to allow us to review and then we can revise accordingly. Bill sup-

ports the hot topics section of the website as well.

Linda Gray

Financials

Summary 5/1/2016 12/15/2016 Change

Checking Account $5,881.68 $3,368.66 ($2,513.02)

Savings Account $24,708.54 $24,712.91 $4.37

Total $30,590.22 $28,081.57 ($2,508.65)

Checking Account

Balance: May 1, 2015 $5,881.68

National NSAC Rebates $1,560.00

National NSAC Conferences

Expenses ($2,506.92)

National NSAC Award $0.00

($2,506.92)

Wells Fargo Service Charge $0.00

2015 NSAC PNW Chapter Annual Meeting

Expenses ($4,721.10)

Registration Revenue $3,155.00

($1,566.10)

2016 NSAC Fruit Seminar

Expenses $0.00

Registration Revenue $0.00

$0.00

Transfer from/(to) Savings $0.00

Balance: May 1, 2016 $3,368.66

Savings Account

Balance: May 1, 2015 $24,708.54

Wells Fargo Interest $4.37

Transfer to Checking $0.00

Balance: May 1, 2016 $24,712.91

Deep in the heart of a steaming jungle, a ramshackle mining town is full of dangers like mudslides, snake-

bites, and tropical diseases. Even getting here is an adventure that requires a small plane, a day spent

navigating seething rivers, or a hair-raising 4x4 ride over ungraded roads. There are few comforts here

and, apart from items in a small camp commissary, almost nothing to buy.

It may seem the most unlikely place on earth to uncover an elaborate fraud scheme. But as Mary Breslin,

CIA, CFE, discovered, “The accounting team had this fantastic, controlled, double sign-off process for the

miners’ cash. It was placed in envelopes, which were actually sealed with wax, and then hand-delivered

to each person, who had to count and sign for it.” Just one problem — the same payroll agent who pre-

pared the miners’ checks was also entrusted with making the bank run to withdraw their cash. It was easy

enough to add extra money to each check, pick up the cash, and pocket the difference.

Upon further investigation, Breslin unmasked the same employee as the culprit in a massive, years-long

payroll fraud. “It looked like there was this great process,” says Breslin, today an independent audit trainer

and consultant. “But they never reconciled the pay register to the actual take-home pay of the miners,

and they never reconciled their pay register to their HR roster. If they had done any of those things even

one time, they would have found ghost employees who had been there for years.”

No business professional thinks they’re an easy mark. Yet thousands of fraudsters roam today’s organi-

zations, and they’re making off with millions of dollars each year. These conniving crooks are relentless in

exploiting our complacency, coming up with inspired twists on the same old cons. Leonard Vona, CPA,

CFE, of Fraud Auditing Inc., spells it out: “A lot of fraud scenarios are common to all businesses. The fun-

damental schemes of 30 years ago are the same schemes occurring today.”

If the schemes are so well known, why do they keep happening? “For decades, the profession has been

talking about fraud data analytics as one of the key skills required for auditors,” Vona explains. “Years lat-

er, we’re still talking about it.” According to Vona, too many audit teams begin and end their war on fraud

by purchasing a detection tool. “We’re comfortable as a profession with compliance and internal controls.

But combating fraud is a different animal. It begins with understanding the specifics of your business sys-

tems and the scenarios that make you vulnerable to fraud.”

The next step is to build an audit program to search for these scenarios. To help you get started, here are

three classic fraud scenarios, along with some savvy approaches to fraud data that real-world CPAs and

fraud professionals are using to protect their organizations.

Continued...

The Best Kept Secrets of Fraud, Part I Source: AccountingToday – Daily Edition – November 7, 2016

Scenario #1: fictitious employees

Ghost employees may be entirely fictitious, or they may be former employees or contractors who were

never purged from the system. As Breslin discovered at the mining company, “The payroll manager had

added 19 fictitious employees, in addition to pocketing the extra payday cash. And because there’d been

a change in computer systems, we could only go back three years. We’ll never know how long he had

been doing it.”

Breslin trains Fortune 500 accountants and auditors on how to combat fraud. “I can’t tell you how many

times someone comes back and tells me that they zeroed in on fictitious employees and immediately

found fraud. It happens every time. This scheme is very common, yet most organizations don’t look for it.”

“It sounds simple,” Vona concedes. “But the methodology for fraud risk identification is missing from most

of the literature. Most auditors need help in paring down a list of fraud scenarios that exist in the business

systems they’re auditing.” It helps to break the scenario into its components:

• WHO is committing the fraud? (in this case, the payroll function)

• WHAT type of entity is involved? (in this case, fake employees)

• WHEN and WHERE does the fraud transaction take place? (in this case, the pay register)

• HOW can an audit step be added? (in this case, what specific tests will find employees who don’t actu-

ally exist?)

In other words, take heart—fraud detection doesn’t have to be complicated! After all, real employees do

real things—they take vacation and sick time, sign up for benefits for their spouses or children, have their

wages garnished for child support, and participate in employee charitable campaigns. They scan their

badges in and out, punch time clocks, and log in and out of their computers.

Ghost employees don’t do any of those things. They just get paid like clockwork, with the money being

deposited right into the pocket of your friendly neighborhood payroll fraudster. “The details of the ghost

employee fraud will vary from one organization to the next,” Breslin says. “Each company has a different

culture, with different processes and different systems. The key to uncovering this scheme is looking for

what’s not there.”

Vona notes, “What the auditor does is look for patterns and frequencies. There’s no official rulebook on

this. It’s somewhat dependent on what the perpetrator thinks they can get away with. With all that said, by

working through your scenarios, you start to understand what fraud detection really looks like.”

(Source: AccountingToday – Daily Edition – November 7, 2016)

Avoiding the Doomsday Countdown:

How Companies Can Prepare for

Changes in Revenue Recognition

The countdown is on for 2018, as new international accounting rules, IFRS 15 for

international countries and ASC 606 for the U.S., will change the way companies

need to manage revenue recognition.

While 2018 seems far away, a recent survey by PwC and the Financial Education

Research Foundation found that 75 percent of companies haven’t completed an

initial assessment of the standard’s effect, and nearly 27 percent of respondents

haven’t started the assessment process. This is a huge problem because it takes the

average Fortune 1000 company 18 months to get ready for a change of this

magnitude—a milestone that just eclipsed us in June.

Regulatory compliance is non-negotiable and imminent changes to accounting

standards are likely keeping chief accounting officers and CFOs up at night. With a

compliance deadline looming, corporate finance departments need to act now to

ensure they’re ready when the standards take effect.

What’s Changing?

The new revenue recognition standard will supersede virtually all current revenue

recognition requirements. These new standards—passed in 2014—eliminate the

transaction and industry-specific revenue recognition guidance under current GAAP

and replace it with a principle-based approach for determining revenue recognition.

While public companies are expected to comply with these standards sooner than

private entities, all organizations that have contracts with customers are effected—

whether public, private or nonprofit.

The actual date of compliance is specific to the fiscal year of

each company, but generally Jan. 1, 2018 is seen as the dead-

line for public companies, with private companies gaining an

extra year to meet the new standards.

Challenges Ahead

While it may seem that companies have plenty of time to adjust to IFRS 15, time is

actually running out. Finance professionals that have yet to begin their assessments

are in serious danger of not meeting the January 1 deadline, which could lead to in-

vestor discomfort, penalties and fines.

Another challenge when it comes to racing the clock is training talent for these new

standards. It can take a traditionally trained accountant up to nine months to get up to

speed. While the updated revenue recognition standards have been a part of the

higher education curriculum for years, existing staff will need training, and companies

will need to work on a strategy for attracting millennial CPAs. Finance departments

should also be prepared to partner closely with operations, sales and IT, because the

standard affects so many aspects of the business.

Beyond the pressure of the final countdown, the impact on revenue is one of the

most top-of-mind factors for corporate finance departments. While some businesses

might not notice a big difference in their final reporting, certain industries such as tel-

ecommunications and leisure/vacation could be greatly impacted due to multi-year

contracts and revenue streams that are calculated on an installment basis.

A change in revenue recognition standards can impact not only how revenue is cal-

culated, but change the outcome and timing of earnings, and how those are an-

nounced and communicated to investors and key stakeholders.

How Companies Can Adopt

Since the prospect of preparing for the new revenue recognition standard can be

daunting, companies should begin preparing as soon as practicable for the transition

by understanding their systems and the tools available to them. How an entity choos-

es to adopt the revenue recognition standard dictates how many years of revenue

will need to be restated. Two years of comparative reporting will often need to be pro-

vided once the new standard goes live and there are two models of adoption:

Modified Retrospective – Companies that adopt a modified retrospective approach

begin implementing the new standards in parallel with the current GAAP standard for

one year, no later than the 2018 deadline. This option allows companies to use with

the new standard sooner.

Full Retrospective – If an entity chooses full retrospective adoption, there will be no

change in accounting principles until 2018. At that time, all contracts will need to be

restated for 2016 and 2017 to show comparative financial statements in tandem with

going live on Jan. 1, 2018. This option allows CPAs additional time to conduct as-

sessments before switching over to the new standard, but does require some extra

legwork on the backend.

Next Steps

In order to ensure a smooth transition to compliance of these new revenue recogni-

tion standards, it’s important that CPAs and finance departments more broadly take

the time to understand the changes to the current GAAP standards, recognize what’s

needed for the transition, and develop a plan for how their company will comply. While a change of this magnitude can be overwhelming, the good news is CPAs do

not have to embark on this endeavor alone. Finance professionals should lean on

strong partners that can assist in scaling a large number of transactions. By imple-

menting the right technology and tools, accountants can better ensure a smooth tran-

sition that is more effective, efficient and ultimately successful in being compliant.

(Source: AccountingToday – First Look – November 2, 2016)

Chapter Officers

President Jeff Dieleman

Moss Adams LLP

Vice-President Cindy Lyden

NW Farm Credit Services

Secretary

Erik Gillam AKT, LLP

Treasurer

Dwaine Brown Tree Top, Inc.

National Director

Linda Gray Diamond Fruit Growers,

Inc.

Editor/Publisher David Enquist

CliftonLarsonAllen

Director Mike Phillips

Northwest Wholesale Inc.

Membership Chair Nancy Greenwalt

Ritzville Warehouse Co.

Mentor Coordinator Phillip Blakney

Cordell, Neher & Co., PLLC

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Mission Statement

To be the acknowledged leader in: • providing accounting, tax and business education uniquely tailored to cooperatives • providing networking and professional development opportunities for our membership • supporting cooperative business interests in standard setting processes enabling our membership to effectively serve cooperatives

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NSAC NATIONAL

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Dayton, OH 45402

Phone: 937.222.6707

Fax: 937.222.5794