[Pete]

At my current organization, upper management (ie. board and CEO) is requesting that we (the organization) recognize the principle on debt as revenue. Is there any justification for doing this? I fear we will probably get in trouble for it on the audit. We use GAAP, so I guess maybe you could argue an accidental switch to cash-basis on the debt.

We currently recognize debt on the balance sheet as a liability (which I think is correct).

B=84 This exam was such a b**** that I thought I failed-don't know how these things work
A=76 Slacker I am, I'll happily take it
R=81 I LOVE taxes
F=80 I don't wanna get banned for an expletive I'm thinking with "yea" proceeding it

[Pete]

They claimed they couldn't understand the organizational performance as well if the debt (principle) was classified on the balance sheet, instead of the income statement. Our new leadership team has no financial background, which is making things very difficult for us. Further, they're extremely difficult people to deal with in general. We're constantly told the things we've done for years (ie. classifying non-forgivable debt on the balance sheet) is completely wrong.

Additionally, We're currently including grants on the budget, which have a low probability of actually occurring/materializing, etc. as income; the places we go for said grants can see right through the non-sense.

I'm hoping I can land a new gig soon because my organization is becoming dangerously close to going bankrupt. At this point, we're barely able to make payroll each week.

B=84 This exam was such a b**** that I thought I failed-don't know how these things work
A=76 Slacker I am, I'll happily take it
R=81 I LOVE taxes
F=80 I don't wanna get banned for an expletive I'm thinking with "yea" proceeding it

[Captain Awesome]

@Pete my understanding is that even if you get some type of signed letter stating what the board wants you to do, it won’t protect you, in fact it may incriminate you further. The letter will be evidence that Accounting was aware booking the debt as revenue was wrong and they did it anyway.

AUD - 80
BEC - 80
FAR - 82
REG - 82

 

 

 

[turo9992000]

@Pete, could you create a supplemental schedule that shows cash used and cash available. They might want to know how much they can actually spend, and do not understand accrual based accounting.

AUD - 64, 80 Passed on 10/09/17

BEC - 75 Passed on 12/09/17

FAR - 69, 71, 73, 83 Passed on 06/10/18

REG - 81 Passed on 09/10/17

[Pete]

They have a statement of cash-flows, which is cash-basis. They expect the financial statements to mirror the statement of cash-flows. We've explained multiple times that cash basis DOES NOT equal accrual basis accounting, yet they keep persisting that we're wrong.

We're typically told we're wrong and don't know what we're doing on a daily basis; it's very frustrating.

B=84 This exam was such a b**** that I thought I failed-don't know how these things work
A=76 Slacker I am, I'll happily take it
R=81 I LOVE taxes
F=80 I don't wanna get banned for an expletive I'm thinking with "yea" proceeding it

[tysonjustis]

everything should be hitting a B/S account except expenses. in the case of a cash based entity, i would image the principle would go directly into your fund balance/cash not accounted for as revenue.

[Pete]

In a true cash based entity, any cash-in is an income item and all cash-out is an expense item. The only item that hits the balance sheet is cash. If you purchase equipment, (under cash basis) you would expense the equipment and credit the cash. Not a great method though.

Thing is, we’re GAAP based. The auditors/others will certainly raise an eyebrow to a sudden 10 million dollar gain.

B=84 This exam was such a b**** that I thought I failed-don't know how these things work
A=76 Slacker I am, I'll happily take it
R=81 I LOVE taxes
F=80 I don't wanna get banned for an expletive I'm thinking with "yea" proceeding it

[AndreA]

I used to work at a local bank as an economist in another country, and the main reason I left the organization was the integrity of management and fraudulent transactions with shareholders that they tried to cover. Don't wait long, it's just a matter of time before they get caught.

FAR - 73, 78 (WileyCPAexcel 3,000+ MCQs, 50 SIMs)
AUD - 73, 81 (WileyCPAexcel 3,000+ MCQs, 40 SIMs)
BEC - 71, 71, 74, 84 (WileyCPAexcel 3,000+ MCQs, 10 SIMs)
REG - 84 (WileyCPAexcel 2,000 MCQs, 15 SIMs)

CA Ethics Exam - 94%

NEVER GIVE UP.

[Author]

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