Case Studies
Innovative thinking and professional acumen are demonstrated in every engagement the firm undertakes. Here are just a few examples.
Case Study 1: First time audit due to explosive growth
Problem
A large multi-location building material supplier was looking to upgrade its outside accounting firm as a result of growth and recommendations from the company’s bank. The company’s calendar year-end was approaching soon. The company needed to have its financial statements audited for the first time as a result of increased capital requirements due to significant growth encountered during the housing boom. The accounting and finance departments were extremely weak for a company with greater than $70M in revenues operating in several states and locations. Tax compliance filings were being done late with little if any tax planning. Cash overdrafts were common as each location was separately incorporated and had its own banking facilities, thus requiring timely monitoring.
WS+B Solution
WS+B immediately developed a game plan knowing that the weak accounting systems in place may result in a delayed audit, increased fees and the possibility that an audit could not be completed due to inadequate documentation and controls. The bank was in need of timely accurate financial information and required assurance that collateral positions were in balance with loan covenants. WS+B met with the bank regarding our concerns and recommended that an Agreed-Upon-Procedures engagement encompassing special audit procedures on inventory and accounts receivable be performed at year-end and reported to bank more timely. The bank was open to our suggestion and WS+B immediately started planning for our engagement. Shortly after year-end the bank received WS+B’s special report.
Within the first few months of the engagement, WS+B introduced the company to a reputable law firm and worked diligently with the law firm and the company to restructure all of the company’s many locations into one entity. WS+B brought the company’s tax compliance up-to-date and strengthened its internal reporting. Tax assessment notices and levies stemming from years of disorganized accounting were also resolved resulting in significant savings.
Result
The bank increased the company’s credit facility, overdrafts disappeared and the company received significant savings from deferring the financial statement audit to the following year, which allowed for the proper planning and strengthening of internal reporting. The company experienced significant tax savings through a considerable reduction or removal of penalties, fines and interest on tax notices. Tax compliance matters were resolved and filings performed timely with no surprises. Available tax credits were researched and taken thus allowing tax refunds to company. Well thought out tax and audit planning meetings were held with minutes maintained and required follow-up actions documented. The above was accomplished just before the residential home building crisis took its toll on many construction suppliers.
WS+B took it one step further. Planning for significant future losses WS+B took a hard look at S-corp shareholder basis and properly restructured shareholder loans and mortgages with the bank in order to allow planned losses to be tax deductible. These refunds resulted in additional cash flows to support the company’s operations.
Case Study 2: Foreign issuer needs assistance recasting GAAP financials
Problem
A large foreign accounting service firm needed some assistance with a client. Their client, a Canadian publicly-traded company who also was filing as a foreign issuer with the SEC, needed assistance in recasting their Canadian GAAP financials in accordance with US GAAP. The financials were needed for a registration statement to be filed with the SEC enabling the Company to become a US registrant. The client also needed audits performed on a Company that they were targeting to acquire.
WS+B Solution
We worked with the CFO to educate him on US GAAP so he could recast his audit financial statements to reconcile US GAAP numbers. We performed historical audits on the target company so that they were complete to ensure a timely filing with the SEC.
Result
After the Registration Statement and acquisition were complete the Company terminated the services of their original accounting services firm and engaged WS+B to be their Certified Public Accounting Firm as the result of the quality and timely service we delivered on what was originally just a “little job.”
Case Study 3: Reversed State tax assessment saving client $50,000
Problem
A construction contractor was audited by the State of NJ. The field agent questioned the company for not paying sales tax on two pieces of screening and conveyor equipment used by the company in its excavation business. The State of NJ assessed the company a use of tax of $50,000 on two pieces of construction equipment used by the company for excavation purposes. The client was upset with the results of this assessment and asked WS+B if there was any way around this issue.
WS+B Solution
Based on the NJ tax code, equipment used in the manufacturing process is exempt from sales and use tax. WS+B convinced the State of NJ Supervisor that the company manufactures dirt. The company uses the conveyor and screening machinery to extract earth which contains tree roots, rocks and other debris so that they could sell the dirt as top soil. WS+B pleaded that the company changed the form of the dirt by removing from the dirt all the foreign debris. The dirt was the raw materials and the tree roots, rocks, etc. were extracted during the “manufacturing process” using the two pieces of equipment. The company thus was able to sell the dirt as topsoil for a much higher price than in its original form.
Result
The State of NJ agreed and rescinded the sales tax on the two pieces of equipment. WS+B saved the client $50,000 plus interest and penalties and the client gladly paid WS+B the next day.
