July 1999 Issue

The Latest on NYSSCPA.ORG

By Wayne Whalen

Website Provides Answers with "Ask an Expert"

The Ask an Expert section on nysscpa.org allows users to submit questions to a panel of experts and search questions and answers by category. The categories include accounting, assurance services (including auditing), CPA firm management, emerging technologies, ethics, management consulting and business valuation, NYSSCPA marketing and membership services, personal financial planning, recruitment issues, and taxation.

Ask an Expert is aimed at those general and frequently asked questions posted by public users. Society members who wish to participate in online discussions with other members can post their questions in Committees/Chapters Forums under the About the Society section.

To give an idea of what kinds of questions can be found in the Ask an Expert section, the following examples have been taken directly from the site.

ACCOUNTING

Accounting for Construction Allowances

The company is a mall-based retailer. Sometimes the lease with the mall landlord provides for a construction allowance payable upon completion of the store. My question is, what is the appropriate accounting treatment: Should the allowance be deducted from the construction cost or a straight reduction of rental expense?

FASB Technical Bulletin 88-1 requires the lessee and lessor to amortize incentive payments against rental income or expense over the term of the lease using the straight-line method. Therefore you should reduce your annual rent over the lease term using the straight-line method.

Capitalization of Moving Costs

Can a client capitalize moving costs associated with a new lease in a new building? I believe there is some guidance on this as far as if they cancel their existing lease and incur penalties.

EITF 88-10 addressed the issue: whether any of the costs, particularly moving costs, incurred by the lessee in connection with changing from one lease to another lease may be deferred and amortized over the new lease term. The task force did not reach a consensus on this matter. However, task force members agreed that the predominant practice is to charge moving from a former location to expense as incurred. It should be noted that the SEC would object to the deferral of moving expense.

EMERGING TECHNOLOGIES

Electronic Signatures

Is there any guidance as to the acceptance of electronic (i.e., computerized) signatures vs. "live" signatures? We are in the process of instituting an intranet and would like to maintain the audit (and obviously legal) integrity of our information.

The area of digital signatures is in flux. Many states have adopted digital signature laws, but there is no national law. The Society does not have an official view on the subject. I would recommend you discuss the topic with your firm's counsel before making a decision in this area. Some websites to find out more information are--

* http://cwis.kub.nl/~frw/people/hof/DS-lawsu.htm

* http://www.ilpf.org/digsig/digsig2.htm

* 1997 New York Senate Bill 2238

* 1997 New York Assembly Bill 6183

PERSONAL FINANCIAL PLANNING

401(k) Plans

I work for two employers and qualify to participate in both of their 401(k) plans. Can I participate in both plans as long as I do not surpass the 15% or $10,000 per year limit? One employer told me that I can participate in only one of the plans. The other said I can participate in both provided I do not surpass the limits stated above.