Defining Lean Accounting - Part II, by Nick Katko
Harding Shymanski has invited me to be a regular contributor to its manufacturing newsletter on the subject of Lean Accounting. In each newsletter I will be explaining one specific aspect of Lean Accounting. These articles are revisions of blogs I post on www.theleancfo.com and www.maskell.com.

In the previous article, an overview of Lean Accounting was discussed. To read Defining Lean Accounting - Part I, click here. In this article, lean management accounting systems are explained.

Management accounting systems are used by management to control and measure the operations of a business and provide a decision-making framework for all types of business decisions. Management accounting systems are for inside the business and not intended to external stakeholders. What we are really talking about here is financial analysis, operational analysis, measurements and other information required to run the business. Management accounting systems do not have to comply with any external regulations.

When a company commits to a Lean strategy, the fundamentals of how the business operates will change as Lean practices are put in place. How the business is controlled, what needs to be measured and the criteria for business decisions will be different than "before Lean." Internal financial reports, financial analysis, measurements, data used to control the business and decision- making criteria all must support "Lean Thinking."

These are the reasons a Lean Management Accounting System must be created. This is a journey, much like Lean is a journey. Without a Lean Management Accounting System, there is a disconnect between Lean practices and the information that management will be receiving to understand how well the Lean business is running.

Because Management Accounting Systems are not externally regulated, they can be changed by companies and changing Management Accounting Systems in no way compromises external financial reporting.

The accounting function of any Lean company must lead the transition to a Lean Management Accounting System. The needs and requirements of customers of a Management Accounting system, the management of a company, have changed because of Lean practices. It's important for the accounting function to make the changes to the output of the Management Accounting system to meet its customers' needs.
For additional information, please contact Nick Katko at 859.268.3218 or at nkatko@gmail.com.  

Indiana Heavy Equipment Rental Excise Tax
Indiana has enacted a new excise tax on the rental of heavy equipment. Effective for transactions after December 31, 2018 the rental excise tax is 2.25% of gross retail rental income and will be collected by the retail merchant.


Heavy rental equipment is defined as follows:

* property classified under 532412 (Construction, Mining, and Forestry Machinery and Equipment Rental and Leasing) of the North American Industry Classification System Manual in effect on January 1, 2018;

* owned by a retail merchant in the business of renting heavy equipment, including any attachments;

* not intended to be permanently affixed to any real property; and

* not subject to registration for use on a public highway.


However, the term does not include equipment rented for mining purposes or heavy equipment that is eligible for a property tax abatement deduction.


Additionally, heavy rental equipment is excluded from personal property tax assessment as of January 1, 2019.  

For additional information, please contact Aaron Wilzbacher, CPA at 800.880.7800 ext. 1332 or awilzbacher@hsccpa.com or John Rittichier, CPA at 800.880.7800 ext. 8484 or at jrittichier@hsccpa.com.


Middle Market Cybercrime
According to RSM's US Middle Market Leadership Council, middle market businesses with revenues of $50 million to $1 billion are being targeted by hackers. The steady rise in data breaches for the middle market may be exacerbated by executives believing that their businesses are too small to draw attention. Consequentially, hackers are actively going after companies that don't have the robust defenses of larger corporations. Vincent Voci, senior policy manager for national and cybersecurity at the U.S. Chamber of Commerce, calls for more vigilance on the part of businesses.
To view the full article, click here. For additional information, please contact Brant Kennedy, CPA at 800.880.7800 ext. 1425 or at bkennedy@hsccpa.com.
Planning for the New Revenue Recognition Standard
The RSM survey of public and private companies suggest that many middle market business leaders are not prepared for the amount of effort it will take to implement the new revenue recognition standard ASC 606. Thirty seven percent of the public companies in the survey reported significant effort and systems changes relating to the new accounting standard. Financial statement issuers that are required to implement ASC 606 for 2018 found that it took significantly more time and effort to implement than planned. As of Q4 for 2017 only 8% of middle market companies have completed implementation and 30% have yet to begin implementation. With the biggest change in compliance since the Sarbanes-Oxley Act of 2002 it is important that companies begin implementation of the standard as soon as possible.
To help with implementation, RSM provided a complimentary webcast on which covers:            
  • A high-level overview of the new guidance
  • Key dates and actions to consider for implementation
  • Potential challenges associated with adopting the new guidance
To download the infographic click here or to download the webcast slides click here.

For additional information, please contact Brant Kennedy, CPA at 800.880.7800 ext. 1425 or at bkennedy@hsccpa.com.

From increased competition and continuous quality improvement demands to rising employee benefit costs and declining margins, manufacturers and wholesale distributors are facing greater challenges than ever before. In addition to the services you would expect from an accounting firm, we have a dedicated team ready to assist you with the unique challenges and issues facing your industry.

A number of our staff members belong to The Association for Operations Management (APICS) with some having achieved the CPIM and CIRM certifications. We understand your key issues and possess the drive and determination to help you manage your company on a proactive basis. This commitment positions us at the cutting edge of the industry and enables us to spot trends and deal quickly with the issues your company may be facing.

"We engaged with HSC in 2007 as we began repositioning our market focus. Since then, our business has increased tenfold. We have expanded into 15 different states and now operate from six locations. HSC's counsel on tax, accounting and finance has proven to be timely and insightful playing a vital role in helping us achieve these results. Harding Shymanski will be a valued partner for the long term."

- Bruce & Katrina Stallings, Owners, P&I Supply
Disclaimer: The information contained in this email is for general guidance on matters of interest only. The publication does not, and is not intended to provide legal, tax or accounting advice.

Harding, Shymanski & Company, P.S.C.
800.880.7800 | info@hsccpa.cm  | www.hsccpa.com 

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