SBN Staff

If your employees have a company retirement plan, then you have a fiduciary responsibility to them. The days of ignoring this responsibility are over. Some of the settlements linked to charges of negligence or mismanagement can be painful for businesses big and small.

In 2010, a California Fortune 500 engineering firm settled $18.5 million with two employees after a class action case claimed it was making an insufficient effort to reduce 401(k) account fees.

The Department of Labor (DOL) recovered more than $117,000 in unremitted employer contributions and associated lost opportunity costs for two Wisconsin employee benefit plans with 25 active participants. The owner had to pay nearly $23,000 of that court judgment.

“With the increased responsibilities facing 401(k) plan fiduciaries, it is crucial that a sound administrative process is in place,” says Phil Ruggeri, an investment executive at Cetera Investment Services, located at First State Bank

Smart Business spoke with Ruggeri, who used material from MarketingLibrary.Net Inc., about recent changes to the fiduciary responsibilities.

What are some key issues with 401(k) fiduciary responsibility?

Fiduciaries are issuing a detailed breakdown of account fees and expenses to plan participants because of new DOL regulations. In addition, plan sponsors must give out investment instructions that follow strict DOL guidelines.

Every employer-sponsored retirement plan must name a fiduciary, but function also determines fiduciaries. Although someone may not be named as a fiduciary, if he or she participates in the management or administration of the plan or hires a service provider, the DOL considers those fiduciary functions.

In addition, the plan sponsor should document all investment processes, so it has proof that the plan is operating according to stated procedure. You need to follow a written summary plan description and investment policy statement. The investment policy statement defines the plan’s investment program and establishes formal standards for monitoring, benchmarking and assessing performance results of various investment options over time. It’s critical to have input from your registered investment adviser with this.

How should plan sponsors educate their participants?

To keep your retirement plan from being undervalued and underutilized, your company needs to have an effective employee education program. Employees must understand the investment options the plan presents, as well as the fees and risk associated with each one. Don’t give it the short shrift for legal reasons alone. 

You should regularly call in an investment professional to help explain the choices and the potential role the plan plays in an employee’s overall retirement savings effort.

What else is necessary to comply with your fiduciary obligations?

Most administrators of workplace retirement plans — those with 100 or more plan participants — are required by the IRS to annually file a Form 5500. This disclosure is then made available to the DOL and the Pension Benefit Guaranty Corporation.

You should carefully oversee your plan providers, as you don’t want the wrong kinds of investments creeping into the plan. Watch for changes in how the plan provider is compensated, changes in the fees that affect plan participants and anything else that seems unusual.

This is just the beginning of fiduciary responsibility. With so much to watch over in the typical employer-sponsored retirement plan, you certainly can miss details, which may lead to big headaches for your business. 

Don’t open the door to liability. Do the right thing, the smart thing: Turn to an experienced, professional adviser who can help play a fiduciary role and ensure you adequately fulfill your obligations.

Phil Ruggeri is an investment executive at Cetera Investment Services, located at First State Bank. Reach him at (586) 445-4769 or

Securities and insurance products are offered by licensed agents of Cetera Investment Services located at First State Bank. Consult your legal or tax counsel for advice and information concerning your particular circumstances. Neither Cetera Investment Services nor any of its representatives can provide legal or tax advice. Securities products are not a deposit, not FDIC insured, not insured by any federal government agency, not bank guaranteed and may lose value.

Insights Banking & Finance is brought to you by First State Bank




With the health insurance marketplace opening next month, the market is expected to be flooded with consumers trying to find a plan that works best for them and their budgets.

“The fact is people who have not previously had access to health insurance may be in shopping mode come Oct. 1 when the health insurance marketplace opens,” says Marty Hauser, CEO of SummaCare, Inc. “Our job as health insurers is to ensure employers and other consumers have access to the most accurate information available to them when it comes to choosing a carrier and a plan both on and off the marketplace.”

Smart Business spoke with Hauser about ways employers can assist employees shopping and applying for 2014 health insurance coverage on and off the marketplace.

What should employers that currently offer health insurance to their employees do when the marketplace opens?

Regardless of the company size, employers should communicate to employees if they will be offering employer-sponsored coverage next year and what type will be offered. Having this information will likely impact their employees’ decision on whether or not to shop for an individual plan on or off the marketplace.  

Are companies required to offer insurance to their employees in 2014?

While there are tax incentives for small group employers — those with two to 24 employees — to offer their employees health insurance benefits next year, it’s not required under the Affordable Care Act (ACA).  

Large group employers — those with 51 or more employees — however, are required to offer health insurance next year, but the penalty for not offering coverage has been delayed until 2015.

What can employers do if they are not offering insurance to employees next year?

If an employer chooses not to offer employer-sponsored coverage next year, they may want to consider a defined contribution health plan approach in which the employer decides how much to contribute to an employee’s health care expenses and the employees purchase health insurance on their own. Coverage can be purchased through the health insurance marketplace, direct from a health insurance company or through an individual insurance agent. Individuals can begin shopping Oct. 1 for plans effective Jan. 1, 2014.

How can employers not offering insurance help their employees get assistance in purchasing a health insurance policy?

Employers’ options include gathering and sharing information from their current insurer to share with employees, putting their employees in contact with a health insurance broker or making them aware of help offered by certified application counselors (CAC) and navigators. 

It’s also important to remember that employers are required to notify their employees of the availability of the health insurance marketplace by Oct. 1. 

What are CACs and Navigators?

CACs and navigators can assist individuals interested in enrolling through the marketplace, as both are trained to help with the application and enrollment process. Navigators receive grants for helping individuals and small employers shop and enroll in a health insurance plan, and they will conduct public education about the availability of qualified health plans, among other responsibilities. Navigators are held to detailed conflict of interest standards and eligibility requirements.

CACs are unpaid volunteers who typically work through organizations such as community health centers, social service organizations and hospitals. CACs are not subject to the same standards as navigators, but can still assist individuals. 

Where can employers go to learn more?

Health insurers and/or insurance brokers can help guide employers in learning more about their insurance options for 2014 and beyond. In addition, information about the health insurance marketplace and other provisions and mandates under the ACA may be available through your insurer’s website. For additional information, visit

Marty Hauser is CEO of SummaCare, Inc. Reach him at

Insights Health Care is brought to you by SummaCare, Inc.





Is the confidential information on your network safe? That’s a question every organization should ask itself because network security breaches are common and becoming even more prevalent.

Kristen Werries Collier, a partner with Novack and Macey LLP, says organizations must acknowledge this risk and vigilantly monitor and evaluate their cybersecurity safeguards and protocols to minimize it.

Smart Business spoke with Collier about network security breaches and the steps companies can take to mitigate or eliminate them.  

How common are enterprise security breaches?

Most large and midsize companies have confronted a cyberattack at some point. Network security attacks are a reality you must confront head on. The threats to your network posed by unauthorized access — and the damage caused by a successful attack — will only continue to rise.  

Can you prevent a security breach of your network?

While you may not be able to prevent a breach with absolute certainty, you can certainly deter one by proactively assessing and addressing your network’s vulnerabilities. If you don’t have the in-house expertise to do that, consult a security adviser. You want to invest your money in safeguards that deter — if not prevent — the attacks you are likely to face, and a security adviser can identify those for you.

Keep in mind that no system is ironclad because hackers adapt as security measures evolve. Accordingly, you must routinely monitor your layered security measures to make sure you are keeping up with determined hackers. Avoid being the easy target.  

What should you do if, despite your precautions, a breach happens?

Undertake these best practices:

  • Act fast. Perform a post-attack forensic analysis to determine the ‘who, what, when, where and how’ of the breach. You’ll need to preserve this information to evaluate the damage, mitigate the fallout, structure appropriate remedial measures and build a case against the hacker.
  • Promptly notify anyone whose sensitive information may have been compromised.
  • Update your intrusion detection and prevention systems and other safeguards to deter future breaches.
  • Assess what your legal obligations are in the wake of the infiltration.

What is the potential fallout if your network is breached?  

Breaches expose your organization to legal claims and undermine its competitive advantage. As for the legal claims, the law mandates the protection of certain types of information like consumers’ personal and nonpublic financial information, Social Security numbers and medical records. Your organization could potentially face claims predicated on an array of legal theories, including negligence; breach of contract; the Fair Credit Reporting Act, which subjects certain organizations to liability if they fail to safeguard consumer credit information in their possession; and Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive practices affecting commerce.

While you may defeat such legal claims on a motion to dismiss or ultimately at trial, it will cost you money to do so. From a business perspective, a security breach may have financial and competitive repercussions by publicly exposing your organization’s highly confidential or propriety information, and by eroding consumer confidence in doing business with you. 

What, if anything, is the government doing to crack down on hackers? 

The government is cracking down by charging hackers with crimes carrying potential years of imprisonment and hefty monetary fines. However, the deterrence effect of this crackdown is somewhat limited given that numerous hackers operate outside of the U. S., making prosecution difficult, if not impossible. This is yet another reason to deter, if not prevent, a breach of your organization’s network in the first place and quickly mitigate the fallout if one occurs despite your best practices.

Kristen Werries Collier is a partner at Novack and Macey LLP. Reach her at (312) 419-6900 or

Insights Legal Affairs is brought to you by Novack and Macey LLP





With increased regulatory demands and constant threats of fraud and misconduct, businesses have to watch their backs, especially when it comes to finances. In many cases, having a traditional accountant is not enough. Instead, you may need someone who has not only accounting skills, but investigative and analytical skills as well. In other words, you need a forensic accountant.

“Forensic accounting enables business owners to get control over possible financial fraud and mismanagement and, more importantly, to deter it before it occurs,” says James P. Martin, CMA, CIA, CFE, managing director at Cendrowski Corporate Advisors LLC.

He says forensic accountants can help companies design effective antifraud controls and mitigate the risks of future lawsuits. They also might be used to quantify economic damages in instances where value and/or profits might be lost, or in cases of business valuations to uncover reported income or expenses.

Smart Business spoke with Martin to learn more about forensic accounting.

How does a forensic accounting engagement differ from an audit?

First and foremost, forensic accounting engagements are nonrecurring and are only conducted at the request of a firm’s management. Audits, conversely, are recurring activities. Forensic accounting engagements are targeted assessments of specific areas of a business; they are not general assessments of the business as a whole or its financial statements. 

The methodology employed in an audit is also quite different from that used in forensic accounting engagements. Audits are conducted primarily by examining financial data, whereas forensic accounting analyses are conducted by examining a wide variety of documents and interviews. 

Lastly, the goals of forensic accounting engagements are yet again very different from audits. The goal of the latter is to detect the presence of material misstatements, irrespective of their cause. Audit activities are in no way designed to help an organization deter fraud, though they may detect such activity.

Because many frauds begin on a small scale, they may go undetected by auditors if the size of the fraud is below the auditor’s threshold for materiality. Moreover, even if the magnitude of a fraud is greater than the auditor’s threshold for materiality, a fraud may remain undetected by the auditor if it is well concealed. Forensic accounting engagements can be specifically tailored to deter fraud and potentially prevent it.

Can forensic accounting techniques be applied proactively?

Forensic accounting techniques can be used on a proactive basis in many instances, including the deterrence of fraud. More specifically, forensic accountants can proactively analyze an organization’s internal control process to determine areas of weakness and help the organization swiftly remediate these issues.

How can organizations use forensic accountants to help deter fraud?

Fraud deterrence focuses on removing one or more of the three causal factors of fraud: motive, opportunity and rationalization. Only when each of these factors is present can a fraud occur. 

Motive and rationalization are generally dependent on personal situations over which the organization may have little control. This is why the opportunity for fraud is often the prime target of fraud deterrence engagements, as this factor can be controlled by an organization. 

How can forensic accounting techniques be used in cases of business valuations?

Valuation professionals who are trained in forensic accounting may have significant experience in data mining and analysis, affording them the ability to supplement typical valuation techniques with information uncovered as a result of forensic accounting activities.

This additional information could result in a markedly different valuation from that which might have been calculated without the use of forensic accounting techniques, as valuations are extremely sensitive to underlying assumptions.

James P. Martin, CMA, CIA, CFE, is managing director at Cendrowski Corporate Advisors LLC. Reach him at (866) 717-1607 or

Insights Accounting is brought to you by Cendrowski Corporate Advisors LLC





Sunday, 01 September 2013 04:51

The changing SOX landscape

A subtle, but very significant, change is underway in the world of Sarbanes-Oxley compliance, specifically audits of Internal Control over Financial Reporting (ICFR). As a result of this change, many public companies will face additional compliance burdens and new exposures, even if they believe they have a well-established and stable system of internal control.

“Some public businesses may be completely unaware that even though they’ve had effective ICFR for years, this year may be a different animal,” says Eric Miles, a partner in Business Risk Services 
at Moss Adams LLP. “We’re seeing that controls or approaches that were fine in the past are now getting much more scrutiny from external auditors.”

If you have not yet had discussions with your external auditors about your 2013 ICFR compliance efforts, you may have a little time to get out in front these changes, he says. Many companies are already experiencing these changes in expectations and have found compliance to be very frustrating.

Smart Business spoke with Miles about why there’s activity change in ICFR compliance expectations and what you can do about it.

Why is there increased focus on ICFR compliance?

Over the last two years, the Public Company Accounting Oversight Board (PCAOB) has drastically increased its inspection focus on audits of internal control over financial reporting (ICFR) and as a result, virtually every major accounting firm has received reports indicating deficiencies in their audits of ICFR. The PCAOB was concerned about the pervasiveness of the findings, so much so that it published a special supplementary report in December 2012 detailing the most pervasive deficiencies identified in firms’ auditing of internal control over financial reporting during the 2010 inspections, and also including information on the potential root causes of the deficiencies.

The SOX ICFR compliance pendulum has swung back and forth over the years. When the SOX ICFR assessment requirement was first implemented, it yielded very rigorous and costly audits.  In response to the litany of criticism, the PCAOB issued a new audit standard in 2007 (Audit Standard No. 5) to clarify expectations and ultimately to focus SOX ICFR efforts on areas of the most importance. What we are currently seeing is the PCAOB’s reaction to the mis-implementation of that standard.  It appears that from the PCAOB’s perspective, the pendulum swung too far.  As a result the PCAOB is trying to put more rigor into audits of internal control over financial reporting.

What is the biggest internal control problem?

Although the PCAOB noted several pervasive deficiencies, the issue currently causing the most consternation with companies is the design and testing of ‘Management Review Controls.’ These are controls, such as account reconciliations, budget to actual, etc., that theoretically allow several key risks to be mitigated with a single control. The PCAOB noted that the auditors’ evaluation of the design and operation of these controls has typically been cursory at best, such as an examination of a document for signature and date. As a result, many firms are now asking companies to be very detailed in the explanation of these controls, explaining aspects such as what triggers management’s attention, what management does when an item for investigation is identified, and how resolution of review items is documented.  Further, firms are expecting management to maintain much more evidence of operation than in the past.

If your company has management review control problems, what can result?

There’s a real risk that organizations that heavily rely on management review controls are going to be surprised, even if their auditor has said for years the controls are fine.

With the new scrutiny, some external auditors may conclude there’s a material weakness. Ultimately that impacts the value of the organization. In any case, it takes a lot of time and effort to update documentation to get back in sync with your external auditor.

What should organizations be doing now?

The first step should be to have a proactive conversation with your auditor to understand whether their expectations have changed or are expected to change. There is a real risk that companies will substantially complete their own internal control assessment activities before fully understanding the scope of needed changes with their external auditors. As a result, companies may need to go back and update their already completed testing to comply with the auditor’s new approach. That’s far from ideal.

Once you have a better understanding of the external auditor’s needs, you need to understand what controls are considered to be ‘review controls.’ By taking an inventory of your controls, you may find that you have just a handful of management review controls, however, organizations that really embraced Audit Standard No. 5 will likely have more concerns.

For the identified controls, make sure your control descriptions include specific investigation criteria such as dollar or percent variance or other qualitative considerations, with clear precision thresholds. There needs to be evidence of control performance that can be tested through re-performance, not just through a review of signatures. If you can update your documentation in advance of external auditors coming in, it will save you trouble later.

Overall, be prepared for increased auditor activity, particularly with respect to walkthroughs and management review controls.

Eric Miles is a Partner in Business Risk Services at Moss Adams LLP. Reach him at (650) 808-0699 or

Insights Accounting & Consulting is brought to you by Moss Adams

In July, the 5th U.S. Court of Appeals ruled in Asadi v. G.E. Energy (USA) LLC that whistle-blowers aren’t entitled to protection under the Dodd-Frank Act’s anti-retaliation provision unless they report directly to the Securities and Exchange Commission (SEC).

This ruling — currently limited to Texas, Louisiana and Mississippi — may provide incentive to bypass the internal process for reporting suspected fraud or misconduct.

When going directly to the SEC, employees not only get monetary awards for information that leads to successful enforcement actions but also have the assurance of protection against retaliation, says Carolyn Bremer, senior manager in Forensic and Litigation Services at Weaver.

“Already, many companies are struggling to keep internal compliance programs strong, actively looking for ways to encourage employees to utilize their internal reporting processes,” she says.

Smart Business spoke with Bremer about how to instill trust in your internal compliance program in the Dodd-Frank era.

What has been the impact of Dodd-Frank on whistle-blower reporting to the SEC?

According to its annual report on the Dodd-Frank Whistleblower Program for fiscal 2012, the SEC received 3,001 whistle-blower tips and awarded a second whistle-blower award this past June. There may be an uptick in tips because of the announcement of these recent monetary awards, the expected increase in future awards and the court ruling.

Why do employees hesitate to internally report fraud or suspected misconduct?

Employees often hesitate because of bad experiences either personally or from co-workers’ stories. Reasons for not reporting potential fraud or misconduct include the fear of not remaining anonymous, fear that no one will believe them, or fear of retaliation such as losing their job, not receiving a raise or being demoted. They also fear discrimination or isolation from co-workers, or sense that the tone at the top doesn’t support the policies.

What can be done to alleviate hesitation?

A company can instill trust in reporting internally by focusing on strengthening its hotline process and whistle-blower policy.

Your hotline must provide a way to report in confidence, while being monitored by an appropriate party. Avoid having tips go directly to human resources or management. Employees should see the monitor as more independent — such as in-house counsel, head of internal audit or a compliance officer — especially if they fear retaliation.

Ensure there are clearly defined timelines or checkpoints for follow up, which include communicating back to the whistle-blower that the tip is being handled discreetly and the issue is being addressed appropriately.
Have a documented whistle-blower policy that addresses retaliation protection. What is considered retaliation and the penalties for it should be clearly outlined. For example, ‘harassment or victimization for reporting concerns under this policy will not be tolerated’ is insufficient. A better statement is: ‘No employee who in good faith reports a violation of the code of conduct or potential fraud or misconduct shall suffer harassment, retaliation or adverse employment consequences. An employee who retaliates against someone who reported in good faith is subject to discipline up to and including termination of employment.’

By voluntarily extending the whistle-blower protections afforded under Dodd-Frank to all employees who report internally, companies introduce additional trust.

Why is it important that employees feel comfortable reporting matters internally?  

In bypassing internal compliance, employees deprive the company of the opportunity to investigate and remedy a wrongdoing before regulators get involved. Many tips don’t warrant the SEC’s attention but do warrant corrective action or communication within the company. However, management can’t address a problem they don’t know about.

Nevertheless, there are obvious instances that warrant direct reporting to the SEC, and it’s always advisable for employees to seek legal advice when deciding whether to report internally or externally.
Strengthening your hotline process and whistle-blower policy, and educating your employees, can be key to instilling trust in internal whistle-blower reporting.

Carolyn Bremer is senior manager of Forensic and Litigation Services at Weaver. Reach her at (972) 448-6951 or

Insights Accounting is brought to you by Weaver

Any business that leases anything for an extended period of time — generally, more than one year — will be impacted by a proposed new accounting standard.

“This may appear arcane to some, but the new rules will have a major impact on the reported financial position of many companies. It has been estimated that this may add hundreds of billions of dollars to the existing liabilities on businesses’ balance sheets nationwide,” says Gerald Weinstein, Ph.D., CPA, a professor and chair of the Department of Accountancy at the John Carroll University John and Mary Jo Boler School of Business.

“Therefore, it is likely that your firm’s financial statements will be affected. At a minimum, expect to see changes in the ways in which leases are being conceived of for recognition and measurement purposes,” says Weinstein.

Smart Business spoke with Weinstein about what the proposed accounting standard would do and how businesses can prepare for the change.

What do you need to know?

Under existing Generally Accepted Accounting Principles (GAAP), leases that are in essence purchases of all of the inherent value of a leased asset are capitalized. Capitalization requires both that the leased asset and related liability for future lease payments be recorded onto the balance sheet. GAAP dictates use of four indicators, any one of which is considered evidence of a so-called capital lease.

Leases that do not meet at least one of the four criteria are operating leases, and are not capitalized. Operating leases are accounted for by expensing the lease payments as they accrue. An example is leasing an office inside an office building owned by another entity.

An operating lease is generally favored by businesses, as it makes the accounting simple in that it avoids recording the liability and depreciating the underlying asset. Further, not booking a liability can improve a company's debt related ratios. Users, however, would prefer to know about all liabilities the entity has and hence want these liabilities booked. These cross-purposes are being resolved in the proposed standard by essentially requiring all leases to be capitalized.

What will the new standard change?

What defines a lease as a capital lease is changing under an exposure draft (ED) issued jointly by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) on May 16, 2013, and the four indicators noted above will no longer apply. Everyone will be affected if this becomes a final standard in 2014.

All leases, with one exception, would be recognized with a lease liability for the present value of the payments, which must be made over the lease term. As lease payments are made, the effective interest method is to be used to accrete the liability. An asset would be reported and written off to expense over time.

The ED defines the manner of write-off. It depends on the type of asset of which two are defined. A Type A asset is personal property whereas Type B is generally real property. Type A assets are amortized on a straight-line basis unless another method better represents the pattern of use. For Type B leases, the amortization would be the difference between the annual straight-line expense and the interest incurred on the liability.

The most notable change in terms of the direct financial impact is that what has previously been accounted for as an operating lease will now be treated as if it were an owned asset, even if title to the asset will never transfer to the lessee. An office suite leased inside an office building would be accounted for as a balance sheet asset and subject to annual amortization.

What is the exception?

Lessees can elect a policy wherein leases with a maximum possible lease term including options to renew of 12 months or less, are accounted for using a method like that currently available for an operating lease.

How is a leased office akin to an asset purchase?

Leases are being redefined as a contract that conveys the right to use an asset for a period of time in exchange for consideration. The contract must depend on the use of an identified asset and convey the right to control its use. The use of the asset can be either explicit or implicit, such as the lease of a floor of a building. ‘Right to control use’ is slightly different from existing GAAP, which calls it the ‘right to use’ an asset. 

Why should you care about recording such a lease as an asset?

Companies should be concerned because booking the asset also means booking the liability. For most businesses, this will have a negative impact on solvency ratios, including debt to assets and debt to equity. This change in the standards could cause your bank loans that have covenants requiring certain solvency ratios to go into technical default.

What can you do to be ready?

Companies should determine which leases they have that will now need to be capitalized, prepare pro forma financials, and determine the impact your solvency ratios. If the new accounting rules cause your debt ratios to deteriorate, consider contacting your lending institution to see if you can re-negotiate the covenants.

While the final standard may undergo some tweaking, changes to lease accounting have been in the works since 2005 and professional accountants expect the standard to be finalized in its current form. The comment deadline on the ED is Sept. 13, 2013.

Gerald Weinstein, Ph.D., CPA, is a professor and chair of the Department of Accountancy at the John Carroll University John and Mary Jo Boler School of Business. Reach him at (216) 397-4609 or

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With so many provisions and mandates under the Affordable Care Act (ACA), it is not surprising some things have changed or been delayed along the way.

In fact, on July 5 the Obama administration released a 606-page document with final regulations on some of the ACA’s key provisions and mandates. In addition to providing new details about how the health insurance marketplaces will operate beginning Oct. 1, the document included changes that will impact the way employers shop for insurance. 

Separately, on July 2, the U.S. Treasury issued guidance delaying the penalties to be imposed on large employers that fail to provide coverage to full-time workers and also reporting requirements applicable to insurers and self-insured businesses.   

“When you are looking at changes impacting the health care delivery system in this country — including the way health insurance companies do business — delays and changes are expected,” says Marty Hauser, CEO of SummaCare, Inc. “The best thing employers and individuals can do is to stay informed and make the best decisions possible when it comes time to shop for a benefit plan.”

Smart Business spoke to Hauser about some of these changes and delays and what they mean for employers.

What are some ACA mandates that have been delayed that directly affect employers?

Components of the employer mandate have been delayed until 2015 to give employers more time to prepare for changes and requirements. The mandate, often referred to as ‘pay or play,’ requires employers with 51 or more employees to offer health insurance or risk paying a penalty. The delay of the mandate’s penalty portion gives employers an additional year to consider their options for offering insurance.  

While some people argue that the delay in penalties effectively delays the entire mandate, it’s important to note that the mandate for large group employers to offer insurance still exists, but with no penalty for not complying. It is in the employer’s best interest to work with their broker, benefits consultant or insurer in an effort to comply with the law and figure out the best solution next year and in preparation for 2015. 

At the time of this printing, this delay in the employer mandate does not change the individual mandate, effective Jan. 1, 2014. 

A delay impacting small employers (with up to 50 employees) has also occurred related to the Small Business Health Options Program (SHOP). The functionality enabling employers to offer employees a variety of qualified health plans (QHPs) from different carriers has been delayed until 2015. This means that in 2014, small group employers may only offer one QHP to their employees shopping through the marketplace in an effort to give the exchange additional time to prepare. 

It’s also important to mention that the SHOP is available to employers with up to 50 employees in 2014 and 2015, and expands to include employers with up to 100 employees in 2016.

What should employers keep in mind as they see marketing campaigns about the changes that become effective next year?

First and foremost, employers should work with their broker, benefits consultant, or insurer to help determine what mandates and provisions of the ACA apply in 2014 and beyond, in order to make the best benefits decisions for their employees and budget. They should also be prepared to receive and answer questions from employees regarding coverage in the coming year. 

Additionally, since marketplaces open Oct. 1, 2013, for 2014 effective dates and employers are required to notify employees of the availability of the health insurance marketplace by the same date (Oct. 1), employees will likely be looking to their employer for guidance on coverage options and want to know what their employer plans to do by way of offering benefits.  Employers should be ready to educate their employees on how the new laws will or will not affect them and their benefits.

It’s also important to remember that although the penalty portion of the employer mandate has been delayed, there are ACA requirements employers must still meet, including reporting and payments, marketplace notification, distribution of Summary Benefits and Coverage documents upon renewal or enrollment, and distribution of rebates, when applicable.

Marty Hauser is CEO at SummaCare, Inc. Reach him at

WEBSITE: To learn more about health care reform, visit or

Insights Health Care is brought to you by SummaCare, Inc.




Executives often wonder why they need to have machinery and equipment appraised, but these appraisals are important components of business today.

“Typically, appraisals are performed because of buy/sell agreements, mergers and acquisitions, business valuations, partnership dissolutions, insurance, bankruptcy, property taxes, financing and Small Business Administration lending. Other reasons would be divorce, estate planning or other estate issues, retirement planning, cost-segregation analysis and litigation support,” says Theresa Shimansky, a manager at Cendrowski Corporate Advisors LLC.

Smart Business spoke with Shimansky about how machinery and equipment appraisals are typically handled.

What is the useful life of an appraisal?

Generally, an appraisal is good for three years, but it depends on the current market, economy and industry. An appraisal’s useful life also depends on the availability of the type of equipment being appraised. The value can drastically change with economic factors such as supply and demand. 

Is a machinery and equipment appraisal beneficial when buying or selling a business?

Absolutely. Buyers want to know the breakdown between real and personal property. This is a cost segregation analysis or study. Appraisals are completed for many reasons, but most importantly for tax reasons — breaking the assets into different categories for depreciation purposes. 

What information and documentation will an appraiser require?

The appraiser will need to know the manufacturer, model, serial number and age of the equipment. This information typically can be found on a plate attached to the equipment. Mostly, it will be visible; however, sometimes locating this plate can be tricky. For example, restaurant equipment will occasionally have a kick plate covering the information plate. Machines may have the plate attached inside a compartment or near the motor, while others may not have one at all. When a machine does not have a plate, it is helpful if the owner has the original manual or sales invoice that should list most of the information. 

The appraiser also needs to know about the condition, special features and upgrades. Important questions to keep in mind are:

  • Does it work well?
  • Has it had any major repairs or is it in need of any?
  • Is it maintained according to manufacturer specifications? The appraiser may request to see maintenance logs or ask about special attachments or upgrades.
  • Is its software up to date?

An appraiser will evaluate and photograph each piece of equipment. When this is not possible, appraisers will note in the report which equipment could not be visually inspected and explain they are relying on the representations of similar machines’ condition and other pertinent information. 

What is a ‘qualified appraisal’?

A ‘qualified appraisal’ is clearly defined in Internal Revenue Service (IRS) Publication 561, where the appraisal: 

  • Is made, signed and dated by a ‘qualified appraiser’ in accordance with appraisal standards.
  • Does not involve a prohibited appraisal fee. 
  • Includes, but is not limited to, a description of property, condition, date of value, terms of the engagement agreement, qualifications of the appraiser, method used to determine value and basis for value.

Generally, an appraisal is considered qualified if it follows the Uniform Standards of Professional Appraisal Practice, developed by the Appraisal Standards Board of the Appraisal Foundation.

What should you look for in an appraiser?

When searching for an appraiser, only use a ‘qualified appraiser.’ This is an individual, as defined by the IRS, who has earned an appraisal designation from a recognized professional organization for demonstrating competency in valuating property. Also, qualified appraisers regularly prepare appraisals for which they are compensated, and demonstrate verifiable education and experience in valuating the type of property being appraised.

Theresa Shimansky is a manager at Cendrowski Corporate Advisors LLC. Reach her at (866) 717-1607 or

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Wakefulness is not the first trait you may think of for effective leadership. Empathy and reflection aren’t typically considered strategic business values. And that emotional intelligence should be a factor in hiring is foreign.

However, corporate America should be about more than just the bottom line — a stakeholder approach with social responsibility is key, says Joan F. Marques, Ph.D., Ed.D., assistant dean of the school of business, chair and director of the BBA Program, and an associate professor of management at Woodbury University.

“Effective leadership consists of a mix of hard and soft skills,” she says. “A major part of being an effective leader is being human, vulnerable, seeing the big picture, the purpose to what you do.”

Smart Business spoke with Marques about the responsibility of corporate leadership.

How does the notion of the awakened leader sync up with the bottom-line mentality that drives corporate America?

Is corporate America awake? Yes and no. In the past two decades, we’ve seen evidence of corporations run by individuals excessively focused on profits. A great many leaders are still driven by a bottom-line mentality. It even drives our students — I once had an MBA student who wanted a ‘massive bank account.’ But the process of waking up involves realizing there is more to life than money. Many people go through life sleepwalking, never questioning it. In the book ‘True North,’ Bill George writes of ‘crucibles,’ suggesting that most people wake up only when confronted with loss, illness or something painful. 

There needs to be a middle path. You cannot ignore profit, but it should not happen at the expense of others. If you consider the well-being of customers, suppliers, employees and other stakeholders, getting to a certain level of profitability will probably take longer, but your conscience will be intact. 

Thankfully, a growing number of business schools are awakening to this trend. Many are addressing the responsibility MBAs have to the larger community, taking into account workplace spirituality and ethical leadership. It’s a break from the kinds of leaders they were grooming in past decades.

You’ve suggested that empathy and reflection are key corporate values. What’s the best way to ensure they find their way into corporate best practices?

Empathy and reflection are personal and interpersonal values, and the best way to incorporate them is on those levels, preferably starting at the top. Of course, some believe these values don’t belong in the workplace — just as so many examples prove the necessity of including them. 

Consider Starbucks. Their products aren’t cheap, and on price alone there doesn’t appear to be much empathy. But below the surface, the company has done a lot. Empathy and reflection were foundational for the company, stemming largely from Howard Schultz’s personal experience growing up. For years, Starbucks has been providing health insurance to part-time workers, the company ceased using milk that includes bovine growth hormone, and it has looked at how it uses and conserves water. 

Another example is Costco, which works with only a 15 percent markup. Costco employees get stellar salaries for that industry, resulting in a happier workforce that treats customers better.

Cases like these show that empathy and reflection have value, long-term.

Businesses are good at hiring for cognitive intelligence, but how are they at screening for emotional intelligence?

Generally, businesses don’t screen for emotional intelligence, which is inherent in stakeholder approach and social responsibility. In order to screen for it, they would need to practice emotional intelligence first.

We did a study on how business students, especially undergraduates, look at leadership values. Empathy ranked lowest in perceived importance for leaders while charisma and networking came out on top. Respondents saw no place for emotional intelligence.

So far, there has been a mutually supporting dynamic at play: the business world demanded short-term profits and students delivered it upon entering. As business educators, we are facing the immense task to evoke a paradigm shift. We’re diligently working on it.

Joan F. Marques, Ph.D., Ed.D., is assistant dean of the school of business; chair and director, BBA Program; and associate professor, management at Woodbury University. Reach her at (818) 394-3391 or

More wakefulness quotes, points to ponder and action plans can be found in Joan’s book, “Joy at Work, Work at Joy: Living and Working Mindfully Every Day.” Find it on

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