A new risk management tool, and PPP and tax deadline updates

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March 24, 2021

A new risk management tool, and PPP and tax deadline updates Risk management has always been important, and it came to the forefront for many organizations in 2020. A new risk heat map tool from the Association of International Certified Professional Accountants can Help measure and manage risks. Lori Sexton, CPA, CGMA, a senior technical […]

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A risk managem tool, and PPP and tax deadline updates

Risk managem has always been important, and it came to the forefront for many organizations in 2020. A risk heat map tool from the Association of International Certified Professional Accountants can help measure and manage risks. Lori Sexton, CPA, CGMA, a senior technical manager for managem accounting, explains some of the features of the tool and how those features can expand an organization’s risk managem funion.

What you’ll learn from this episode:

Play the episode below or read the edited transcript:

To comm on this episode or to suggest an idea for another episode, conta Neil Amato, a JofA senior editor, at Neil.Amato@aicpa-cima.com.

Transcript:

Neil Amato: safe to say everyone’s risk managem plans were upended in a major way starting about a year ago with the COVID-19 pandemic. So today, we’re devoting time on the Journal of Accountancy podcast to about a tool that can help on the risk managem front.

I’m Neil Amato with the JofA, and on the podcast now is my colleague Lori Sexton, a CPA who holds the CGMA designation. Lori is a senior technical manager for managem accounting, and in that role she’s in regular conta with businesses and governm ities about topics that include risk managem.

Lori, many listeners know what a business risk is, especially these days. But they may not know about a risk heat map. What is that exaly?

Lori Sexton: To me, Neil, a heat map is really three things. visual. A piure is truly a thousand words. And instead of taking five minutes to read a page, you can glance at a graph in 30 seconds and see right where your risks lie. In our world of overload, we know piures are extremely effeive.

The second thing a heat map is to me is a method of explaining risk — the likelihood that an idified risk is going to occur, coupled with the suspeed impa, whether financial or not. Now, the heat map is useful to a foundational audience, for example, those who just got assigned to risk and know nothing about it, or to a board of direors who’ve had decades of experience and interaion with risk. The heat map is an easy-to-use and interpretive tool that just seems to make sense.

And lastly, because of that, easy to communicate and understand, whether a 3×3 grid, a 5×5 grid, or even a 10×10 grid, the stakeholders can take a look and see that the risks in the lower left corner, often colored in green, aren’t nearly as serious as the risks in the upper right corner, usually covered in red. And then, focus their mitigation on those that are in the high red sperum.

Amato: So, heat maps are one tool an organization can use to assess risk. How is this updated version going to help organizations with erprise risk managem?

Sexton: As I think about your , I’m going to tweak your term to use “expanded” instead of “updated.” As the risk environm continues to be a magnifying focus, as we’ve seen in the last 15 months, we’ve also expanded this to include qualitative tables as well as the standard quantitative table. Financial risks are often the initial risk assessm performed, but as the world has recly shown us and as our own risk processes mature, the nonfinancial risks are just as important. For example, let’s take reputational risks. often very hard to quantify that in firm dollar amounts. Yes, we can get an estimate, but the effes on our reputation are beyond that and are very qualitative in nature. This table helps explain that.

Another expansion in this tool are additional s and aions that are geared toward the performance and continuity of your business or ity. We’ve included considerations surrounding thresholds and monitoring. no longer just an accepted praice to know if you have a risk or if you don’t, but what’s become increasingly important is to be able to see it coming and do some mitigation before it hits the red zone. That’s where the thresholds and monitoring come into play. Also, we’ve included more risks within our toolkit. Currly, you can find great resources on our s, which I know you’re going to be ing about in a mom, Neil.

Amato: For those who want to learn more, what can they look for next?

Sexton: We have got some exciting — and I do say exciting, because I find risk to be a very exciting topic — some exciting resources and tools coming in the next couple quarters. We have got how to communicate a risk heat map. Though you can go through the curr tool and understand it, this is going to help you communicate it not only to your staff but also to your executive stakeholders. We also have a tool designed to develop you as a risk leader. And, certainly, the focus on continuity continues, as we look for risks related to your business continuity.

Amato: Thank you, Lori. For the listeners, you can find the risk heat map on CGMA.org under Resources [and then Tools], or, and this link was created just for the listeners of the podcast so you have something easy to remember, you can also go to tinyurl.com/riskheatmap2021.

For those focused on April 15 as the date to file your 2020 taxes — well, you’ve been given extra time. The Departm of the Treasury and the IRS announced on Wednesday that the deadline for filing income taxes is now May 17.

In other s, business groups along with the AICPA are supporting a bill that would delay the application deadline for Paycheck Proteion Program loans by 60 days. The PPP Extension A of 2021 calls for loan deadlines to move from March 31 to May 31. The AICPA said in a letter to the bill’s sponsors that CPAs are working diligly to assist as many clis as possible with applications and that more time is needed. A deadline extension, according to the letter, would give the U.S. Small Business Administration time to work out technical challenges and to provide more guidance. At this recording, the bill has passed the House of Represatives and is headed to the Senate.

In the first two months of the 2021 version of the PPP, the SBA said, it has approved 2.5 million loans a total of $168.5 billion.

Also, The AICPA has asked for IRS guidance on how S corporations and partnerships should treat tax-exempt income from PPP loan forgiveness. The AICPA’s Tax Executive Committee s a letter to the IRS making recommendations on how to apply the CAA and specifically Seion 276. That seion of the a provides that expenses paid with forgiven PPP funds are deduible, that PPP borrowers are not to reduce any tax attributes, and that no basis increase shall be denied by reason of the exclusion of PPP forgiveness from gross income.

Also, the SBA said that business recipis of COVID-19 Economic Injury Disaster Loans won’t have to make payms on the loans until 2022 or later. The date the loan payms begin depends on whether the loan was made in 2020 or 2021. A loan made this year has a first paym due 18 months from the loan date. Loans granted in 2020 have a first paym due date 24 months from the loan date.

For more on these stories, visit journalofaccountancy.com. Thanks for listening to the JofA podcast.


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A new risk manageMent tool, and PPP and tax deadline updates Risk manageMent has always been important, and it came to the forefront for many organizations in 2020. A new risk heat map tool from the Association of International Certified Professional accountants can help measure and manage risks. Lori Sexton, CPA, CGMA, a senior technical […]

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How To Really REALIZE DREAMS COME TRUE?

Happiness is for those who plan well and pursue. A profound among us have been proven those who have true dream to live for likely REALIZED IT. It is just simply the person working toward the DREAM days and night until accomplishment. There is a phrase of efficiency a head of you. Steps and obstacles at first seem tremendous. However, just with some times those difficult steps and challenges are so easy performance for you. There are also plenty of tools including VISUALIZATIONS and helps are around you.

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