RINA President’s Message January 2012
Ed Fahey, Stockholder RINA President
On behalf of all of us at RINA I must start with a thank-you to all who contributed to our success in 2011. Aided by the late 2010 addition to our San Francisco office, a recovering economy, support from referral sources and our great clients, RINA was able to set a revenue record for the firm. We look to continue our growth in 2012. In fact, the new theme for our strategic plan is One Firm, One Goal: Growth.
We expect that growth to come in client service as we continue to bring new ideas to help our clients be successful. We will see it in staff development through our efforts to grow personally and professionally. We will also continue to grow our niche expertise in real estate, not-for-profits, estate planning, employee benefit plans, food and beverage and business valuations. When all three come together we are able to create value in the marketplace and serve our clients more effectively.
We also start the year with a new website which we will leverage to provide important information to its users. In 2012, you will find us more active in blogging, Facebook and LinkedIn as we utilize these tools to connect with our clients, prospects and prospective staff. Still, we remain committed to communicating the “old fashioned” way by being responsive to your phone calls and meeting with you in person. The relationships we have developed over our 65 year history are very personal and we look forward to those growing in 2012 as well.
Elsewhere in this newsletter, you will find a profile of Ray Evans, our newest shareholder. Ray practices primarily in the tax arena and is that rare combination of a technician who can see the opportunities in tax law changes. If you know Ray, be sure to congratulate him on this important milestone and accomplishment.
I wish you all the best for the New Year.
MGI – Business Solutions Worldwide
Stockholders Tom Neff, Ed Fahey & Howard Zangwill attended the MGI Conference in New York on October 19-21. With 158 members and a presence in 280 offices and 82 countries across all continents, MGI is one of the largest alliances of independent auditing, accounting and consulting firms in the world providing for their members and clients, effective professional business solutions worldwide.
The stockholders interacted with other accountants from throughout the world, many of whom serve our clients or refer work to us. To encourage interaction among members, regional “circles” are being formed. RINA will host the North America Western Circle meeting on January 6, 2012. Ed Fahey is a member of the coordinating committee and Western Circle leader.
Stockholder Announcement
Ray Evans, Stockholder
We are delighted to announce our newest stockholder, Ray Evans. Ray brings to his new position over 20 years of experience in the accounting field, and has worked at RINA as a tax manager in our Walnut Creek Office since 2006. Ray currently heads our tax department. Ray’s areas of focus include tax planning for individuals and closely-held business, financial and estate planning and business succession planning.
“As a stockholder of RINA, I look forward to working with our dedicated team of professionals and instilling in them my passions of responsiveness and finding the best possible solutions for our clients.” – Ray Evans
Client Profile – MicroCredit Enterprises
By Pamela Raumer, RINA Business Development Director
MicroCredit Enterprises (MCE) is a non-profit organization with a unique business model. They utilize the financial capital and good credit of high net worth individuals and institutions to guarantee microloans that lead to sustainable communities and social good throughout the developing world. Specifically, MCE borrows private capital from banks and foundations that is backed by guarantees from high net worth individuals and institutions. MCE then lends the borrowed money to microfinance institutions (MFIs) throughout the developing world that use it to issue microloans to poor entrepreneurs. MCE’s mission is to reduce poverty in the most impoverished countries by providing loans to finance cottage businesses.
Microfinance client in Mongolia selling blackberries and blueberries.
Founded in 2005, MicroCredit Enterprises’ current loan portfolio includes 32 MFIs in 18 countries, impacting over 300,000 impoverished individuals. The first loan was issued in January 2006 and since then they have issued $46 million in loans in 22 countries. Their goal is to end this year with a total of $50 million lent since launching and their long-term goal is to raise $100 million in guarantees to support their lending.
As a MicroCredit Enterprises Management Fellow in 2004, Kyle R. Salyer, who now holds the position of Executive Vice President for Finance & Operations with MCE, co-researched and wrote an analysis of international lending to microfinance institutions and microfinance capital market trends. Prior to his internship with MicroCredit Enterprises, he was a regional manager with the Mexican Association of Rural and Urban Transformation where he developed and managed their Chiapas-based microfinance institution. Mr. Salyer was responsible for creating savings and loan products, identifying new markets, managing the loan portfolio, and developing a strategic plan for program growth.
Banana vendor in Cambodia. A microfinance client.
MCE is always looking for new sources of borrowing and new guarantors to sustain their growth plans. “Because of MCE’s high efficiency business model, we are able to keep our overhead at 3% to 4% of loans outstanding,” said Kyle. “Also, our borrowers have a near-perfect record of paying back their loans.” When vetting microfinance institutions, they heavily favor working with MFIs that have a focus on serving women in rural areas that live on less than $2/day. They are not providing hand-outs; rather, they promote financially struggling entrepreneurs to use their talents and skills that they already have. Over 80% of the entrepreneurs served by MCE are women.
Although Kyle recently assumed his current role of working with RINA as MCE’s auditor, he is impressed with our understanding of their unusual model and the fact that Howard Zangwill, (their audit partner) went on a study-mission to Guatemala in 2008 to learn microfinance and visit microfinance institutions.
“RINA has done a great job in comprehending our unique model and taking that into consideration in their work for us. RINA has been helpful in guiding us to improve our accounting and internal controls. They are always available and not just at audit time – Howard responds right away.” – Kyle R. Salyer, Executive Vice President for Finance & Operations, MicroCredit Enterprises.
RINA’s Website Gets an Extreme Makeover in 2012
RINA’s website is getting a much needed upgrade with a fresh new look and easier navigation. While our original website is useful in communicating our services and experience, the new site will have expanded content, easy access to resources, event information, search capabilities and integration of our newsletters, blog and social media. Please visit our site at www.rina.com in early February and become a fan.
The Top 10 Reasons You Need a Board
Howard Zangwill, Stockholder
A company’s board of directors provides the company with direction and advice. It is their responsibility to ensure that the company fulfills its mission statement. In doing so, the company’s overall policy objectives are frequently set. For these reasons, a good board includes knowledgeable and experienced business people. Your business will immediately gain legitimacy and a panel of expertise you may not otherwise have “in house.” Directors with specialized knowledge such as law, finance and marketing become a valued resource providing guidance and much needed advice in critical centers of the business.
A board will help you set aside your tactical perspective, get outside the organizational boundaries of your day-to-day perspective and force you to work on the business. It will allow you the unique opportunity to look at the business objectively and from every angle. It forces you to work on strategy instead of tactics. It allows time to develop new ways to improve the entire business enterprise. Don’t underestimate the impact formalizing a board can have on a family or small partnership business.
Below is a list of the top ten reasons of what a board should do for you as written by Kraig Kramers, nationally-known speaker and CEO of Corporate Partners, Inc. which is based in Atlanta.
- Make More Money – Good boards make huge differences in the company’s bottom-line and value.
- Bring Me Stuff – Often the board can get cash (lenders, equity, and more) as well as identify new strategies, or duck an approaching comet.
- Help me not screw up – Another really good reason for a board is to keep from screwing up. It’s too hard to anticipate everything; let your board be your eyes, your ears, and your pulse-checker. It’ll save you money and grief.
- Get me out of this mess – Yes, getting out of trouble is what good boards are for. Boards bail you out strategically, bringing multiple experiences to bear on the really tough nuts. Boards offer an ongoing, big picture, financial/strategic view.
- Blame it on the board – Some CEO’s and owners aren’t confrontational or can’t tell the bad news – a great reason for a board is to blame unpopular stuff on them.
- Window dressing – If you’re going public, getting a loan, merging, or just trying to look good, a rock-solid board is window dressing to up your multiple.
- Coaching – board members can be great coaches for you and for your people; use them.
- Corporate governance – For public companies, those looking to go public, and certain private companies, boards are mandated.
- But they’re expensive – Actually not, but only if you are using them right. Boards should create more wealth for your company and more time for you. It’s called managing smart, not hard. Boards are cheaper than consultants and attorneys, or even in-house personnel.
- Focus – Actually the number 1 reason for boards: they get the Company’s people into the present and out of the past, focusing on preparing for the future. Yes, this is strategy, but it’s also an imperative. Boards challenge, create, pro-act, and position you to maximize owner wealth.
To further discuss your Board of Directors and how to make them more effective and their functions, please contact RINA.
Is Your Business Valuation Report Readable
Robert Kosbie, CPA/ABV/CFF Director - Valuation and Litigation
The Tax Court decision in the 2011 case of Gallagher v Commissioner, the tax court has given a very clear directive that business valuation reports must be understandable and fully supported. On several occasions in the finding, Judge Halprin admonishes one or both experts that they had failed to “support his conclusion with an explanation.”
One of the differences in the experts’ findings was the amount of Long-Term Debt that should be used as an offset to the indicated entity value to determine the fair market value of the stock interest in question. In criticizing the petitioner’s expert, the court wrote, “Moreover, Mr. May identified differing debt amounts throughout his report. We will not rely on a consistently changing number, especially one that Mr. May fails to justify.” That was one of a half dozen issues unsupported and therefore rejected without consideration by the court.
Although each report should be tailored to the specific assignment and may have many unique issues, the overall presentation should be readable and fully supported. We recommend that a reviewer of a business valuation report consider the following:
- Consistent. Are the facts and figures used consistent throughout the report?
- Complete. Does it appear that all relevant data and analyses are included?
- Balanced. Does it discuss both the positive and negative factors affecting value?
- Plain English. Is technical jargon avoided or at least well defined?
- Logical. Do the findings flow from the assumptions and data presented?
If you have questions about understanding a valuation report, we are happy to discuss it with you. Please contact Robert Kosbie, Business Valuations Director, at (415) 777-4488.
RINA Gives Back
Thom & Mary Trimble, Karen Elliot, Ashley Griffin, Robert Kosbie, Tracy Teale, Gayle Tostenson, Kelly Creed, Carrie Whisler, Howard Zangwill, Lorraine & Jarrod Aldaya
On Saturday, October 1st, eight staff from RINA’s WIN group and two of their significant others volunteered at the Girls Inc. of Alameda County “20th Annual Women of Taste” event. The event brings together over 60 restaurants, wineries and culinary vendors showing off their wares to support the mission of Girls Inc. – Inspiring all girls to be strong, smart and bold through vital educational programs.
Our volunteers worked from 4pm to 10pm managing the Lagunitas Brewery booth, greeting guests, escorting guests to the VIP area, and assisting vendors with setting up and restocking. Everyone had a great time and said the food and beverages were wonderful!
RINA’s WIN group was created to further the Firm’s vision of being the most respected regional accounting and consulting firm in Northern California by inspiring and advancing leadership through the support, development and empowerment of the women at RINA.
RINA Helps Habitat for Humanity
RINA Volunteers at Oakland's Kinsell Commons; a Habitat for Humanity East Bay project.
By: Ashley D. Griffin
On Friday, November 4th, thirty staff members of RINA banded together to assist with the volunteer effort of rebuilding and remodeling Oakland’s Kinsell Commons; a project being completed by Habitat for Humanity East Bay. The volunteers from RINA reported to the Kinsell site and were given team-designated tasks involving interior painting and landscaping duties. The day proved to be both fun and work filled, and was quite a success. All of our work goals were accomplished by the day’s end, and the Kinsell Commons are just one step closer to their completion. The dedication of the homes is set for March 5th, 2012 (for 14 of the homes).
The Kinsell commons are a collection of 22 town homes, each with spacious layouts and backyards. This site (which is part of the large development, Tassafaronga Village) was the last remaining of Oakland’s severely distressed public housing developments. “Habitat’s development of Kinsell Commons will further stabilize the neighborhood by creating a mixed-income community and entry-level homeownership opportunities for low-income families.”
All of the Habitat for Humanity projects are primarily volunteer-staffed, so if you have any interest in lending a hand please visit http://www.habitateb.org/index.
February 29 – Payroll Due Dates
| February 29, 2012 |
- Form W-3, Transmittal, together with Forms W-2 to Social Security Administration
- Form 1096, together with appropriate Forms 1099 to the Internal Revenue Service