Two Fast Background Checks to Determine Whether Your Boyfriend (Or Girlfriend) Has a Criminal Past

Posted on December 16 2014 by admin

HarveyOn her third arranged date, Alice met a man, Harvey, whom she thought would fulfill all her dreams of having “Mr. Right” in her life for the rest of her days. Alice made a dire mistake.

Alice decided to try the internet dating service, Ace Dates (“Ace”). She was looking for a future soul mate and put her trust in Ace to help her find the perfect man. Alice was required to provide a photograph of herself and some personal background information. The Ace people would then find compatible fellows in their database and submit each party’s personal information to the other member of the potential couple, with first names only notated.
Through this process Alice got hooked up with a couple of gents that she met via the date scene. She was unimpressed with both. On her third arranged date Alice met a man, Harvey, whom she thought would fulfill all her dreams of having “Mr. Right” in her life for the rest of her days. Alice made a dire mistake.

After several dates and becoming quite accustomed to having Harvey around, Alice noticed some subtle changes in Harvey’s behavior towards her. Harvey seemed to have quite a temper, sometimes berating Alice loudly in restaurants. One day Harvey got so irritated with Alice that he clenched a fist as if to strike her. This was not at all the kind of relationship Alice had envisioned. She parted ways with Harvey soon after.

It turned out that Harvey had served two prison sentences for aggravated assault. One of the charges stemmed from his causing physical harm to a past girl friend. The charges somehow escaped Ace’s screening processes. Had Alice known beforehand of Harvey’s dark past she never would have made the connection with him. There was a way that Alice could have run a check on Harvey without his knowledge and with no charge to her.

Alice resided in Arizona in the City of Phoenix which was in the county of Maricopa. Alice could have accessed the Maricopa County Superior Court website (*). There she would have had the opportunity to search Harvey’s name under various court categories: Civil, Criminal and Family Court cases. Searching under the Criminal Cases tab, she would have found Harvey’s name and all the related court actions from the time he was first charged with a crime to the time he was sentenced. She also could have read the court’s minute entries relating to the various hearings involving Harvey.

Now knowing that Harvey had been sentenced to one of the state’s prisons, Alice could have accessed the state’s Department of Corrections website (**) and found out much about Harvey’s prison record, such as: the details of his charges and how many years he served in prison; at what jobs did he work while in prison; whether he had any disciplinary actions against him while in prison, and other information.

Accessing criminal background information on Harvey using the county superior court and the state department of corrections websites would have alerted Alice that it might not be a bad idea to dump Harvey before too much dating time had elapsed. And, the information would have been provided at no charge. (***)

By Don Bays, CPA/ABV, CVA, CFF



(***) Although this article is applicable to background searches in Maricopa County, Phoenix, Arizona, readers in other Arizona counties and counties in other states may find that their counties offer similar research capabilities, at no charge.

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How Long Will It Take Until the Arizona Economy Recovers?

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According to experts gathered at the 51st annual Economic Forecast Luncheon on December 3, 2014 at the Phoenix Convention Center, it could take another two years for Arizona’s economy to recover from the depths of the Great Recession.

Below are some statistics, comments and opinions two of the panelists shared with the audience about the status and future of Arizona’s fragile economy,

Lee McPheter – Director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business

“As of May, the United States finished gaining back 100 percent of its jobs lost in the recession, but in Arizona alone, we’re only 69 percent of the way there. We expect to regain that last 96,400 jobs in the next year and a half.”

“So far this year, Arizona has experienced 2 percent job growth, while our state’s 30-year average is a much higher 4.2 percent. Still, this rate was good enough to rank Arizona as the No. 12 state for job growth as of October.”

“Arizona unemployment has dropped from 7.8 percent last year to 6.8 percent this year. However, we continue to recover much more slowly than from past economic downturns, and we continue to face risks from ineffective growth policies at the national level.”

“Population growth could go up from 1.4 percent in 2014 to 1.5 percent next year.”

Elliott D. Pollack – Chief Executive Officer of Elliott D. Pollack and Company

“We still see relatively sluggish employment growth, fewer people moving, millennials delaying home purchases, many people still waiting out their required seven years in the credit ‘penalty box’ after foreclosures, and overall difficulty in getting home loans.”

According to Pollack, full recovery is still years away and we agree with him. Consequently, we encourage you to be patient and conservative while maintaining a watchful eye for opportunities as the Arizona economy continues to grow.

By Gary Ringel, CGREA

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Tales of a Forensic Accounting Intern at Henry & Horne, LLP

Posted on December 9 2014 by admin

I have been fortunate the last three months to have mentored a forensic accounting student through a “Shadowing Opportunity” we offered at Henry & Horne, LLP. I absolutely love my profession, and being able to share my passion with someone just starting out has been a wonderful experience. Forensic Accounting is a dynamic and growing field, and an excellent career choice for those who are analytical, inquisitive and detail oriented. Forensic accountants are not limited to using their accounting, math, finance and investigative skills. They also utilize their verbal and writing skills on a daily basis. It is an extremely creative profession, as every case is unique and requires out-of-the box thinking and problem solving. Please enjoy the blog below from Teresa Judd about her first experience working in this environment. – Julia Miessner, CPA/CFF

When I began my career as a police dispatcher for a local police department, I didn’t imagine that nearly 10 years later I would be searching for a new career path. Even though I love parts of my job, I found myself seeking more opportunities to work at those tasks I most enjoy. The main task is skip tracing. In criminal justice it can be quite beneficial to be skilled in the art of finding people. I have scoured many public and criminal justice records in order to find a suspect, a victim or a vehicle for many detectives. The thrill of finding them is unmatched. You might think I’m a total geek, but I can live with that. Before working in law enforcement, I worked as a bookkeeper at a small auto garage. I had no experience upon gaining this position and had to teach myself the ins and outs of basic record keeping. Despite that, I found that I loved this as well. It was refreshing to work in black and white. As you know, numbers don’t lie. And despite the fact that I wasn’t very good in math during my high school years, I found that I was very good with numbers. Go figure.

So when I decided that it was time to go back to school and select a major, I sat long and hard thinking about those things in my life that I most enjoyed doing. Was there a way that I could combine my experiences in bookkeeping and criminal justice for a more fulfilling career? My answer was yes, in forensic accounting. I spent a lot of time researching this career path on the internet and could find nothing negative about it. The potential to work more normal hours (this is a big deal to a shift worker like me), investigations, working with numbers, it all sounded perfect. All I needed to do was complete my criminal justice degree and begin schooling at a university to obtain my Bachelor’s degree in accounting.

I was only two classes away from finishing my associates in Criminal Justice when I registered for a career work experience class at my community college. Once this class started, I found myself calling many accounting firms trying to gain an internship. However, I found it difficult to find an internship in my field of interest. Finally, my instructor and I decided an interview with a forensic accountant and a research paper would be accepted as replacement for internship hours. I called and met with Julia Miessner, a Forensic Accountant in the Business Valuation and Litigation Support Group of Henry & Horne, LLP. This meeting was awesome! Not only did I learn about different aspects of forensic accounting, but I was able to secure a “job shadowing” opportunity with the company!

Suffice it to say I was nervous. Despite having done research on the career, I had no practical knowledge or real world experience on which to base my desire to pursue this career path. I was nervous that I wouldn’t like it. Would I get bored? I was excited to find out. To begin, I assisted Julia with data entry in tracing and quantifying the loss in a fraud case. This task encompassed data entry into an excel spreadsheet known as a “model”. During the entry of this data, the numbers and transactions are scrutinized in order to uncover the fraud scheme being used and decipher how it was employed. Now this might sound boring, but it was actually the opposite. To me, the numbers tell a story. You see the patterns and it’s like solving a puzzle every day.

This basic data entry was a great way to begin working and gaining experience with the types of models used by forensic accountants in identifying fraud schemes and quantifying losses. I really enjoyed this internship. I learned how to use the models, as I said, and was even able to help identify fraudulent transactions within various fraud cases I assisted in. Additionally, I was able to spend time in the business valuation department learning about their excel model and inputting data into that as well. This allowed me to become more familiar with reading tax returns and financial statements such as balance sheets and profit/loss statements. Within this department I gained experience in valuing businesses that were for sale, stock options and valuing shares of a business. I also learned about the difference between valuing a business for sale vs. valuing a business for gift tax purposes. All in all, I feel that I gained a world of experience and knowledge that only furthers my desire to continue my pursuit into this interesting field.

By Teresa Judd, Guest Blogger

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Henry & Horne, LLP Gives Back Again…This Year at the Phoenix Zoo

Posted on December 2 2014 by admin

Last year I was fortunate to participate in Henry & Horne, LLP’s first firm-wide community service event. It was at the Florence Crittenton campus in Phoenix, Arizona. Florence Crittenton provides shelter, education, counseling and social support to nearly 2,000 girls, ages ten to twenty-one. Our three offices in Scottsdale, Tempe, and Casa Grande joined together for an afternoon of clean-up and general maintenance programs including painting, washing windows and moving gravel.

This year on November 14, the firm joined together again for an afternoon of volunteering at the Phoenix Zoo. Before we began, the zoo coordinator provided a little history and background on the zoo. The Phoenix Zoo opened in 1962 and is the largest privately owned, non-profit zoo in the United States. I was surprised to find out that it is larger in land size than the San Diego Zoo! The Phoenix Zoo began as a personal project of Robert Maytag, grandson of the founder of the Maytag appliance company. Mr. Maytag died a few months before its opening and the zoo was originally named the “Maytag Zoo”. It was renamed the following year to the “Phoenix Zoo” to identify more closely with the community.

The zoo operates on 125 acres of land, has over 1,400 animals and contains 2.5 miles of walking trails. It is divided into four main themed areas or trails: 1) The Arizona Trail – American Southwest flora and fauna; 2) The Africa Trail – animals from Africa; 3) The Tropics Trail – residents of the rain forests; and 4) The Children’s Trail – features Harmony Farm and a petting zoo. The zoo has always focused on animal conservation efforts and it contains a sanctuary to care for animals that are endangered or unwanted.

Our group of around 90 volunteers was assigned to clear and clean away debris in a large area of the zoo. We were able to fill to the brim an extra-large dumpster with debris. We brought gloves and rakes, many purchased by Henry & Horne, LLP, which were then donated to the zoo for later use. The area looked fantastic when we were done. It was both a great way to give back to the community and also a great team building event for the employees at Henry & Horne, LLP. I look forward to our firm-wide community event next year. Happy Holidays!

By Cindy Andresen, ASA


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Fraud in Non-Profits?!

Posted on November 25 2014 by admin

It can’t be. After all, these organizations are meant to help those less fortunate than ourselves. Why would anyone commit fraud against a non-profit organization?

Unfortunately, because they can is too often the answer. Many non-profit organizations simply don’t have the staff or the budget to implement proper internal control procedures to help mitigate the risk of fraud. Sometimes it is those that you would least expect to commit the fraud that do.

Recently a minister in Tulsa, OK pleaded guilty to three counts of wire fraud and one count of subscribing to a false tax return. The minister admitted to personal use of approximately $933,000 of funds donated to build a community center. The funds were used on automobiles, liquor, jewelry, hotels, gambling and renovations to his personal home.

In September, a husband and wife in Los Angeles County were charged with embezzlement from a nonprofit agency meant to help abused and neglected foster children. The executive director and assistant executive director of the Little People’s World agency are charged with 22 counts of embezzlement and misappropriation of public funds. The couple “borrowed” more than $460,000 from the agency over a period of several years to fund their own investments and vacations.

Management, including board members, of non-profits need to make fraud prevention a priority. Oftentimes management of non-profits are so focused on the mission, as they should be, that they become too busy or unconcerned about something they don’t think could happen. And when it is management that is committing the fraud, those around them may be too intimidated to speak up. But speak up they must.

Non-profits should be training their volunteers on the “red flags” of fraud. Why does the executive director take so many trips? How does he/she afford that new car every two years? Was that jewelry a gift? And they should be directed as to whom they should speak regarding their concerns.

We all want to be trusting, especially when working with others for a common cause. But we must also be vigilant to help protect that cause.

By Melissa E. Loughlin-Sines, CPA, CFE, CVA, CFF, ABV

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Metro Phoenix 2014 Third Quarter Office Market Report

Posted on November 18 2014 by admin

Vacancy Rates Fall From 23.0% to 21.6%

The Phoenix office market continued to improve through the third quarter of 2014 – its best quarter of the year to date – with 798,563 square feet of net positive absorption, bringing the year-to-date total positive absorption to 1,830,275 square feet. Vacancy also improved during the quarter, falling from 23.0% to 21.6% – its lowest level in six years.

Rents Remain Flat

According to Lee & Associates, despite the strong absorption in the third quarter of 2014, rents have stayed flat and will continue to remain there until vacancy rates fall below 20%.

Third Quarter Metro Phoenix Office Market Statistics

Microsoft Word - 111814_Metro Phx  2014 Third Qtr  Office Market

Southeast Valley is Top Performing Submarket

Newmark Grubb Knight Frank (NGKF) reports that the Chandler/Gilbert submarket was the top performing office sector in metro Phoenix during the third quarter of 2014 with 168,081 square feet of positive absorption. According to NGKF, “The driving force behind the positive numbers was the movement of General Motors into its new information technology center in Chandler.”

New Construction Bodes Well for the Future of the Metro Phoenix Office Market

In the Valley, 2,255,470 square feet of office space is currently under construction with Chandler and Tempe accounting for most of it.

Tenant Demand Exceeds Supply

Real estate commentators are optimistic about the rebuilding and repositioning of the Phoenix office market attributable to tenant demand exceeding supply.

By Gary Ringel, Managing Director of Henry & Horne, LLP’s Real Estate Appraisal & Consulting Group

(1) The source for the statistics is Lee & Associates Q3 Phoenix Office Market Report. We excluded submarkets with total inventories of 1,000,000 square feet or less.

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Use of a Calculation Report in the Court Room

Posted on October 22 2014 by admin

Per the AICPA Statement on Standards for Valuation Services #1 (SSVS #1), a valuation analyst may complete a calculation engagement for which he/she would submit a calculation report. A calculation engagement is much more limited in scope than a valuation engagement. A valuation engagement is performed for the purpose of expressing an opinion of value and requires consideration of all relevant information and the application of all relevant valuation methods and procedures. A calculation engagement is an agreement between the valuator and the client as to which valuation approach or approaches will be used and the extent of the procedures to be applied in the process of determining a calculated value. A calculation engagement does not result in the expression of an “opinion” of value but rather a calculated value. It is possible that a materially different value could be derived using a calculation rather than a valuation engagement. A calculation engagement is typically requested by a client who is just trying to get a feel for a business’ value but does not want to spend the amount of money necessary to have a valuation engagement performed.

There is some debate among valuation analysts regarding the use of a calculation of value in a litigation environment. Because the engagements are limited in scope, some analysts do not feel comfortable testifying in court to a calculated value. If an opposing expert provides an opinion of value through a valuation engagement, the expert relying on a calculation of value may be subject to some harsh scrutiny under cross-examination regarding why a valuation engagement was not performed.

A recent Federal court case in the State of Pennsylvania dealt with whether or not a calculation of value is admissible as evidence under Daubert. In Hipplie v. SCIX, LLC, the plaintiff’s expert submitted a calculation of value. Under deposition testimony, the expert stated that he had limited information about the financial records of the Company and therefore could not perform a full valuation engagement. Defendants issued a Daubert challenge stating that the report failed two requirements, reliability and fit (relevance). The defendants asked that the calculation report be precluded from evidence.

The court sided with the Plaintiffs and allowed the report to remain in evidence. The court stated that a calculation report was approved by the AICPA, that the expert had reasonably explained why a full valuation could not be performed and that the methodologies and assumptions made were clear. The court found no reason for the trier of fact not to hear the testimony.

The weight of reliance the court put upon the calculation of value was not available as of this writing. Admittance as evidence and reliance upon are, as they say, two different things. A recent family court case in Arizona highlights this fact. A calculation of value was submitted by one of the experts in a marital dissolution case. The use of the calculation was not objected to and no Daubert challenge was issued. However, in its ruling the court determined that the calculation of value was not thorough or complete and did not reliably apply the principles and methods regarding business valuation to the facts of the case.

Although calculation reports may be admitted as evidence, it is the opinion of Henry & Horne, LLP that they do not contain enough facts or data to reliably provide a value to a court of law.

For more information about calculation vs. appraisals, please read the article entitled “Calculation vs. Appraisal Opinion in Marital Dissolutions” written by Stephen Koons.

By Melissa E. Loughlin-Sines, CPA, CFE, CVA, CFF, ABV

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Estate & Gift Tax Valuations: Can the IRS Disregard an Agreed Upon Value for Shares in a Buy-Sell Agreement?

Posted on October 21 2014 by admin

Section 2703 of the Internal Revenue Code enacted in 1990 states that buy-sell agreements are disregarded for valuation purposes, unless the agreement satisfies the following tests.

Test One: The Agreement Must Constitute a Bona Fide Business Arrangement

The buy-sell agreement (Agreement) cannot be a ploy to transfer shares to members of the family at a price that is less than full and adequate consideration.

Test Two: Formula Clauses Must be Fair and Reasonable

If the Agreement includes a formula, it may not result in a transaction price that is lower than what would be agreed upon in an arm’s length negotiation.

Test Three: Terms and Conditions Comparable to Those in a Contract between Unrelated Parties

The covenants, restrictions and conditions in the Agreement must be consistent with practices incorporated in a business contract between unrelated shareholders.

Prior to the enactment of Section 2703, Treasury Regulation 20.2031-2(h) (Regulation) governed the manner in which a buy-sell agreement should be interpreted for estate and gift tax valuation purposes. This Regulation sets forth additional tests that are still considered relevant by most commentators.

Test Four: Agreement Must Include Valuation Methodology

The Agreement must include an explanation of the manner in which the value of the shares is determined.

Test Five: Shares Must be Sold Upon the Death of a Stockholder

In the case of an estate, upon the death of a shareholder, the Agreement must obligate the personal representative to sell the decedent’s stock.

Test Six: Shares Must be Offered to the Remaining Shareholders or Corporation Upon the Death of a Stockholder

When reporting the market value of a decedent’s shares, the agreed upon transaction price in the Agreement can be relied upon only if the contract includes a right of first refusal provision that vests the corporation, remaining stockholders, or a third party with the right to acquire the shares at a price which exceeds the stipulated sale price in the Agreement.

Make sure your buy-sell agreement satisfies the tests presented in Section 2703 and Regulation 20.2031-2(h).

By Gary Ringel

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Will My Gift Tax Return be Audited?

Posted on October 15 2014 by admin

Gary Ringel, Managing Director of the Business Valuation and Litigation Support Services group at Henry & Horne, LLP, wrote an informative article in our quarterly September 2014 BV/Lit e-News publication about the IRS and the likelihood of increased gift tax audits in the future. Gary reported that gift tax returns increased from 219,544 in 2011 to 258,393 in 2012. The increase in the total dollar amount gifted is much greater increasing from $51 billion in 2011 to $135 billion in 2012. As many did not file their 2012 gift tax returns until 2013, I expect both the number of returns filed and the gift amounts reported in the 2013 filings to be even greater than in 2012.

As Gary pointed out in his article, many professionals expect the Internal Revenue Service to shift resources from estate tax returns to gift tax returns as estate tax returns have declined significantly due to the estate, gift tax, and generation-skipping transfer tax exemption amount now in excess of $5 million. In 2012 there were 28,061 estate tax returns filed and only 8,693 of them were taxable estates. (*) Estimates are that only 0.10% to 0.15% of 2014 decedents will die with an estate subject to federal estate tax. (**)

It’s very good news then that the professionals we have talked to have not seen an increase in gift tax return audits for gifts made in 2012. With the three year statute of limitations beginning when the gift tax return is filed, those who filed their 2012 gift tax returns on the latest due date of October 15, 2013 could still be audited within the next two years up to October 15, 2016. But for those who gifted and filed anytime in 2012, they will be approaching the three year mark sometime next year.

To find out the common factors that trigger a gift tax audit and helpful details on the audit process itself, please click on the following link to Gary Ringel’s article titled “Gift Tax Audits Expected Increase in the Future?

By Cindy Andresen, ASA

(*) Internal Revenue Service Data Book, 2013, Publication 55B, Washington, DC March 2014

(**) L. William Schmidt, Jr., Senior Trust Officer, First Western Trust

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Arizona’s Dismal Housing Market Continues to Impede State’s Economic Recovery

Posted on October 7 2014 by admin

Single family permits in Arizona decreased a whopping 28.8% between 2014 and 2013.

Below are excerpts from the September 22, 2014 edition of The Monday Morning Quarterback, a weekly e-newsletter published by Elliott D. Pollack & Co.

Snapshot of Arizona’s Employment & Housing Statistics

  • In August, the seasonally adjusted unemployment rate in Arizona edged up 1/10 of 1% from 7.0% in July to 7.1% in August. This is the third consecutive month of increase in the unemployment rate. A year ago, the Arizona unemployment rate stood at 8.1%. In contrast, the U.S. rate dropped 1/10 of 1% from 6.2% to 6.1% in August.
  • Since January, Arizona added 51,400 nonfarm jobs (2.1%). Of these gains, the private sector gained 50,500 jobs and the government added 900 jobs. For the first eight months of the year, Arizona’s job growth ranked 15th out of 50 states in gains. The state has regained only 62% of the jobs lost in the great recession compared to nearly 100% for the U.S.
  • Greater Phoenix job growth is up 2.2% year-to-date and 2.3% year over year and has added 42,200 jobs on a year over year basis. It has regained 70% of the jobs lost in the recession. The unemployment rate for the area stands at 6.3%.
  • The August permit count of 838 new homes was the lowest count in the last 12 months decreasing a whopping 28.8% from last year. Year-to-date in 2014, 7,621 new home permits have been issued in the region. This is down 17.2% from the same period in 2013 when the region counted 9,206 permits.

In summary, there were few glimmers of hope in Mr. Pollack’s weekly e-newsletter. It is apparent that we will be waiting a few more years for the state to dig itself out of the single family residential housing recession that continues to impede Arizona’s economic recovery.

By Gary Ringel

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