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Guidance from the US Department of Education Dear Colleague Letter

03.23.20

In early March 2020, the US Department of Education (ED) issued a Dear Colleague Letter, “Guidance for interruptions of study related to Coronavirus (COVID-19),” posting a subsequent update March 20 to include the document “Frequently Asked Questions Related to COVID-19.” The information below has been excerpted directly from the letter and compiled with the needs of our higher education clients in mind.

This electronic announcement addresses concerns regarding how higher education leaders should comply with Title IV, Higher Education Act (HEA) policies for students whose activities are impacted by the coronavirus and COVID-19:

  • Either directly because the student is ill or quarantined, or 
  • Indirectly because the student was recalled from travel-abroad experiences, can no longer participate in internships or clinical rotations, or attends a campus that has temporarily suspended operations.

This information provides some flexibility for schools working to help students complete the term in which they are currently enrolled. Some of the most important changes to note:

  • Federal Work Study (FWS)
    For students enrolled and performing FWS at a campus that must close due to COVID-19, or for a FWS student who works for an employer that closes as a result of COVID-19, the institution may continue paying the student federal work-study wages during that closure if it occurred after the beginning of the term, the institution is continuing to pay its other employees (including faculty and staff), and the institution continues to meet its institutional wage share requirement.
  • Length of academic year
    If at any point an institution determines it will close as the result of a campus health emergency, it may contact the school participation team to request a temporary reduction in the length of its academic year.
  • Professional judgement
    Financial aid administrators (FAA) have statutory authority to use professional judgement to make adjustments on a case-by-case basis to the cost of attendance or to the data elements used in calculating the EFC to reflect a student’s special circumstances. The use of professional judgement where students and/or their families have been affected by COVID-19 is permitted, such as in the case where an employer closes for a period of time as a result of COVID-19. 
  • Reentering the same payment period
    If an institution that has closed subsequently re-opens during the same payment period or period of enrollment, and permits students to continue coursework that they were taking at the time of the closure, students that return to class at that time are considered to have reentered the same period and retain eligibility for Title IV aid that they were otherwise eligible to receive before the closure.

We highly recommend you read the full letter, as it outlines additional important details and includes recently added FAQ documents.

Questions? Please contact Renee Bishop, Sarah Belliveau, or Mark LaPrade. We’re here to help.

For further reading
Guidance for interruptions of study related to Coronavirus (COVID-19) 
FAQs
COVID-19 ("Coronavirus") Information and Resources for Schools and School Personnel
 

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Read this if you are a plan sponsor of employee benefit plans.

This article is the eleventh in a series to help employee benefit plan fiduciaries better understand their responsibilities and manage the risks of non-compliance with Employee Retirement Income Security Act (ERISA) requirements. You can read the previous articles here.

Most employee benefit plans have outsourced a significant portion of the internal controls to a service organization, such as a third-party administrator. The plan administrator has a fiduciary responsibility to monitor the internal controls of the service organization and to determine if the outsourced controls are suitably designed and effective.

SOC 1 reports: Internal controls and financial reporting

Generally, the most efficient way to obtain an understanding of the outsourced controls is to obtain a report on controls issued by the service organization’s auditor. Commonly referred to as a System and Organization Controls (SOC) report, the SOC report should be based on the American Institute of Certified Public Accountants’ (AICPA) attestation standards and should cover internal controls relevant to financial reporting, also known as a SOC 1 report (the “1” indicating it covers internal controls over financial reporting).

Plan sponsors should perform a documented review of the SOC 1 report for each of the plan’s significant service organizations. The documented review should include the plan sponsor’s assessment of the complementary user entity controls outlined in the SOC 1 report. The complementary user entity controls are internal control activities that should be in place at the plan sponsor to provide reasonable assurance that the controls tested at the service organization are operating effectively at your plan. If a service organization’s internal controls are operating effectively, but complementary user entity controls are not in place at your organization, the effectiveness of the service organization’s internal controls may not transfer to your plan’s operations.

Creditability and CPA firms: Considerations

Creditability of the CPA firm completing the SOC 1 report examination may impact the reliability of the CPA firm’s opinion and thus your reliability on the service organization’s internal controls. Unfamiliarity with the service auditor’s qualifications may be mitigated through additional research. Items to consider are: 

  • The firm’s expertise in SOC 1 reporting
    • Are they familiar with the service organization’s industry?
    • How many professionals do they have that perform SOC 1 examination services?
  • The evaluation of AICPA peer reviews 
    Audit firms are required to have a periodic peer review conducted. The results of the peer review are public knowledge and can be found on the AICPA’s website.
    • Did the service auditor receive a “pass” rating during their most recent peer review?
    • Did the peer review cover SOC 1 examination services?
  • Evaluation of the service organization’s due diligence procedures surrounding the selection of an auditor

Some of this information may be readily available via the service auditor’s website, while other information may need to be gathered through direct communication with the service organization. A qualified service auditor should be able to provide a SOC 1 report that contains sufficient detail, relevant transactional activity, relevant control objectives, and a timely reporting period.

SOC 1 reports may contain an unqualified, qualified, adverse, or disclaimer of opinion. The report determines if the controls in place are adequate for complete and accurate financial reporting. Report qualifications may affect the risk of relying on the service organization and may result in the need for additional procedures or safeguards to help ensure the plan’s financial statements are presented fairly. Even if the SOC 1 report received an unqualified opinion, you should review the controls tested by the service auditor and the results of such testing for any exceptions. Exceptions, even if they don’t result in a qualified opinion, may have an impact on the plan’s control environment. 

You should also review the scope of the audit to check that all significant transaction cycles, processes, and IT applications were properly assessed for their impact on the plan’s financial statements. Areas outside the scope of the SOC 1 report may require additional consideration, including the possibility of obtaining more than one SOC 1 report for subservice organizations whose functions were carved out from the service organization’s SOC 1 report.

Subservice organizations

Subservice organizations are frequently utilized to process certain transactions or perform certain functions at the service organization. Management of the service organization may identify certain transaction cycles and processes that are performed by a subservice organization and choose to exclude relevant control objectives and related controls from the SOC 1 report description and the scope of the auditor’s engagement. In such cases, multiple SOC 1 reports may need to be acquired to gain adequate coverage of all controls and objectives relevant to your plan. 

Furthermore, you need to consider the time period the SOC 1 report covers. Coverage should be obtained for your plan’s full fiscal year. For SOC 1 reports that lack coverage of your plan’s full fiscal year, a bridge letter should be obtained to help ensure that no significant changes in controls occurred between the SOC 1 report examination period and the end of your plan’s fiscal year.

Although plans commonly outsource a significant portion of their day-to-day operations to service organizations, plan fiduciaries cannot outsource their responsibilities surrounding the maintenance of a sound control environment. SOC 1 reports are a great resource to assess the control environments of service organizations. However, such reports can be lengthy and daunting to review. We hope this article provides some best practices in reviewing SOC 1 reports. If you have any questions, or would like to receive a copy of our SOC 1 report review template, please don’t hesitate to reach out to our Employee Benefits Audit team.

Article
Service organizations and review of SOC 1 reports: Considerations and recommendations

Read this if you use QuickBooks online.

The money you spend to run your business must be recorded conscientiously for your taxes and reports. Here’s how to do it.

You undoubtedly keep a very close watch on the money coming into your business. You record payments as soon as they come in and deposit them in your company’s bank account. But are you as careful about your purchases?

It’s easy to go out to lunch with a client and forget to save the receipt. You figure it’s not that much money, anyway. Or you pick up a ream of printing paper and a cartridge at the office supply store and neglect to record the purchase. When you disregard even small expenses, you can have two problems. One, your books won’t be accurate. And two, you never know how an extra $42.21 under Meals and Entertainment might affect your income taxes.

QuickBooks Online provides two ways to enter expenses. You can create a record on the site itself. Or you can snap a photo with your phone using the QuickBooks Online mobile app to document the money spent. Here’s how these two methods work.

Documenting at your desk

Let’s say you just had lunch with a vendor to discuss some products you’re planning to buy for a project you’re doing for a customer. You charged it to your company credit card, which you track in QuickBooks Online. You still have to enter it as an expense on the site so that when your credit card statement comes, you can match the credit card transaction to the expense you recorded.

Hover over Expenses in the navigation toolbar and click on Expenses. Click the down arrow in the New transaction button and select Expense. Fill in the fields at the top of the screen with details like Payee, Payment date, and any Tags you want to specify. Under Category details, select the correct category from the drop-down list and enter a Description and Amount

QuickBooks Online allows you to thoroughly document expenses. You can attach a picture of a receipt if you’d like.

Since you’re going to bill this to the customer as a part of your project fee, click in the Billable box to create a checkmark. Select the Customer/Project. Add a Memo to remind yourself of the reason for the lunch (very important!) and attach a photo of the receipt if you take one. Click Save. Your record of the lunch will now appear on the Expense Transactions screen. It will also show up in the Expenses by Vendor Summary and Unbilled Charges reports, among others.

Recording with QuickBooks Online on the road

In the example we just went through, attaching a photo of the receipt was the last thing we did to record an expense in QuickBooks Online. There’s another way to document a purchase that starts with a photo of a receipt and should save you a bit of data entry: using the QuickBooks Online mobile app. The app uses Optical Character Recognition (OCR) to “read” the receipt and transfer some of its data to fields on an expense record. (If you haven’t installed the QBO app on your smartphone, you should. You can do a lot of your accounting work that synchronizes automatically with QBO. It’s free, too.)

Open the app and log in. On the opening screen, you’ll see an icon labeled Snap Receipt. Click on it, and your phone’s camera will open (you’ll be asked for permission to use it). Position your phone over the receipt and move it around until you see the blue box covering the content of the receipt.  Take the picture. You’ll see it displayed on the phone with a message saying, “Use this photo.” If it seems OK, click the link. 

A message on the screen will tell you that the upload is complete and that the app is extracting the information from it. Click “Got it!” It should only take about a minute for your receipt to appear in the list on the Receipt snap screen. You’ll see the details that the app has pulled from your receipt. Tap the matching expense and click Done on the next screen.

You can snap a photo of the receipt in the QuickBooks Online mobile app, and some fields will be automatically entered on a receipt form in QBO.

When you’re back at your computer, open QuickBooks Online and go to Transactions | Receipts. At the end of the row that contains your receipt, click the down arrow next to Delete and select Review. QBO will display the partially-completed receipt form next to the photo you took of the receipt. Fill in any missing fields and save the transaction. Click Create expense on the screen that opens. Then open the Expenses menu and select Expenses, and there should be an entry for the receipt you just added.

This tool isn’t perfect, of course. Every receipt has different fields in different places, and sometimes they’re just not very readable. But in our tests, the app picked up an average of four fields.

Documenting your expenses using one of these two methods is so important. It will help you remember why you stored the receipt and make your reports more accurate. As long as you’re categorizing each transaction correctly, it will also make your tax preparation easier and faster and ensure that you’re charging customers for billable expenses. And if you’re ever audited, your careful work will come in handy.

QuickBooks Online does expense management well, but there are enough moving parts in these recording tools that you may have some questions. Please contact our Outsourced Accounting team. We're here to help. 

Article
Record expenses in QuickBooks Online and on your phone

Read this if you are a plan sponsor of employee benefit plans.

This article is the tenth in a series to help employee benefit plan fiduciaries better understand their responsibilities and manage the risks of non-compliance with Employee Retirement Income Security Act (ERISA) requirements. You can read the previous articles here

ERISA bonding requirements

Generally, every fiduciary of a plan and every person who handles funds or other property of the plan must be bonded. ERISA's bonding requirements are intended to protect employee benefit plans from risk of loss due to fraud or dishonesty on the part of persons who handle plan funds or other property. ERISA refers to persons who handle funds or other property of an employee benefit plan as plan officials. A plan official must be bonded for at least 10% of the amount of funds he or she handles, subject to a minimum bond amount of $1,000 per plan with respect to which the plan official has handling functions. In most instances, the maximum bond amount that can be required under ERISA with respect to any one plan official is $500,000 per plan. If the plan holds employer securities, the maximum required bond amount increases to $1,000,000. The bond must be fixed or estimated at the beginning of the plan's reporting year; that is, as soon after the date when such year begins as the necessary information from the preceding reporting year can practicably be ascertained. The amount of the bond must be based on the highest amount of funds handled by the person in the preceding plan year. Bonds must be placed with a surety or reinsurer that is named on the Department of the Treasury's Listing of Approved Sureties, Department Circular 570.

The US Department of Labor Field Assistance Bulletin No. 2008-04 provides answers to a number of questions that have been raised concerning the bonding rules.

Compliance testing

The Internal Revenue Code requires retirement plans to undergo certain non-discrimination and compliance testing on an annual basis to ensure contributions or benefits do not discriminate in favor of highly compensated employees and contributions are not in excess of amounts prescribed by the Internal Revenue Service (IRS).

The tests the plan should perform varies based on the plan’s provisions. However, some of the more common tests for defined contribution plans are:

Actual Deferral Percentage (ADP) Test: This test ensures employee salary deferrals made to the plan do not disproportionately benefit highly compensated employees (HCEs). If this test is failed, the most common correction method is distributing excess contributions to HCEs in the amount necessary to make the test pass. Corrections should be made no later than two-and-a-half months following the close of the plan year to avoid a 10% excise tax. The final deadline is 12 months following the close of the plan year.

Actual Contribution Percentage (ACP) Test: This test ensures the matching and voluntary employer contributions made to the plan do not disproportionately benefit HCEs. If this test is failed, the most common correction method is removing excess contributions from HCE’s accounts in the amount necessary to make the test pass. These excess contributions do not leave the plan. Rather, they are transferred into the forfeiture account of the plan, typically to be used to pay plan expenses or fund future employer contributions. Corrections should be made no later than two-and-a-half months following the close of the plan year to avoid a 10% excise tax. The final deadline is 12 months following the close of the plan year.

416 Top Heavy Test: This test ensures key employees do not represent a disproportionate percentage of plan assets. If this test is failed, the most common correction method is to allocate a 3% top heavy minimum contribution to non-key participants (any participant that is not a key employee). Other employer contributions can be used to offset the 3% contribution. Corrections should be made no later than 12 months following the close of the plan year in which the plan is top heavy.

The ADP, ACP, and Top Heavy Tests can be forgone if the plan qualifies for safe harbor status. Also, 403(b) plans are not required to perform the ADP nor the top-heavy test.

410(b) Minimum Coverage Test: This test ensures each contribution made to the plan benefits a sufficient percentage of non-HCEs. This test is performed for each different contribution type offered within the plan. If this test is failed, the most common correction method is to retroactively amend the plan to benefit more non-HCEs until the test passes. Corrections should be made no later than nine-and-a-half months following the close of the plan year in which the failure occurred.

402(g) Elective Deferral Limit: Participants are limited in the amount of elective deferrals they may contribute to qualified plans and thus exclude from taxable income each calendar year. If a participant contributes in excess of this limit, the most common correction method is to distribute the excess contribution amount. In 2021, the 402(g) Elective Deferral Limit is $19,500. Corrections should be made no later than April 15th following the close of the calendar year during which the excess deferral was made.

415(c) Annual Addition Limit: Participants are also limited in the amount of total contributions that can be credited to their account each limitation year (usually the plan year). If a participant receives total contributions in excess of this limit, the most common correction method is to first distribute elective contributions in excess of the limit. If an excess still remains, employer contributions should then be transferred to the plan’s forfeiture account. In 2021, the 415(c) Annual Addition Limit is $58,000. Corrections should be made no later than nine-and-a-half months following the close of the limitation year in which the failure occurred.

ERISA bonding requirements and compliance testing, although not necessarily related, are two of the compliance matters we, as auditors, commonly look at during our audits. For ERISA bonding requirements, we review to make sure the plan had adequate coverage and the bond is with an approved surety. For compliance testing, we look to make sure the testing has been performed and failed tests, if any, have been appropriately and timely resolved. Plan fiduciaries are not alone in addressing these matters—insurance carriers can help guide plan management in finding a fidelity bond appropriate for their plan and third-party administrators will typically perform compliance testing on behalf of the plan and guide plan management through any necessary corrections. However, it is still important for plan fiduciaries to be aware of the overall purpose of the bonding requirements and the compliance tests and be familiar with the correction methods and deadlines.

If you would like more information, or have specific questions about your specific situation, please contact our Employee Benefits Audit team.

Article
Other ERISA compliance matters: ERISA bonding requirements and compliance testing

Read this if you paid wages for qualified sick and family leave in 2021.

The IRS has issued guidance to employers on year-end reporting for sick and family leave wages that were paid in 2021 to eligible employees under recent federal legislation.

IRS Notice 2021-53, issued on September 7, 2021, provides that employers must report “qualified leave wages” either on a 2021 Form W-2 or on a separate statement, including:

  • Qualified leave wages paid from January 1, 2021 through March 31, 2021 (Q1) under the Families First Coronavirus Response Act (FFCRA), as amended by the Consolidated Appropriations Act, 2021 (CAA).
  • Qualified leave wages paid from April 1, 2021 through September 30, 2021 (Q2 and Q3) under the American Rescue Plan Act of 2021 (ARPA).

The notice also explains how employees who are also self-employed should report such paid leave. This guidance builds on IRS Notice 2020-54, issued in July 2020, which explained the reporting requirements for 2020 qualified leave wages.

Employers should work with their IT department and/or payroll service provider as soon as possible to review the payroll system, earnings codes configuration and W-2 mapping to ensure that these paid leave wages are captured timely and accurately for year-end W-2 reporting.

FFCRA and ARPA tax credits background

In March 2020, the FFCRA imposed a federal mandate requiring eligible employers to provide paid sick and family leave from April 1, 2020 to December 31, 2020, up to specified limits, to employees unable to work due to certain COVID-related circumstances. The FFCRA provided fully refundable tax credits to cover the cost of the mandatory leave.

In December 2020, the CAA extended the FFCRA tax credits through March 31, 2021, for paid leave that would have met the FFCRA requirements (except that the leave was optional, not mandatory). The ARPA further extended the credits for paid leave through September 30, 2021, if the leave would have met the FFCRA requirements.

In addition to employer tax credits, under the CAA, a self-employed individual may claim refundable qualified sick and family leave equivalent credits if the individual was unable to work during Q1 due to certain COVID-related circumstances. The ARPA extended the availability of the credits for self-employed individuals through September 30, 2021. However, an eligible self-employed individual may have to reduce the qualified leave equivalent credits by some (or all) of the qualified leave wages the individual received as an employee from an employer.

Reporting requirements to claim the refundable tax credits

Eligible employers who claim the refundable tax credits under the FFCRA or ARPA must separately report qualified sick and family leave wages to their employees. Employers who forgo claiming such credits are not subject to the reporting requirements.

Qualified leave wages paid in 2021 under the FFCRA and ARPA must be reported in Box 1 of the employee’s 2021 Form W-2. Qualified leave wages that are Social Security wages or Medicare wages must be included in boxes 3 and 5, respectively. To the extent the qualified leave wages are compensation subject to the Railroad Retirement Tax Act (RRTA), they must also be included in box 14 under the appropriate RRTA reporting labels.

In addition, employers must report to the employee the following types and amounts of wages that were paid, with each amount separately reported either in box 14 of the 2021 Form W-2 or on a separate statement:

  • The total amount of qualified sick leave wages paid for reasons described in paragraphs (1), (2), or (3) of Section 5102(a) of the Emergency Paid Sick Leave Act (EPSLA)1  with respect to leave provided to employees during the period beginning on January 1, 2021, through March 31, 2021. The following, or similar language, must be used to label this amount: “Sick leave wages subject to the $511 per day limit paid for leave taken after December 31, 2020, and before April 1, 2021.”
  • The total amount of qualified sick leave wages paid for reasons described in paragraphs (4), (5), or (6) of Section 5102(a) of the EPSLA with respect to leave provided to employees during the period beginning on January 1, 2021, through March 31, 2021. The following, or similar language, must be used to label this amount: “Sick leave wages subject to the $200 per day limit paid for leave taken after December 31, 2020, and before April 1, 2021.”
  • The total amount of qualified family leave wages paid to the employee under the Emergency Family and Medical Leave Expansion Act (EFMLEA) with respect to leave provided to employees during the period beginning on January 1, 2021, through March 31, 2021. The following, or similar language, must be used to label this amount: “Emergency family leave wages paid for leave taken after December 31, 2020, and before April 1, 2021.”
  • The total amount of qualified sick leave wages paid for reasons described in paragraphs (1), (2), or (3) of Section 5102(a) of the EPSLA with respect to leave provided to employees during the period beginning on April 1, 2021, through September 30, 2021. The following, or similar language, must be used to label this amount: “Sick leave wages subject to the $511 per day limit paid for leave taken after March 31, 2021, and before October 1, 2021.”
  • The total amount of qualified sick leave wages paid for reasons described in paragraphs (4), (5), and (6) of Section 5102(a) of the EPSLA with respect to leave provided to employees during the period beginning on April 1, 2021, through September 30, 2021. The following, or similar language, must be used to label this amount: “Sick leave wages subject to the $200 per day limit paid for leave taken after March 31, 2021, and before October 1, 2021.”
  • The total amount of qualified family leave wages paid to the employee under the EFMLEA with respect to leave provided to employees during the period beginning on April 1, 2021, through September 30, 2021. The following, or similar language, must be used to label this amount: Emergency family leave wages paid for leave taken after March 31, 2021, and before October 1, 2021.”

If an employer chooses to provide a separate statement and the employee receives a paper 2021 Form W-2, then the statement must be included with the Form W-2 sent to the employee. If the employee receives an electronic 2021 Form W-2, then the statement must be provided in the same manner and at the same time as the Form W-2.

In addition to the above required information, the notice also suggests that employers provide additional information about qualified sick and family leave wages that explains that these wages may limit the amount of the qualified sick leave equivalent or qualified family leave equivalent credits to which the employee may be entitled with respect to any self-employment income.

For more information

If you have more questions, or have a specific question about your particular situation, please call us. We’re here to help.

 1Employees are eligible for qualified sick leave under EPSLA if the employee:

  • Was subject to a federal, state or local quarantine or isolation order related to COVID-19;
  • Had been advised by a health-care provider to self-quarantine due to concerns related to COVID-19;
  • Experienced symptoms of COVID-19 and was seeking a medical diagnosis;
  • Was caring for an individual who was subject to a quarantine order related to COVID-19, or had been advised by a health-care provider to self-quarantine due to concerns related to COVID-19;
  • Was caring for a son or daughter of such employee, if the school or place of care of the son or daughter had been closed, or the child-care provider of such son or daughter was unavailable, due to COVID-19; or
  • Was experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.

Article
IRS guidance to employers: Year-end reporting requirements for qualified sick and family leave wages

Read this if you use QuickBooks online.

There are always more things to learn about the applications we use every day. Here are some tips for expanding your use of QuickBooks Online. 

We tend to fall into the same old patterns once we’ve learned how to make a computer application work for us. We learn the features we need and rarely venture beyond those unless we find we need the software or website to do more. 

QuickBooks Online is no exception. It makes its capabilities known through an understandable system of menus and icons, labeled columns and fields, and links. But do we really see what else it can do? Expanding your knowledge about what QuickBooks Online can do may help you shave some time off your accounting tasks and better manage the forms, transactions, and reports that you work with every day. Here are some tips.

Edit lines in transactions. Have you ever been almost done with a transaction and realize you need to make some changes farther up in the list of line items? Don’t delete the transaction and start over. QuickBooks Online comes with simple editing tools, including:

  • Delete a line. Click the trash can icon to the right of the line. 
  • Reorder lines. Click the icon to the left of the line, hold it, and guide it to the new position. This is tricky. You may have to work with it a bit.
  • Clear all lines and Add lines. Click the buttons below your line items, to the left.


Click the More link at the bottom of a saved transaction to see what your options are.

Explore the More menu. Saved transactions in QuickBooks Online have a link at the bottom of the screen labeled More, as pictured above. Click it, and you can Copy the transaction or Void or Delete it. You can also view the Transaction journal, which displays the behind-the-scenes accounting work, and see an Audit history, which lists any actions taken on the transaction. 

Create new tabs. Do you ever wish you could display more than one screen simultaneously so you can flip back and forth between them? You can. Right click on any link in QuickBooks Online, like Sales | Customers, and select Open link in new tab

Use keyboard shortcuts. Not everyone is a fan of these, mostly because they can’t remember them. Hold down these three keys together to see a list: Ctrl+Alt+?. Some common ones include those for invoices (Ctrl+Alt+i) and for expenses (Ctrl+Alt+x).

Modify your sales forms. Do you need more flexibility than what’s offered in your sales forms? It may be there. Click the gear icon in the upper right and select Account and settings under Your Company. Click the Sales tab. In the section labeled Sales form content, notice that you can add fields for Shipping, Discounts, and Deposits by clicking on their on/off switches. You can also add Custom fields and Custom transaction numbers.

Add attachments. Sometimes it’s helpful to have a copy of a source document when you enter a transaction. To attach a receipt to an expense, for example, look in the lower left corner of the transaction. Click Attachments and browse your system folders to find the file, then double click on it.


Record expenses made with credit cards. Who doesn’t use credit cards for expenses sometimes? You can track these purchases in QuickBooks Online, as pictured above. Click the gear icon in the upper right and select Chart of Accounts under Your Company, then click New in the upper right. Select Credit Card from the drop-down list under Account Type. Enter Owner Purchase in the Name field and then Save and Close. When you create an expense, select Owner Purchase as the Payment account

Previous Transaction Button. Are you trying to find a transaction that you entered recently but don’t want to do a full-on search? With a transaction of the same type open, click the clock icon in the top left corner. A list of Recent Expenses will drop down. Click on the one you want.

Whether you’re new to QuickBooks Online or you’ve been using it for years, there’s always more to explore. We’d be happy to help you expand your use of QuickBooks Online by introducing you to new features, building on what you’re already doing on the site to improve your overall financial management. Contact our Outsourced Accounting team to schedule some time.

Article
Eight QuickBooks online tips

Read this if you use QuickBooks. 

Want to break up an estimate into multiple invoices? QuickBooks Online supports progress invoicing.

If you do large, multi-part projects for customers, you may not want to wait until absolutely everything is done before you send an invoice. This can be especially problematic when you have to purchase a lot of materials for a job that will eventually be billed to the customers.

QuickBooks Online has a solution for this: progress invoicing. Once you’ve had an estimate approved, you can split it into as many pieces as you need, sending partial invoices to your customer for products and services as you provide them, rather than waiting until the project is complete. If cash flow is a problem for you, this can be a very effective solution. You might be able to take on work that you otherwise couldn’t because you’ll be getting paid periodically.

Setup Required

Progress invoicing requires some special setup steps. First, you’ll need to see whether QuickBooks Online is prepared for the task. Click the gear icon in the upper right and select Account and settings under Your Company. Click the Sales tab and scroll down to Progress Invoicing. It may just say On to the right of Create multiple partial invoices from a single estimate. If it doesn’t, click the pencil icon to the right and turn it on. Then click Save and Done.

You’ll also have to choose a different template than the one you use for standard invoices. Click the gear icon and select Custom form styles. Click New style in the upper right and then click Invoice. Enter a new name for the template to replace My INVOICE Template, like Progress Invoice. Then click Dive in with a template or Change up the template under the Design tab. Select Airy new by clicking on it. This is the only template you can use for progress invoicing.

When you’re creating a template for your progress invoices, you’ll have to select Airy new.

Now, click on Edit print settings (or When in doubt, print it out). Make sure there’s no checkmark in the box in front of Fit printed form with pay stub in window envelope or Fit to window envelope. Then click on the Content tab. You’ll see a preview of the template (grayed out) to the right. Click the pencil icon in the middle section. Select the Show more activity options link at the bottom of the screen.

If you want to Group activity by (Day, Week, Month, or Type), check that box and select your preference. Go through the other options here and check or uncheck the boxes to meet your needs. Then click Done. You’ll see your new template in the list of Custom form styles.

QuickBooks Online allows you to designate one form style as the default. This is the form that will open when you create a new invoice or estimate template. If you plan to send a lot of progress invoices, you might want to make that the default. To do this, find your new template in the list on this page and click the down arrow next to Edit in the Action column. Click Make default. If you leave your standard invoice as the default, you can always switch when you’re creating an invoice by clicking the Customize button at the bottom of the screen.

Creating a Progress Invoice


You can see what your options are for your progress invoice.

Invoice and estimate forms in QuickBooks Online are very similar. The only major difference is that estimates contain a field for Expiration date. To start the process of progress invoicing, select an estimate that you want to bill that way. Click the Sales tab and select All Sales. Find your estimate and click on Create invoice in the Action column. A window like the one in the above image will appear.

You can bill a percentage of each line item or enter a custom amount for each line.  If you choose the latter, the invoice that opens will have zeroes in the Due column. You can alter the amount due for any of these by either a percentage or an amount and/or leave them at zero if you don’t want to bill a particular product or service. Either way, the Balance due will reflect your changes. When you’ve come to the last invoice for the project, you’ll check Remaining total of all lines.

Once you’ve chosen one of these options, click Create invoice. Double-check the form and then save it. You can now treat it as any other invoice. To see a list of your progress invoices, run the Estimates & Progress Invoicing Summary by Customer report.

As you can see, there are numerous steps involved in creating progress invoices. Each has to be done with precision, so the customer is billed the exact total amount due at the end. We can help you accomplish this. We’re also available to help with any other QuickBooks Online issues you have. Contact our Outsourced Accounting team to set up a consultation.

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How does progress invoicing work in QuickBooks Online?

Read this if you are a plan sponsor of employee benefit plans.

This article is the ninth in a series to help employee benefit plan fiduciaries better understand their responsibilities and manage the risks of non-compliance with Employee Retirement Income Security Act (ERISA) requirements. You can read the previous articles here

Employee benefit plan loan basics 

If your plan’s adoption agreement is set up to allow loans, participants can borrow against their account balance. Some participants may find this an attractive option as the interest they pay on the loan is returned to their retirement account as opposed to other loans where the interest is paid to the lender. 

Additionally, while interest is charged at the market rate, it may be lower than other options available to the participant, such as a credit card or other unsecured debt. Unlike hardship distributions, there are no restrictions on the circumstances under which a participant may take a loan. A potential downside is that if the borrower defaults on the loan or ends their employment and cannot repay the loan in full, it converts from a loan to a deemed distribution, potentially incurring taxes and penalties.

If a participant decides that an employee benefit plan loan is their best option, they will apply for the loan through your plan administrator. Loans are limited in both size and quantity. Participants may take loans up to 50% of their vested account balance with a maximum loan of $50,000. The provisions of a plan determine how many loans an employee may have at once; however, the combined loan balances cannot exceed 50% of the employee’s vested balance or $50,000. Furthermore, the $50,000 loan maximum must also consider payments made on loans within the previous 12 months.

Repayment of employee benefit plan loans

Repayment of employee benefit plan loans may be done through after tax payroll contributions, making it a relatively easy process for the participant. If a plan sponsor elects to provide this repayment option, they must ensure that repayments are remitted to the plan in a timely manner, just as they must with other employee funded contributions. The term of the loan is typically limited to five years and must be repaid in at least quarterly installments. However, a loan can be extended to as long as thirty years if specified within the plan’s loan policy. If the loan term is for longer than five years, the loan proceeds must be used to purchase a primary residence.

Like any source of debt, there are pros and cons to taking out an employee benefit plan loan, and it remains an important option for participants to understand. The benefits include the ease of applying for such a loan and loan interest that is then added to the participant’s retirement account balance. Potential pitfalls include lost earnings during the loan period and the risk of the loan becoming a deemed distribution if the participant is unable to repay within the allotted time. 

If you would like more information, or have specific questions about your specific situation, please contact our Employee Benefits Audit team.

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Retirement plan loans: A brief review

Read this if you have a blended workforce with both in-office employees and remote workers.

It is hard to believe it has been nearly a year and a half since we started our remote work journey. At the time, many thought the move to working remotely would be short term. Then, a couple of weeks turned into a month, a month into another month, another month into a year and, some employers are now finally considering re-opening their offices.

Back in April 2020, we provided some internal control challenges, and potential solutions, faced by working in a remote environment. These challenges included exercising appropriate tone at the top, maintaining appropriate segregation of duties, and ensuring timely review, amongst others. Although these challenges still exist, there are new considerations to address as we transition into (hopefully) a post-pandemic world.

Blended workforces

As we mentioned in that article, since people have now been forced to work in a remote environment, they will be more apt to continue to do so. For some employees, the perks of ditching that long commute outweighs the free coffee they receive in the office. Employers have a decision to make—do we allow our employees the option to continue to work from home or, do we require employees to work from the office, as was standard pre-pandemic? Now that employees have exhibited the ability to work from home efficiently and effectively, it may be difficult to move all employees back into the office. Requiring all employees to return to the office could result in employees seeking employment elsewhere, and the option to work remotely is a selling point for many recruiters. Furthermore, disallowing remote work could cause employees to feel distrusted or undervalued, possibly leading to less efficient and effective work.

However, remote work comes with many challenges. Although video chat has been instrumental in navigating the remote work environment, it still has limitations. Nothing can beat in-person conversations and the relationships they help build. Nearly every video chat has a purpose, and unfortunately, you can’t just “run” into somebody in a video chat as you can in the office. Building camaraderie and instilling your company’s culture is difficult in a remote environment. And, if your workforce is blended, with some working in the office while others work remotely, building culture may be even more difficult than if your entire workforce was remote. Employees in the office may be less apt to communicate with remote colleagues. If you have a task you wish to delegate, you may think of giving the assignment to someone in the office prior to thinking of your remote co-workers that may be just as able and willing to complete the assignment. It will be important to ensure all employees are provided with equal opportunities, no matter of where they work.

Remote work policy

Regardless of your company’s decision to allow employees to work remotely or not, we recommend developing a remote work policy addressing expected behaviors. When developing such a policy, consider:

  •  Will the policy’s provisions apply to the entire company or will there be different provisions by department? If the latter, consider what the implications may be on employee morale.
  • Will there be a minimum amount of days per week that must be spent in the office?
  • If employees are allowed to work remotely, do they need to work a set schedule or can the frequency, and which days they work remotely, change from week to week?
  • Who should the employee communicate their decision to? How will this information then be shared company-wide?
  • How do remote employees address document destruction? If they are handling sensitive and confidential documents, how should they dispose of these documents?
  • Similarly, what are the expectations for protecting sensitive and confidential information at home?
  • Are employees allowed to hook up company-provided equipment to personal devices, such as personal printers?
  • If an employee is customer/client facing, what are the expectations for dress code and backgrounds for video chat meetings?
  • What will staff development look like for individuals working remotely? Alternatively, what will their involvement look like in onboarding/developing new employees?
  • What are the expectations for meetings? Will all meetings be set up in a manner that accommodates in-person and remote attendees? Are there meetings where in-person attendance is mandatory?

The importance of these considerations will likely differ from company to company. Some of these considerations may be addressed in other, already existing policies.

Are your internal controls “blended workforce” ready?

If your company plans to allow employees to work remotely, you will need to assess if your internal controls make sense for both in-office and remote employees. Typically, internal controls are written in a manner irrespective of where the employee resides. However, there may be situations that require an internal control be re-worked to accommodate in-office and remote employees. For instance, do you have an internal control that references a specific report that can only be run in-office? If the control owner plans to transition to a hybrid work schedule, does the frequency of the internal control need to change to reflect the employee’s new schedule? Alternatively, does it make sense to transition this internal control to someone else that will be in the office more frequently?

Internal control accommodations

The transition to a remote environment was expeditious and many thought the remote environment would be over quickly. As a result, there may have been modifications to internal controls that were made out of necessity, although they were not ideal from an internal control standpoint. The rationale for these accommodations may have been the expectation that the remote environment would be short-lived. Although these accommodations may have made sense for a short amount of time, and posed little to no additional risk to your company, the longer these accommodations remained in effect, the greater the chance for unintended consequences. 

We recommend reviewing your internal controls and creating a log of any internal control accommodations that were made due to the pandemic. Some of these modifications may continue to make sense and, after operating under the new internal control for an extended period of time, may even be preferable to the previous internal control. However, for those modifications that do appear to have increased control risk, control owners should assess if the length of the pandemic could have resulted in inadequately designed internal controls. And, if so, what could the consequences of these poorly designed internal controls have been to the company?

Internal control vs. process

While reviewing your company’s internal controls, it will also be a good time to ensure your internal control descriptions actually describe an internal control rather than simply a process. Although having well-documented processes for your company’s various transaction cycles is important, a good internal control description should already incorporate the process within it. Think of your internal control descriptions as writing a story—the “process” provides background information on the characters and setting, while the “internal control” is the story’s plot.

For example: The Accounting Manager downloads the market values from the investment portfolio accounting system and enters the market values into the general ledger on a monthly basis. Once the journal entry is entered, the Accounting Manager provides the market value report and a copy of the journal entry to the Controller.

Although a savvy reader may be able to identify where the internal control points are within this process, it could easily be modified to explicitly include discussion of the actual internal controls. The text in bold below represents modifications to the original:

The Accounting Manager downloads the market values from the investment portfolio accounting system and enters the market values into the general ledger on a monthly basis. Once the journal entry is entered, the Accounting Manager provides the market value report and a copy of the journal entry to the Controller via email. This email serves as documentation of preparation of the journal entry by the Accounting Manager. The Controller then reviews the market value report against the journal entry for accuracy. Once approved, the Controller posts the journal entry and replies to the email to indicate their review and approval. The Accounting Manager saves the email chain as auditable evidence.

The text additions in bold font help provide a complete story. A new employee could easily read this description and understand what they need to do, and how to appropriately document it. Most importantly, the internal control is both in-office and remote environment friendly.

Transitioning back to the office has resulted in a mixture of excitement and anxiety. Routine office norms, such as shaking hands and having a spontaneous meeting over a cup of coffee need to be relearned. Likewise, policies and internal controls need to be revisited to address the changing landscape. The more proactive your company can be, the better positioned it will be to accommodate its employees’ demands, while also maximizing the effectiveness of its internal controls. Please contact David Stone or Dan Vogt if any questions arise.

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May the "blended workforce be with you": Policy and internal control considerations for a new era