Author: Service2Client

Dissecting the Revenue Recognition Principle

4 min read

What is Revenue Recognition PrincipleSome businesses, especially publicly traded ones, may choose accrual accounting to reduce volatility in earnings, while start-ups or small businesses may choose to go with a cash basis accounting option. A poll conducted by the Journal of Accountancy on Topic 606 discovered that one in five respondents reported that one of the most common audit perils for their clients was the risk of evaluating “material misstatement” when it comes to recognizing revenue under Topic 606.

According to the Association of International Certified Professional Accountants (AICPA) and the Financial Accounting Standards Board’s (FASB) Accounting Standards Topic 606, proper revenue recognition involves following five steps. While each step requires exercising judgment, the following is a brief overview.

Step 1

When all the following criteria is satisfied in the first step to establish a contract with their client, an organization should follow the revenue recognition standard mandates when an agreement falls within such criteria.  

All contract parties have agreed to the terms of the contract and are engaged in fulfilling their agreed-to commitments. All party’s rights are easily identifiable when it comes to goods/services to be exchanged. Payment is clearly described for the goods/services to be delivered. The recipient’s cash flows are expected to change based upon the contract’s deliverables. The organization that provides the product or service should have “a reasonable expectation” of receiving consideration from the customer and they have a reasonable expectation the customer is able and willing to provide such payment.

Step 2

The second step is to determine what each party of the contract must fulfill to satisfy their respective contractual obligations. This is what businesses pledge to customers and clients while delivering their unique product or service. This step is where each performance obligation should be identified as unique. If each performance obligation does not qualify as unique, based upon this standard, it must be packaged with other goods or services until it meets such criteria.

The FASB AICPA ASC 606 standards explains if both of the following apply, a good or service is considered “distinct:”

If the receiving party can receive a useful product or professional assistance by itself or in conjunction with related materials the client had pre-existing to the contract in question;

AND

The business’ contractual pledge to deliver the service or finished materials is individually distinguishable from additional pledges from the contract.

Step 3

The third step is to calculate the financial terms of the deal. This entails how much money the business anticipates receiving in return for delivering the goods or services, minus portions related to that of external organizations. This can include taxes businesses must collect for local, state or federal government agencies. Other examples of this include “variable consideration” – or how much consideration a company will receive, bearing in mind financial adjustments in conjunction with delivering their product or service. Businesses should estimate the impact of such variable costs and what they might be allowed while fulfilling their contractual obligations. Examples can include financial enticements, fines, reimbursements, price cuts, etc.

Step 4

The fourth step is to figure out how much it will cost parties to fulfill their responsibilities spelled out in the legal agreement. When attempting to recognize revenue according to Topic 606, if there’s multiple distinct responsibilities, the business is required to break down the price based on “each separate performance obligation in an amount” that is commensurate to an amount the business is expected to receive for each “separate performance obligation.” This means looking at each piece of the contract as a unique “performance obligation.”

When the transaction is subject to a discount or “variable consideration,” businesses may or may not assign the price concession or “variable consideration” to one or more performance obligations versus across the agreement’s full list of “performance obligations.” If the business offers markdowns of the goods or services, in addition to adjusting the “transaction prices,” there should be proportional and estimated calculations when it comes to recognizing revenue.

Step 5

The fifth step says that once a business has satisfied its “performance obligation” set out in the contract, revenue can be recognized. This occurs when the customer receives their contracted goods or services, which is when they have complete command of the property. This can be illustrated when the customer can increase their cash flow, use it as an asset to obtain financing, leverage pre-existing equipment or service delivery, etc.

When it comes to recognizing revenue under Topic 606, this is just the beginning of how businesses can analyze and interpret the many nuances of this accounting topic.

Financial Accounting Overview

5 min read

What are financial statementsFinancial accounting is how accounting professionals document, compile and outline how a business performs financially over a discrete period of time. Unlike cost accounting, which is used primarily for internal short and long-term strategic planning, financial accounting focuses primarily on producing relevant documentation for outside parties interested in short- and long-term financial performance.

Small businesses, large corporations and nonprofits use the following financial statements produced for relevant parties: the Balance Sheet, the Cash Flow Statement and the Income Statement. When it comes to publicly traded companies, their financial accounting standards are overseen by generally accepted accounting principles (GAAP). It’s one way to provide a standardized means to communicate the business’s monetary details to potential and current shareholders, lenders, government oversight and tax enforcement agencies.

Balance Sheet

As the U.S. Securities and Exchange Commission (SEC) explains, the balance sheet is a financial statement that informs readers about a business’s assets, financial obligations and shareholders’ equity. It’s how a business documents its asset valuation, its financial obligations and cash holdings. It provides owners, lending institutions and investors a way to analyze a business. The current ratio shows the ratio of current assets to current liabilities. This is a way to evaluate a business’ ability to manage financial obligations over the next year. Shareholders’ equity represents how much cash would remain if the business satisfied all creditors and all assets were liquidated; whatever remains would be the property of the shareholders.

Income Statement

Released once a month, every quarter or once per year, an income statement reports revenue, expenses, and net earnings or losses of a company for a given period. A company’s net revenue is calculated by subtracting allowances for uncollectable accounts, discounts, etc. from a business’s gross sales or revenues. From there, subtract the cost of sales, or how much the lot of products or services cost to make for the accounting period, from the net revenues figure. This results in gross profit or gross margin. Depreciation, along with amortization, or the cost of machinery and equipment losing life over time, is subtracted from the gross profit figure.

From there, operating expenses, which aren’t directly attributable to product or service production but are running day-to-day operations, are deducted from the resulting gross profit figure. This number is now called income from operations or operating profit before interest and income expense. Depending on the number, the interest income or interest expense is either added or subtracted from operating profits to arrive at the operating profit before income tax. Finally, income tax is deducted, resulting in net profit (net income or net earnings) or net losses. For publicly traded companies, it gives investors insight as to how much the company is making per share, so-called “earnings per share” (EPS).

Statement of Cash Flow

Per the SEC, a statement of cash flow features three sections that detail sources and utilization of the business’ operating, financing and investing cash flows. It paints a picture of inflows and outflows of the business’s cash levels. At the end of the day, it helps anyone interested in the company’s financials, especially potential and current investors, see the latest status and trends of cash flow.

One way to calculate cash flow, according to the SEC, is to look at a company’s free cash flow (FCF). This is calculated as follows:

Free Cash Flow = Operating Cash Flow – Capital Expenditures

Free Cash Flow = $50 million – $20 million = $30 million

This information is helpful because free cash flow can help determine a company’s financial health, how well (or not) the business model is performing, and its overall likelihood of success moving forward. Additionally, understanding the difference in accounting methods is another helpful piece of financial accounting analysis.

Accrual Method vs. Cash Method

Accrual Method

When it comes to the accrual method, according to the Congressional Research Service, when a business is paid for services or products to be rendered in the future, the payment is permitted to be recognized as revenue only when the product or service has been rendered. When it comes to accounting for expenses that are presumably deductible, under the accrual method, the expense can be recorded when it’s experienced by the business, not when payment has been made to the utility, raw material supplier, etc.

Cash Method

If a consultant gets payment immediately but isn’t expected to do said job until the following month, this approach requires revenue to be recognized when the cash has been received. Similarly, when expenses are paid is when expenses are recorded.

Considerations

For any business that handles inventory or sells to customers on credit, accrual accounting is required by the Internal Revenue Service. Similarly, for companies with average gross receipts of revenues greater than $25 million for the past 36 months, the IRS mandates accrual accounting. For companies with average gross receipt of revenues of less than $25 million, depending on the exact circumstances of the company’s business nature, cash or accrual may be used.

Financial accounting provides investors, business owners, and those providing businesses with legal and accountability a way to monitor performance and compliance.

Sources

IRS, IRS, IRS, FAS, SEC, SEC

Increase In Deepfake Attacks and How Enterprises Can Prepare

4 min read

Deepfake AttacksDeepfake technology utilizes machine learning and artificial intelligence (AI) to manipulate or create synthetic audio, video and images that appear authentic. Deepfakes are commonly featured in entertainment and politics to spread false information and propaganda. For instance, deepfake has been used to show a celebrity or leader saying something that they didn’t, and this creates fake news.

Unfortunately, in deepfakes, cybercriminals have found a new tool for cyberattacks. Cybercriminals are now using deepfakes to pose a variety of enterprise risks.

How Cybercriminals Are Using Deepfakes

Deepfake technology is now used to create scams, hoaxes and false claims that undermine and destabilize organizations. For instance, a manipulated video might show a senior executive associated with fake news, such as admitting to a financial crime or spreading misinformation about a company’s products. Such corporate sabotage costs a lot of time and money to disprove and can impact a business’s reputation.

Another way businesses can be negatively impacted is through social engineering attacks such as phishing, which relies on impersonation to compromise an email. Similarly, social engineering using deepfakes can feature voice or video impersonations. A good example of such an impersonation was reported in The Wall Street Journal, in which fraudsters used AI to mimic a CEO’s voice. This incident happened in March 2019, when criminals impersonated a chief executive’s voice to direct a payment of $243,000.

Cybercriminals are able to execute social engineering attacks by accessing readily available information online. They can research a business, employees and executives. The criminal will even use an actual event picked from social media – for instance, a financial director who is just returned to work from a holiday – to sound more legitimate.

This emerging security threat is also made possible by the development of video editing software that can swap faces and alter facial expressions. Such developments have enabled deepfakes to fool biometric checks (like facial recognition) to verify user identities.

The deepfake cybersecurity threat has become such a concern that the Federal Bureau of Investigation (FBI) has issued a Private Industry Notification (PIN) cautioning companies of the possible use of fake content in a newly defined cyberattack vector referred to as Business Identity Compromise (BIC).

How to be Prepared and Protect Against Deepfakes

Deepfake videos and images can be recognized by checking for unnatural body shape, lack of blinking in videos, unnatural facial expressions, abnormal skin color, bad lip-syncing, odd lighting, awkward head and body positioning, etc. However, cybercriminals keep evolving and creating more convincing deepfakes.

Other measures introduced to combat deepfakes include creating solutions that detect deepfakes. There also was an introduction of deepfake legislation in the National Defense Authorization Act (NDAA) in December 2019.

Unfortunately, this has not been enough, and enterprises have the task of helping reduce the impact of these attacks. The following measures can help:

  1. Use anti-fake technologies
    Businesses should explore automated technologies that help identify deepfake attacks. They should also consider watermarking images and videos.
  2. Enforce robust security protocols
    Implement security protocols to help avoid deepfakes, such as automatic checks for any procedure involving payments. For instance, putting systems that allow verification through other mediums.
  3. Develop new security standards
    As security threats keep evolving, so should security standards within a company. For instance, introduce new security standards involving phone and video calls.
  4. Training and awareness
    Enterprises should enforce regular training and raise awareness among employees, management, and shareholders on the dangers of deepfakes to businesses. When all involved parties are trained to identify deepfake social engineering efforts, this will help reduce the chances of falling victim.
  5. Keep user data private
    Deepfake attackers use the information found in public domains such as social media. Although not a failsafe procedure, company profiles can be made private. Users also should avoid adding or connecting with strangers they don’t know and posting too much personal information online.
  6. Disinformation response policy
    Some deepfake incidents are out of control for an enterprise, such as fake videos purporting to be from top management. However, establishing a disinformation response plan will help in cases of a reputation crisis. This should include monitoring and curating all multimedia output – which will help present original content to the public as authentic content.

Conclusion

Deepfake is an emerging cybersecurity concern that requires enterprises to be aware of its potential threats and stay prepared. Although it might be possible to identify a poorly generated deepfake with the naked eye, the technology continues to advance. In response, countermeasures must keep pace.

Recent Trends in Long Term Care Insurance

5 min read

Long Term Care InsuranceLong term care (LTC) is associated with the elderly for good reason. Over the past 50 years, life expectancy has increased significantly and is therefore something all families should be prepared to address. Even though we may live to a ripe old age, that doesn’t mean we will be healthy or able to live independently. Most people develop one or more chronic conditions that require living assistance – and many live with that ailment for years. Conditions such as arthritis, joint and muscle deterioration, or back pain often lead to chronic disability, making it difficult to impossible to take care of your own physical and lifestyle needs. Among even healthy seniors, about half of people age 80 and older experience some form of dementia or cognitive impairment.

Most LTC insurance (LTCi) contracts require that the policyowner no longer be able to perform at least two of the basic activities of daily living (ADL), which including dressing, bathing, toileting, feeding, and moving without assistance. However, before getting to that stage, many people may live for years needing help with domestic ADLs, such as preparing meals, paying bills, shopping, attending appointments, etc.

New Criteria for LTC Insurance

An unfortunate influence of the pandemic is that some LTC insurance carriers now require an in-person medical exam as part of the application process. In the past, underwriting generally involved a telephone interview, a completed questionnaire and medical records review. These days, in addition to an exam, issuers have increased the number of pre-existing conditions that are excluded from coverage. Furthermore, insurers are declining more applications for medical reasons. In fact, there is preliminary data that suggests more LTCi applications are declined or higher premiums charged in geographical areas where populations have persistently higher rates of serious COVID-19 infections. Not surprisingly, these areas are generally correlated with lower vaccine rates.

New Policy Options

Even before the pandemic, LTCi sales were on the decline and many insurers exited the market. This is because, with longer life expectancies, carriers increased premiums to cover the financial risk. This priced many policies out of range for most households. In recent years, the life insurance industry has found a strong market in sales of hybrid policies, which guarantee benefits one way or another. For example, a contract might include a rider that allows the policyowner to use the future death benefit in the present to pay for LTC expenses while she is still alive. If she doesn’t need the money, her beneficiaries will receive the value when she dies. Another benefit of hybrid policies that they guarantee premiums will not increase. In many cases, a policy can be purchased with a single lump sum.

New Focus for LTC: Live at Home

Apart from exploring new ways to pay for long-term care, there is political interest in finding ways to provide LTC more efficiently than in the past. For perspective, consider that the current U.S. system of placing Medicaid recipients into nursing home facilities proved to be one of the most vulnerable components of the pandemic. As of February 2021, more than 170,000 residents in long-term care facilities had died due to the coronavirus.

Various public agencies and non-government organizations (NGOs) are looking at new paradigms for caregiving as an alternative to high-volume residencies in order to minimize the risk of disease contagion. Some recent proposals include the following:

  • Enhance our current public programs that support independent living (e.g., Original Medicare, Medicare Advantage (MA) plans and Special Needs Plans (SNPs) with integrated benefits such as wellness care, behavioral healthcare, case management, home-delivered meals, transportation and adult day services.
  • Allow Medicaid’s long-term services and supports (LTSS) programs to reimburse long-term care expenses at home and for community-based services.
  • Expand efforts already originated in a handful of states (e.g., Illinois, Michigan, Minnesota, Washington) for state-sponsored, long-term care insurance plans.
  • Consider building on state initiatives such as California’s Master Plan for Aging, which includes plans to:
    • Create community housing solutions that that are age-, disability- and dementia-friendly, as well as climate- and disaster-prepared.
    • Improve quality of life for the elderly and disabled by presenting opportunities for work, volunteering, engagement and leadership regardless of age or disability. The purpose of this initiative is to reduce isolation, discrimination, abuse, neglect and exploitation.
    • Generate up to1 million highly-qualified, well-paid caregiving jobs.
    • Improve financial security for the elderly population by making long-term care affordable.
  • Reimagine nursing homes using continuum of care housing models designed for 8 to 10 residents with integrated staffing.

The current trend in the caregiving industry is to help seniors be able to live at home for as long as possible. In many cases this increases the burden on families. Since some people have to leave the workforce to care for family members, this hampers economic growth and tax revenues that could be used to fund better options. While LTC insurance remains expensive, it’s important that potential buyers are aware that most policies pay out benefits regardless of where care is bestowed, including nursing homes, assisted living facilities, the insured’s home or even if the insured has moved to a family member’s home.

How to Determine Partnership Basis, Inside and Out

3 min read

How to Determine Partnership Basis, Inside and OutAccording to the Internal Revenue Service, the 2019 tax year saw more than 25 million partners comprising nearly four million tax returns filed by partnerships in 2019. With many concerns necessary for navigating the U.S. tax code, including filing annual returns, one important consideration for partnerships and their partners is how to calculate a tax liability. In order to determine how much they profit or lose on their investment, there must be an accurate calculation of adjusted cost basis via outside cost and inside cost basis.

According to the Internal Revenue Code (IRC), one aspect of Section 754 details how the tax basis of partnership assets are handled. When partnerships change or when there are changes in partnership interest, it helps to rebalance the basis of the business entity’s property. This entails defining and calculating both outside cost basis and inside cost basis.  

Understanding Outside Cost Basis

Outside cost basis refers to what percentage of interest each partner owns in a partnership. For example, if three partners own a partnership and each partner contributes $200,000, this establishes their outside cost basis. Recording what each initial partner contributes to the partnership is essential to determine their tax basis, including whether they’ve established a loss or gain and therefore their tax obligations.

Understanding Inside Cost Basis

As the Internal Revenue explains it, “Inside basis refers to a partnership’s basis in its assets.” One way to look at it is if three partners bought an asset for $600,000, each contributing $200,000 (symbolizing their inside cost basis), their respective inside basis in that particular asset would be $200,000.

When to Consider a Section 754 Election

It’s important to distinguish that partnerships adding or selling partnership interests must consider how such changes impact owners’ tax basis. By making a Section 754 election, partnerships can adjust the cost basis for new partners to provide an accurate accounting of profits (or losses). Assume five partners contributed $200,000 to a partnership and bought an asset for $1 million. A year later, the asset appreciated to $1.3 million. The outside basis is $200,000 (per partner) and the inside basis is $1 million.

Assume the asset appreciates to $1.3 million and one of the original five partners wants to cash out and sell it to a new, independent partner for $260,000. The original partner must pay taxes on the appreciation of $60,000 when exiting the partnership. Assume three months later, the asset is sold at the same price of $1.3 million with no Section 754 election. The four original partners are faced with a taxable gain of $60,000 ($1.3 million selling price – $1 million inside basis) / 5 partners = $300,000 profit / 5 partners). However, despite the new partner’s outside basis of $260,000, they would face the same $60,000 tax liability.

However, if a partnership chose to elect their partnership to Section 754, the new partner’s tax basis is “stepped up” to $260,000 instead of the original partner’s basis of $200,000. The new partner’s inside cost basis will remain at $200,000, requiring no adjustment. However, the new partner now has an outside basis of $260,000 – the amount the partnership interest was sold for from the original partner to the new partner.

While each business arrangement is unique, for partnerships that see their assets regularly increase in value and experience frequent changes in partners, it could make sense to go with a Section 754 election.

How to Increase After-Tax Returns on Investments

4 min read

How to Increase After-Tax Returns on InvestmentsIt is all about how much you keep after taxes – not what you earn from your job, a business, or investments. While it is always great to see fabulous investment gains, the only financial metric that really matters is what is in your bank account at the end of the day. One of the ways you can influence this is by minimizing the taxes you pay on your investments.

Unfortunately, many people do not think about how taxes impact their investment returns until near the end of the year; however, you should act all year round. Taking part in investment tax planning throughout the year will give you opportunities to keep more of what you earn. Here are some rules and strategies to keep in mind.

Know When to Take Your Losses

Psychologically, many investors are averse to taking losses, holding out to “make their money back.” Instead of emotion, logic and investment acumen needs to be applied here. If an investment does not have a fundamental reason to turn around, then you are better off selling it and taking a tax loss.

Losses reduce taxes on either your capital gains for the year or, when losses exceed gains, up to $3,000 on other income. Excess losses can be carried forward to future years. Plus, you will have the proceeds to reinvest in something more likely to produce a return.

Let Winners Run

Unlike long-term capital gains, short-term capital gains are taxed as ordinary income. This means your marginal income tax rate (the highest rate applied to you) can impact your investment gains.

While you should not let the tax tail wag the investment dog, ideally you want to hold a winning investment for at least a year and a day to benefit from long-term capital gains tax treatment. This means you will pay only a 20 percent maximum tax versus whatever your marginal rate is.

As with losses, the fundamentals of the investment are key. Therefore you should not sell a holding if you think the gains are at risk just to save on taxes. If you believe in the investment for the long term, then holding out for preferred capital gains treatment can be a clever idea.

Give the Gift of Appreciation

Making charitable donations you would not otherwise give is generally not a viable tax strategy. However, if you are already charitably inclined then consider donating stock or mutual funds instead of cash.

When you donate property such as stocks, your charitable deduction is based on the fair market value of the asset on the date of the gift. It is much better to do this than donate cash.

For example, if you have a stock you purchased for $35 and it is now worth $135, when you donate it you will receive a charitable deduction of $135. If you were to sell the stock first, you would have to pay tax on the $100 gains and then have only $103 to donate in cash – assuming you are in the 32 percent tax bracket. The only winner in this situation is the IRS; both you and the charity lose. This is because the charity is excluded from paying capital gains taxes on the appreciation that occurred while you owned the asset.

Hold Until You Die

This strategy does not benefit you directly, but rather your heirs. When someone inherits an asset such as real estate, stocks, bonds, mutual funds, etc., the cost basis of the asset is reset to the fair market value at the date of death.

This means that if you have stock in company XYZ that you bought for $50 and now it is worth $500, you would pay tax on the gain of $450 per share. However, your heir would pay $0 if he sold it on the day you died. If your heir continues to hold the stock, the benefit still applies as his cost basis in the stock of XYZ would reset to $500, so he will pay taxes only on gains over that amount.

Conclusion

While you should never cheat on your taxes or do anything unethical, it is foolish to pay any more than legally necessary to the IRS. Engage in investment tax planning year-round and you may see better after-tax returns and more money in your bank account.

Shoring up Protections for Sexually Abused Children, the Mentally Ill in Crises, and a Benefit Increase for Disabled Veterans

3 min read

Shoring up Protections for Sexually Abused Children, the Mentally Ill in Crises, and a Benefit Increase for Disabled VeteransEliminating Limits to Justice for Child Sex Abuse Victims Act of 2022 (S 3103) – Introduced by Sen. Richard Durbin (D-IL) on Oct. 28, 2021, this Act eliminates the statute of limitations for civil lawsuits by anyone who, as a minor, was a victim of human trafficking or a federal sex crime. The bill passed in the Senate on March 2, in the House on Sept. 13, and was signed into law on Sept. 16 by President Biden.

Law Enforcement De-Escalation Training Act of 2022 (S 4003) – This bill would authorize training for de-escalation and alternatives to the use of force when law enforcement officers are called to a scene involving mental and behavioral health and suicidal crises. The Act was introduced by Sen. John Cornyn (R-TX) on April 5. It passed in the Senate on Aug. 1 and is currently under consideration in the House.

National Aviation Preparedness Plan Act of 2022 (HR 884) – This legislation directs the Department of Transportation (DOT), in consultation with the aviation industry and labor stakeholders such as air carriers, to develop a national aviation preparedness plan for future outbreaks of communicable diseases. The plan must include provisions for frontline, at-risk workers to be equipped with the appropriate personal protective equipment (PPE) to reduce exposure and spread of the disease. The bill was introduced by Rep. Rick Larson (D-WA) on Feb. 5, 2021. It was passed in the House on Sept.14and has moved to the Senate.

Veterans’ Compensation Cost-of-Living Adjustment Act of 2022 (HR 7846) – This legislation was introduced by Rep. Elaine Luria (D-VA) on May 19. It proposes a cost-of-living increase beginning Dec. 1 for the compensation of veterans with service-connected disabilities as well as dependency and indemnity compensation for the survivors of certain disabled veterans. The bill passed in the House on Sept. 14 and is currently under consideration in the Senate.

Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2022 (HR 3962) – Introduced by Rep. Madeleine Dean (D-PA) on June 17, 2021, this bill would permit notaries public to perform electronic notarizations and remote notarizations for matters pertaining to interstate commerce. The Act specifies that minimum standards be established, and that all Federal courts be required to recognize notarizations performed by a notarial officer of any state. This bipartisan bill passed in the House on July 27 and has a very high chance of passing in the Senate.

Jenna Quinn Law (S 734) – On March 11, 2021, Sen. John Cornyn (R-TX), re-introduced this bill from an earlier version he proposed in 2019. The legislation would amend the Child Abuse Prevention and Treatment Act to authorize grants for training and education to teachers (as well as other school personnel, students and the community)for sexual abuse awareness and prevention programs among primary and secondary school students. The bill passed unanimously in the Senate on Aug. 3 and is awaiting further action by the House.

How to Host Awesome Holiday Office Parties

4 min read

How to Host Awesome Holiday Office PartiesFall is here and so are many of the holidays we love. Whether it’s Halloween, Thanksgiving or December holidays, here are some fail-safe things you can do to make sure everyone shows up and has a good time.

Throw a Potluck

One of the easiest ways to lure people away from their desks is – you guessed it – food. Create a sign-up sheet with different categories to make sure you have enough savory and sweet dishes, and provide options for those with dietary restrictions. If you’re the organizer, you might supply the drinks and utensils, maybe even some appetizers or snacks. Depending on the holiday, you might also suggest a theme. If it’s Halloween, you could ask folks to bring their spookiest fare.

Have a Raffle

This is yet another way to get people out of their offices. Everyone who shows up gets a ticket and on the back they’ll sign their name. At different times during the party, have a drawing. Maybe leave the big prize to the end. You could even stipulate that people must be present to win. Some of the prizes you could offer are: gift cards, smart watches, paid time off (PTO) or tickets to an event (a sporting event, a concert, etc.). A weekend at a local hotel (think staycation) or airline tickets are also attractive options. If resources allow, the sky’s the limit.

Designate Secret Santas

During December, this is always a big hit. Employees draw random names and get paired up with someone. The Secret Santa is given a wish list to choose from to give to their giftee. A smart idea is to set a monetary limit, such as gifts for under $25. After opening the present, the giftee has to guess who gave them the gift.

Set Up Games

Think giant Jenga. Pin the carrot nose on the snowman. Cornhole. These can be scheduled or ongoing. And best of all, it’s easy and uncomplicated. Employees can come and go as they wish. A little competition while everyone is noshing is a surefire way to foster employee bonding.

Host a White Elephant Gift Exchange

This is another classic. Everyone brings a wrapped gift and then you draw numbers. People sit in a circle with the presents in the middle, select their gifts in numerical order and unwrap them for all to see. But here’s the fun part: You can steal a gift that someone before you has unwrapped, which causes that person to either select a gift from the pile or steal from someone else. After three steals, the gift is frozen with whoever has it.

Volunteer Together

Working side by side with your colleagues for a purpose greater than yourself always cultivates a sense of community. For example, you could print off blank cards with your company logo on them, then ask employees to send a note of thanks to deployed military members. Another thing you could do with the cards is send a word of encouragement to those who live at places like The Salvation Army. The holidays can bring up lots of emotions, and sending positive messages to others is always a reward in and of itself. After all, when you give, you receive.

If you try one or all of these ideas, taking a break from the grind and enjoying a little non-work fun is not just necessary, it’s critical. When employees can cut loose, as well as feel appreciated and cared for, it’s highly likely you’ll have a happier, healthier workplace.

Sources

https://www.indeed.com/career-advice/career-development/office-holiday-party

Risk of Browser Extensions and How to Stay Safe

4 min read

Risk of Browser ExtensionsWeb browsers such as Google Chrome, Firefox, Safari and Edge, among others, play an essential role in enabling access to websites on the internet. Most browsers allow users to install extensions, also referred to as add-ons or plug-ins. These extensions are applications or small software modules that add functionality and other useful features to a browser.

By means of the extensions, users can carry out various tasks such as password management, cookie management, ad blocking, interface modification, productivity tracking, grammar and spell-checking, etc.

However, although the extensions offer different useful functionalities, cybercriminals have taken advantage of them, creating a security risk to users and their data.

The Need to Beware of Browser Extensions

Browsers enable websites to collect information such as viewing history, adding cookies, etc. Also, when installing the extensions, some require to be allowed various permissions, like the ability to read or change data. For instance, according to a recent study by Talon, a digital security company, most Chrome Web Store extensions (62.43 percent of extensions) require dangerous permissions, including permission to read or change user data and activity. This means that an extension can see the sites visited, keystrokes, login credentials and private data, such as payment card details.

Since this information is readily available on a user’s web browser, cybercriminals can use a malicious extension to collect the data for their gain. At the same time, the data collected is sold without user consent or knowledge and used by third-party data brokers to send users tailor-made ads.

Although not all browser extensions are a security risk, some might be built to impersonate legitimate extensions, especially those from third-party resources. In other cases, legitimate extensions have been compromised or bought by a developer who uses them for malicious purposes.

Some browser add-ons are built to download malware onto your device, redirect search traffic to malicious websites or download ad ware and Trojan horse viruses.

The extensions can automatically update without requiring any action from a user. This means that if a legitimate extension is compromised, it can be used to install malware without user knowledge. Even secure extensions are prone to attacks or can be compromised, enabling attackers to gain access to data stored by browsers.

Additionally, malicious extensions can be built to bypass fraud detection by official Web stores. For instance, in 2020, Google removed over 500 extensions from its web store that violated policies, with some already having infected users and stolen their data. This followed the discovery of some malicious extensions that users had already downloaded.

A recent report released by Kaspersky, a cybersecurity firm, shows just how dangerous malicious add-ons are. After the firm analyzed data from January 2020 to June 2022, it discovered that over this time frame, 4.3 million users were attacked by adware hiding in browser extensions. This put adware as the highest representative of browser extension risks, with malware coming second. The report also indicates that Kaspersky products prevented more than 6 million users from downloading adware, malware or riskware disguised as browser extensions.

Such figures from just one cybersecurity firm are worrying, considering the study focused only on users that use their security solutions. This creates a need for users to be more vigilant when using browser extensions.

How to Make Sure Browser Extensions Are Safe

There are various ways to help reduce the risks posed by browser extensions:

  1. Ensure the extension is from an official web store. Since these extensions can also be compromised, it is best to find out more information about the developer.
  2. Check reviews as they help to know what other users think of the extension and if there have been any complaints. However, users should be cautious of identical comments or too many 5-star reviews, as these could be fake.
  3. Check whether the extension is updated regularly. An extension last updated many years ago might not be reliable.
  4. Review extension permissions for each extension.
  5. Check that you are not installing clones of the original extension. For instance, if you search for an extension, you can find other similar ones that look legit.
  6. Uninstall browser extensions that you don’t recognize or those you no longer need.
  7. Use browsers that have the features you want.
  8. Install reliable antivirus software that will help spot malicious activities or applications.

Conclusion

Browser extensions play an important role in the user browsing experience. Although not all extensions are dangerous, users must conduct due diligence to ensure they install legitimate extensions.

Should You Upgrade Your Homeowners Insurance?

5 min read

Should I Upgrade Your Homeowners Insurance?During the first year of the pandemic, many homeowners spent their down time upgrading their homes. The year 2020 alone experienced at 3 percent uptick in spending on home improvements – to the tune of nearly $420 billion nationwide. This included modifications for remote work, online schooling and leisure activities at home.

Between remodeling, high inflation and today’s elevated real estate prices, it’s important to review your homeowner’s insurance policy to ensure it’s up-to-date. Does it include enough coverage for recent upgrades to your home? Does it carry an inflation factor to ensure coverage is on par with more expensive building material costs and labor increases? Do you have coverage for ancillary factors, such as the cost of meeting local building ordinances, or flood insurance for today’s extreme weather events?

Replacement vs. Actual Value

One term to check on your policy’s declaration page is whether your coverage is determined by replacement cost or actual cash value. Replacement cost will pay for repairs to your home or replace your personal property (e.g., laptop, television) up to coverage limits, regardless of its current value. In other words, the policy will pay for a new computer even if your old one was 3 years old.

Actual cash value refers to a cash payout equal to the current value of your property. In other words, if your computer was 3 years old, you will receive the cash value of a 3-year-old computer – which will not likely cover the cost of a new replacement.

Guaranteed Replacement

In lieu of upgrading your home’s cost coverage each year, you might have the option to pay for guaranteed replacement, which is an extra fee that ensures the policy will cover the entire cost to rebuild your home. Extended replacement cost coverage pays out a certain percentage above your policy’s stated dwelling coverage limit if the cost to rebuild is higher than the face amount. For example, a policy with $200,000 coverage and 25 percent extended replacement coverage will pay up to $250,000 to rebuild your home.

Ordinance Coverage

Homeowners who live in older homes should consider adding ordinance coverage if it is not standard under your policy. Ordinance coverage pays for the cost to meet current building codes should you need to rebuild. These fees can be substantial and would have to be paid out-of-pocket if you don’t have this form of coverage. Note, too, that although guaranteed replacement cost coverage might offer a higher payout, that is only for the material and labor costs to rebuild – not local ordinance fees, licenses or inspections.

Inflation Impact

As you review your current policy, note that the section labeled Coverage A represents the amount available to rebuild your home. It generally rises by 2 percent to 3 percent each year for basic cost-of-living increases. However, it is worth noting that building materials, such as lumber and steel, increased by 19 percent in 2021, and in June the general inflation rate increased to 9.1 percent, its highest level in more than 40 years.

Because home building costs, the inflation rate and the increasing number of weather events have plagued the home insurance industry, policy premiums are starting to increase at a higher rate each year than in the past. In additional to higher costs due to supply chain disruptions and inflation, the home building industry is hampered by a lack of qualified workers – and experienced workers are demanding higher pay. This is yet another component that is factored into calculating insurance premiums. Basically, anything that would lead to a higher cost to repair your home will result in higher rates.

Insurance companies calculate your policy premiums by multiplying your home’s replacement rate with your home’s current value. Therefore, a combination of higher building costs and higher real estate values have contributed to higher insurance premiums. Some states have set an annual percentage cap on how much insurance companies can raise homeowner rates each year. However, given the increasing number of extreme weather events (e.g., storm surge, wildfires) in recent years, state legislators also have increased those rate caps so that insurers have the latitude to cover excess payouts. Note that rate increases vary by geographical area, based on local weather activity, labor costs and building supplies.

Some insurance policies offer an inflation guard, which automatically increases coverage limits to match inflation rates when the policy is renewed.

Flood Damage

Be aware that homeowners insurance does not cover flood damage. Mortgage lenders require homes located in government-designated Special Flood Hazard Areas (SFHA) to purchase a separate flood insurance policy. However, we have seen inland and even metropolitan areas that are not located in flood zones be devastated by the effects of storm surge following a hurricane. Homeowners who live in these higher-risk areas should consider purchasing a separate flood insurance policy as well.