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Cost Basis Reporting Poses Challenges for Accountant in Miami

Cost Basis Reporting Poses Challenges for Accountant in Miami

The Internal Revenue Service’s Cost Basis Reporting requirements remain a challenge for many Accounting Firms as the IRS continues to phase in the requirements, according to a new report.

The report, from the research firm Celent and financial technology provider Scivantage, examines the current state of the industry in terms of Cost Basis Reporting readiness. The study analyzes Accountants evolving priorities for technology and operational processes for cost basis reporting, and how these have changed after the first two of three phases of regulations have been completed.

According to the study, Accounting Firms had challenges with the automation and transfer of data between their books and records, Cost Basis Reporting systems, and tax reporting systems. In addition, accuracy of calculations for wash sales and corporate actions were also a high priority.

According to the report, now that Accountant have completed the 2012 tax reporting season and have been given until January 2014 by the IRS to implement fixed income regulations, they are taking the opportunity to assess their cost basis reporting systems to find areas of synergy with other business practices. While Cost Basis Reporting systems are still mainly viewed as a compliance requirement, Accountants are exploring ways to use them to streamline processes, integrate technologies and improve communications between end-users, financial intermediaries and solution providers.

Celent conducted nearly 50 interviews with broker-dealers, mutual funds, transfer agents, custodians, prime brokers and technology providers for its report.

“As Firms have been actively operating their CBR systems over the past two years, it has become obvious that they underestimated the amount of technology enhancements, tax knowledge and operational adjustments needed to successfully comply with IRS regulations,” said Celent wealth management analyst Alexander Camargo in a statement. “Through our research, we found that the industry wants cost basis solutions to be integrated with other internal systems, ultimately leading to consolidated, streamlined operations.”

The report found that Accountant using third-party vendors where overall more satisfied than those who were using a homegrown solution, with custodians being the most satisfied segment on average (3.75). The majority of the firms across all segments chose to buy versus build a CBR solution

Brokers and prime brokers expressed the least confidence in their system to be able to handle 1099 reporting; while mutual funds, transfer agents and custodians have the least confidence for transfers processing. Accurate 1099 reporting has become a high priority over the past two years for respondents and investors may need to get used to corrected 1099-B forms being the new norm.

“As we progress further into the regulation phases, Accountants increasingly looking for ways to turn Cost Basis Reporting into a business differentiator. Automating complex tax calculations using sophisticated data processing to provide accurate reporting is becoming increasingly important as 1099 tax reporting volume continues to grow. As complexity and sheer number of trades present a considerable CBR challenge, CPA’s must streamline their cost basis operations to deliver a superior service experience to their clients.

About 

Gustavo A Viera is the managing partner of Gustavo A Viera, PA. His experience spans more than 25 years. He started his career in public accounting at PriceWaterHouseCoopers where reached the level senior audit manager. His Fortune 500 experience includes positions as CFO – Latin America Region for both Hewlett Packard and Telefonica of Spain. Gustavo also writes a blog twice a week that addresses trending accounting and tax issues. He is an SBA Advisor and teaches workshops for aspiring entrepreneurs. His offices are located in Palmetto Bay, Coral Gables and Brickell Avenue in Miami FL, and is admitted to practice in the State of Florida as a licensed Certified Public Accountant. Gus welcomes questions and he can be reached at Gustavo A Viera PA 15715 S Dixie Hwy. Ste 409, Miami Fl. 33157, 2332 Galiano Street, 2nd Floor, Coral Gables, Fl 33134 or 1111 Brickell Avenue11th Floor Miami, FL 33131 Telephone 786-250-4450.

About the Author

Gustavo VieraGustavo A Viera is the managing partner of Gustavo A Viera, PA. His experience spans more than 25 years. He started his career in public accounting at PriceWaterHouseCoopers where reached the level senior audit manager. His Fortune 500 experience includes positions as CFO - Latin America Region for both Hewlett Packard and Telefonica of Spain. Gustavo also writes a blog twice a week that addresses trending accounting and tax issues. He is an SBA Advisor and teaches workshops for aspiring entrepreneurs. His offices are located in Palmetto Bay, Coral Gables and Brickell Avenue in Miami FL, and is admitted to practice in the State of Florida as a licensed Certified Public Accountant. Gus welcomes questions and he can be reached at Gustavo A Viera PA 15715 S Dixie Hwy. Ste 409, Miami Fl. 33157, 2332 Galiano Street, 2nd Floor, Coral Gables, Fl 33134 or 1111 Brickell Avenue11th Floor Miami, FL 33131 Telephone 786-250-4450.View all posts by Gustavo Viera →

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