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Matthew Sutorius
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Things were simpler in times of old. Back in the pre-industrial era, the only data you needed for a profitable harvest was a ledger of your past sales and maybe a farmer’s almanac.

Today, data is everywhere. The problem isn’t how we get the information we need to make decisions, it’s how we get the right information we need, in the right format, and how to see through the clutter and white noise that surrounds everything we do.

Every day, our systems accumulate vast amounts of data without any intentional action by us. As I write this article, Outlook is sending me insights into my productivity over the past week and reminding me of the commitments I’ve made to my peers. With so much data accumulated and available for our use, the leaders of the future will need to develop skills to pick the right data and use it in an informed and intentional way.

Understanding Your Data Systems

The first step in using data to make decisions is to get the right data in a useable format.

Most sophisticated business systems, be they CRM, accounting, production, or hybrid systems, contain massive quantities of data. Taking the time to understand what your systems can do and the data they can produce is critical at the beginning of any new data-driven decision-making journey. No one wants to spend the first 30 minutes of an hour-long meeting arguing about where their data came from and whether it’s “good or not.” My Microsoft CRM may be able to run 200 different reports, but how many of those are useable and can help in informing my decisions? How will I know without experimenting and understanding what my systems can do?

If we take the time to see what capabilities our systems already have (and where they may be lacking), we are on our way to more informed decision-making and leadership.

Using Your Data

Once we have data in a useable format, what do we do with it? How should it impact our decision- making? What do we do if the data challenges our long-held beliefs or existing practices?

Strong leaders use data to improve their organizations and the lives of the employees working for their business.

As an example, in professional services we have historically looked to the “billable hour” as a gold standard of how to run a successful practice. The more hours your employees billed, the more successful your business. Ergo, if we want to be more profitable, our employees should work more hours.

However, if we look at historical data outside of hours (including non-financial data such as turnover rates, client and employee satisfaction surveys, and average tenure of employees) we may find that a better indicator of profitability is utilization, or client satisfaction, or average amounts billed each week. It may be that the way we’ve run the business in the past isn’t the most efficient.

This brings up one of the challenges in using data to lead – what if the data shows us the historical way of doing things is flawed or can be improved upon?

A good leader is able to pivot based on new insights created by analysis of data, even if it means reassessing previously held beliefs on how something should be done. While subjective measures can be influenced by feelings, thoughts, emotions, or experiences and therefore be inherently flawed, data doesn’t lie.

Preparing for a Data-Driven Future

At Clark Nuber, our leaders pride themselves on bringing useful data into the decision-making process early, including relevant facts and figures as part of the process. It may be that professional accountants are hard-wired to seek out “the numbers” first, but this tendency to get data to “back up your opinion” has created a culture in which we strive to support our opinions with hard facts.

In the audit world, change is coming quickly. The AICPA, the organization responsible for creating auditing standards, is undergoing a years-long project to rethink standard practices and re-engineer financial statement audits with data analysis at the core.

If you’re a financial professional on the other end of our audits, you’ve no doubt had to pull “samples” of transactions for your auditors to review. In the future, instead of analyzing a sample of items, computers and AI will analyze 100% of the transactions and flag those needed for auditor review based on algorithms written by experts in both auditing and data science. In many cases, this is happening now.

For many organizations, the biggest challenge right now is how to incorporate raw data into decision-making and developing the necessary skills to do so. Statisticians, data scientists, and professionals with skills in computer-assisted data analysis techniques are going to be in demand for the foreseeable future. Good leaders will recognize the need for hiring such experts and utilizing their services for the extraction of quality data that can be used to make decisions.

The applications will be endless. The recruiting process, the hiring process, the evaluation process, new client acquisition, product development, marketing plans, and lookback analyses will all be significantly changed over the next decade as we enter a realm of data-driven decision-making. In all likelihood, much of this change will be driven by artificial intelligence and algorithms. The leader who embraces this technology and uses it as part of a well-informed decision-making process will be set up well to lead into the future.

This article is part of the Learning, Adapting, and Growing: Leadership Perspectives series, which explores the role of leadership from a diverse array of perspectives. Each article is written by a Clark Nuber leader who shares their ideas on the unique challenges and opportunities they have experienced, and the lessons they’ve learned along the way.

© Clark Nuber PS and Leadership Perspectives, 2021. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Clark Nuber PS and Leadership Perspectives with appropriate and specific direction to the original content.

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Articles and Publications

Understanding the Uniform Guidance: A Federal Award Primer

Federal Awards – Strings Attached

The historic amount of federal assistance being granted in response to the COVID-19 pandemic means that many not-for-profit organizations are either receiving federal award assistance for the first time or are significantly expanding their existing portfolio of federal awards. Whether being received directly from federal awarding agencies or being received as a subrecipient from a pass-through agency, federally funded awards come with strings attached, unlike any other non-federal grant an organization will likely receive. When applying for a federally funded award or reviewing an award agreement, understanding the requirements your organization will be held to is key to ensuring you stay on the “good side” of the federal award. Award agreements often include terms and conditions that outline a myriad of requirements, including references to program regulations, certifications and (drum roll) the Uniform Guidance – 2 Code of Federal Regulations (CFR) Part 200 (Uniform Guidance). The Uniform Guidance includes the key administrative and cost requirements you will need to follow when administering the federally funded award and is what we will be covering in this article.

The Uniform Guidance – Getting Started

The Uniform Guidance is promulgated by the U.S. Office of Management and Budget, and federal agencies are required to adopt and incorporate it in their federal award regulations. Understanding the Uniform Guidance is a critical step that all other federal grants management efforts stem from. Its requirements must be understood in order to assess existing procedures and determine what changes are needed to comply with the Uniform Guidance. This process often results in new policies and procedures needing to be developed and deployed. To help you get started in your Uniform Guidance quest, we have outlined key subparts to this regulation. When studying the Uniform Guidance, it’s helpful to keep in mind that a “must” is a requirement, whereas a “should” is more of a best practice. [table id=32 /]

Action Required

Digging into and understanding the Uniform Guidance regulation is just the first step in ensuring that adequate systems are in place to maintain compliance with your federal award. A close examination is needed to compare requirements of the Uniform Guidance to existing finance practices of your organization. This investment of time and resources will ensure that your organization properly builds the capacity to comply with the federal award terms and conditions you have or are about ready to commit your organization to. Want to learn more or need further help with your Uniform Guidance readiness efforts? Contact our Federal Grants Advisory group to help lead the way. ©2021 Clark Nuber PS. All rights reserved.

Planning to Apply for Restaurant Revitalization Fund Grants? – Prepare Your Documentation Now

On March 11, 2021, President Biden signed into law the American Rescue Plan Act (the Act), to speed up the U.S. recovery from the economic and health impacts of the COVID-19 pandemic. Included in the Act is a Restaurant Revitalization Fund (RRF) with appropriations of $28.6 billion in grants to support the restaurant industry.

Application

The RRF begins accepting applications from eligible entities on Monday, May 3, 2021 at 9:00 AM (PST). Applications will be accepted through a U.S. Small Business Administration (SBA) dedicated portal and certain Point of Sale (POS) vendor partners. We encourage eligible applicants to prepare gross receipts documentation in advance to be ready when the application goes live. Errors in the application and incomplete documentation will cause the application to be denied.

Required Documents

For entities that were open before 2020, the following documentation is required:
  • Completed application, SBA Form 3172
  • Tax verification – IRS Form 4506-T; completion of this form digitally on the SBA Platform satisfied this requirement.
  • Three months of the most recent bank statements from the account that would receive the grant.
  • 2019 Tax Returns as filed
  • 2020 Gross Receipts documentation (at least one of the following):
    • Preferred: 2020 Federal Tax Returns filed
    • Preferred: 2020 Gross Receipts – SBA Restaurant Partner validated POS report
    • Accepted: Externally or internally prepared financial statements, signed, dated, and certified as to accuracy by applicant.
For entities opening in 2020 and later, the following documentation is required:
  • Completed application, SBA Form 3172
  • Tax verification – IRS Form 4506-T; completion of this form digitally on the SBA Platform satisfied this requirement.
  • Three months of the most recent bank statements from the account that would receive the grant.
  • 2020 Gross Receipts documentation (at least one of the following):
    • Preferred: 2020 Federal Tax Returns filed
    • Preferred: 2020 Gross Receipts – SBA Restaurant Partner validated POS report
    • Accepted: Externally or internally prepared Income Statement or Profit and Loss Statement, signed, dated, and certified as to accuracy by applicant.
  • 2021 Gross Receipts Documentation (at least one of the following):
    • Preferred: 2021 POS reports from SBA Partner through March 11, 2021
    • Accepted: Externally or internally prepared Income Statement or Profit and Loss Statement through March 11, 2021, signed, dated, and certified as to accuracy by applicant.
For entities that were not yet open, but incurred eligible expenses between February 15, 2020 and March 11, 2021, at least one of the following documentation is required:
  • Preferred: Qualified third-party accountant, bookkeeper, or CPA Comfort Letter with associated Profit and Loss Statements and Balance Sheet documentation
  • Accepted: Externally or internally prepared Income Statements or Profit and Loss Statements, signed, dated, and certified as to accuracy by applicant
  • Accepted: All original expense documentation (payroll documents, invoices, payments, loan statements)
In addition to the documentation noted above, bakeries, breweries, brewpubs, microbreweries, taprooms, tasting rooms, wineries, or inns, must prove that onsite sales to the public comprise at least 33% of gross receipts for 2019. This documentation may include:
  • 2019 Tax and Trade Bureau Forms filed
  • State or local government forms filed
  • Internally created reports from inventory management, sales reporting, or accounting software
  • Internally created revenue reports or accounting reports

Recommendations

The following are recommendations to ensure an accurate and complete application process:
  • Consider registering at the SBA Application Portal on April 30 to receive log-in credentials and become familiar with the web portal.
  • Be certain that the business tax identification number (meaning Employee Identification Number (EIN), Social Security Number (SSN), or Individual Taxpayer Identification Number (ITIN)) entered in the application is consistent to what is reported on the business tax returns. Confirm the number is entered in the correct format.
  • Confirm that if a Paycheck Protection Loan (PPP) was obtained, that the EIN, SSN, or ITIN used in applying for the PPP loan agrees with the EIN, SSN, or ITIN used in the application.
  • Be prepared with the SBA PPP loan number. This is requested on the application.
  • Be certain that the gross receipts entered in the application agree to the gross receipts’ documentation provided.
  • Prepare your documents in PDF, JPG, GIF, TIFF, or PNG file formats.
  • Execute the package immediately through DocuSign to trigger the SBA review process. Once the application is completed, an email will be sent requesting the applicant to execute the DocuSign package.
  • Save a full copy of the completed application for your files.
We expect the demand for the Restaurant Revitalization Fund grants will be great. Ensuring your application is accepted requires being prepared with the required documentation and the accurate completion of the application. If you have any questions about the application process, please contact a Clark Nuber advisor. For more information on Priority Group Applications, click here. ©2021 Clark Nuber PS. All rights reserved.

Restaurant Revitalization Fund – Priority Group Applications – Do You Qualify?

The Small Business Association (SBA) has announced they will soon begin accepting applications for the Restaurant Revitalization Fund. During the opening 21 days of the program, the SBA will first review and process applications from those deemed “priority group” applicants. Businesses that do not qualify as a priority group applicant may still apply; however, such applications will not be processed until after the 21-day priority group period. Those who apply for funding must self-certify that they qualify as a priority applicant, a list that includes small business organizations owned and controlled by women, veterans, or socially and economically disadvantaged small business organizations. The following covers the different priority group applicant pools and provides information to help you understand if your business qualifies.

Small Businesses

The priority group status is available for small businesses only as defined by the SBA by industry (by NAICS code). To qualify, a business must be for-profit, independently owned and operated (any legal structure), located and operating in the U.S. or its territories, and must not exceed certain limits set by the SBA. For example, for a full-service restaurant to qualify, average annual gross receipts cannot exceed $8 million. See if your business qualifies under the industry size limits by using the SBA size tool here: SBA Size Standards.

Businesses Owned and Controlled by Women, Veterans, Socially Disadvantaged and Economically Disadvantaged

A business is considered owned and controlled by a priority group member if at least 51% of the business is owned by one or more persons within the qualified groups discussed below, and operations are managed by one or more persons within the qualified groups below. The priority group includes women, veterans, and socially and economically disadvantaged individuals; Alaska Native Corporations; Indian tribes; or Native Hawaiian Organizations. While these terms are highly subjective, the SBA has provided guidance on qualifications under these classifications as follows:
  • Those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities are considered socially disadvantaged.
  • Those socially disadvantaged individuals and groups whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged are considered economically disadvantaged.
While not all-inclusive, individuals identifying as a member of the following groups are presumed to be socially disadvantaged: Black Americans; Hispanic Americans; Native Americans (including Alaska Natives and Native Hawaiians); Asian Pacific Americans; or Subcontinent Asian Americans.

Evaluating the Economically Disadvantaged Classification

In evaluating whether an applicant falls under the economically disadvantaged classification, the SBA has stated it will evaluate various financial metrics. These metrics include net worth, adjusted gross income over the preceding three years, and the fair market value of the individual’s assets. Individuals exceeding any of the following three metrics are not considered to be economically disadvantaged for purposes of the priority group status:
  • Net Worth of $750,000 Net worth of the individual, excluding ownership in the business under application; primary personal residence; contingent liabilities; retirement accounts; or income received from an S-corporation, LLC, or partnership which was reinvested in the company.
  • Average Adjusted Gross Income of $350,000 Individual adjusted gross income averaged over the preceding three years, excluding income received from an S-corporation, LLC, or partnership which was reinvested in the company or was used to pay taxes arising from normal operations of the company.
  • Fair Market Value of Assets of $6 million Fair value of all the individual’s assets, including ownership in the business under application. The only assets excluded from this determination are the individual’s retirement accounts and primary personal residence
It is important to note that to qualify as a small business owned and controlled by socially and economically disadvantaged individuals, the applicant must meet both the socially disadvantaged and economically disadvantaged eligibility requirements.

Additional Relief and Qualifications

In addition to the priority group filing period, the SBA has set aside a portion of the total Restaurant Revitalization Fund of $28.6 billion for specific small businesses to ensure relief is available and provided to them, regardless of priority group status. While fund allocation may be adjusted, the following are currently set aside for applicants with 2019 gross receipts of: <$50,000 | Funds allocated: $500 million <$500,000  |  Funds allocated: $5 billion $500,001 to $1,500,000 |  Funds allocated: $4 billion The terms of the program and the application process have been continuously developing since the Restaurant Revitalization Fund’s creation under the American Rescue Plan Act, signed into law on March 11, 2021. Clark Nuber is closely monitoring program developments, so stay tuned for further information in the coming weeks. If you have questions on whether you qualify as a priority group member or other questions about the Restaurant Revitalization Fund, please contact a Clark Nuber advisor. Shelley Oswald, Audit Senior Manager at Clark Nuber PS Shelley Oswald is a senior manager in Clark Nuber’s Audit and Assurance Services Group. ©2021 Clark Nuber PS. All rights reserved.

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