Legal Issues in Certified Public Accounting with MJ Huffman
This is part of an interview between Sarah Morris and Mary Jennifer Huffman, transcribed from an episode of Around the Gavel by Morris Law Center.
I was going to ask you if you did have an area of specialization, and I know you, you said you’re a fraud examiner in income tax preparation.
Those are my focuses. So we’re a full service firm, so we do help with, you know, financial statements, audits and contracts preparation as well as litigation support, and so our other two partners, Bo Johnson and Deanna Tompkins, they’re certified valuation analysts and so they do more with the business valuation side of things and then I can help out with the forensic accounting.
Can you explain more about what forensic accounting is?
Forensic accounting focuses on, a lot of times when you’re worried about fraud or embezzlement, that’s when you hire a forensic accountant to come in and take a look at things. So, we are doing a variety of things. There’s no set procedures for that, it’s very client specific and generally at the end of our analysis, we have either a conversation or issue a letter to our client to let them know what we did, find what we suspect, and we oftentimes get our direction a lot of times from attorneys.
Do you have any like interesting, unusual things that have come up lately that have to do with the law?
I think the most interesting thing that we’re following right now is just what’s happening with the marijuana business. Federally, that being illegal, but the States more and more of them are allowing for some sort of marijuana business and that’s still a difficult thing for them to establish banking relationships. It is difficult even when it comes to the income tax preparation because anytime you have a federally illegal business then only the cost of goods sold can be deducted.
So only what they’re truly putting into selling their product is deductible. Anything that would be normally a business expense like advertising or ,you know, some of these office supplies, some of those things, that are a little bit more indirectly related, generally aren’t deductible. It’s just the cost of goods sold that is deductible. So it is something that we’re watching and probably crosses that legal line the most often when it comes to income tax preparation.
And in terms of just typical legal issues that you come across as an accountant, what did those look like?
Well, we work very closely with any legal team when it comes to our litigation support, business advisory capacity, but just on an everyday basis I would say LLC set up. People are so interested in making sure that they’re set up correctly to save on income taxes. We always recommend to our clients that anytime they’re setting up a new entity, that they consult their attorney. And it is really the biggest thing that I tried to work with attorneys on so that we are making sure that we’re both going for the same goal of the client. And so, I would say that’s where we crossover the most often. And it can be so important to make sure that they’re getting legal advice as well as some accounting and income tax help too.