The current crisis has complex and special issues unique to dealerships. Every dealer has questions relating to employment matters and the new government loan/grant programs join our expert panel to have yours answered.

We have invited the dealership attorneys at Stoll Keenon Ogdon, PLLC, Ron Smith, Amy Miles, Sarah Bishop and Joel Nagel, to join HBK Team members, Amy Reynallt, Jordan Baierl and Rex Collins to answer your questions on these topics.

Download the materials:
Coronavirus Dealers Q&A
April 2 Outline

The resource guide below provides details for some of the most important provisions of the Coronavirus Aid, Relief, Economic Security (CARES) Act.

CARES Act Resource Guide

As a result of COVID-19 causing people to work from home, the Division will temporarily waive the impact of the legal threshold within N.J.S.A. 54:10A-2 and N.J.A.C. 18:7-1.9(a) which treats the presence of employees working from their homes in New Jersey as sufficient nexus for out-of-state corporations. If employees are working from home solely as a result of closures due to the coronavirus outbreak and/or the employer’s social distancing policy, no threshold will be considered to have been met.

For additional information related to the New Jersey guidance on telecommuting during the COVID-19 crisis please click on the links below:
https://www.state.nj.us/treasury/taxation/
https://www.state.nj.us/treasury/taxation/covid19-payroll.shtml

HBK will continue to follow developments and provide guidance and clarity surrounding COVID-19 business issues. To discuss COVID-19’s effect on your business, contact your HBK advisor.

Cybersecurity attacks are occurring at such a rapid pace during the COVID-19 crisis that it has become difficult to keep up with all the fraud attempts.

Fundamentally, everyone should:

• Have up-to-date antivirus software
• Use a Spam Filter
• Use VPN (Virtual Private Network) software
• NEVER trust public Wi-Fi
• Use Encrypted Filesharing, if necessary

Beyond those basic directives, there is an additional offline layer of controls that build on the “Defense in Depth” concept that every company can easily incorporate to help prevent bank fraud. Now that we are working remotely, business is being conducted with almost no face-to-face interaction among team members, clients, vendors. We rely more on email conversations than phone calls. Hackers see this situation as an opportunity and are developing schemes to take advantage of it.

Our recommendations for email payment security include (Your businesses may already have some or all of these in place):

1. Assemble a directory—mobile or landline—with pre-arranged telephone numbers

• Include your company leadership or C-suite
• Include your finance and/or accounts payable teams
• Include vendors that you have a history of paying electronically
• Include your bank(s) and regular contacts at your bank(s)

2. Require any team member receiving an email requesting a new or altered electronic payment to reach out to the “requestor” as listed in your new directory of “pre-arranged” phone numbers to verify that the request is real and to verify the account numbers.

Never rely on the contact information or account numbers provided in the email!

3. Require a secondary authentication from a pre-designated member of your company who is included in your directory of pre-arranged telephone numbers, such as your CFO or Director of finance. Additionally, you can add another layer of security by using a pre-designated “code word” with the members of the pre-designated directory.

4. To protect your pre-arranged telephone directory, store it inside your password vault. (Most have the capability to store secure notes).

HBK Risk Advisory Services can help develop and implement a cybersecurity program that fits your organization’s risk appetite and budget. Our assessment will offer a road map for continual improvement through cost-effective solutions. Call me at 330.758.8613, or email me at wheaven@hbkcpa.com for more information or to schedule an assessment. As always, we’re happy to answer your questions and discuss your concerns.

Also, if you were unable to join us in February for our Risk Advisory Service Webinar on Banking Controls, you can access a recording of the session at: https://attendee.gotowebinar.com/recording/8846183878460240903

The NJEDA will launch the application for its Small Business Emergency Assistance Grant Program on Friday, April 3, 2020, at 9:00 am and close it on April 10, 2020, at 9 a.m. The grant program is part of a package of initiatives announced last week to support businesses and workers facing economic hardship due to the outbreak of the novel coronavirus COVID-19.

The Small Business Emergency Assistance Grant Program will provide up to $5,000 to NJ-based small- and medium-sized businesses and non-profits that have between 1–10 full time equivalent employees (“FTE”). The grant funding is targeted as unrestricted payroll and working capital support, and cannot be used for any capital expenses, including construction.

Grant values are calculated at $1,000 per FTEs reported on a business’ WR-30 filed with the New Jersey Department of Labor and Workforce Development.

• Minimum grant amount (per application): $1,000
• Maximum grant amount (per application): $5,000

For additional information on the NJEDA Small Business Emergency Assistance Grant Program please click here.

Applications for other NJEDA COVID-19 programs, including no/low-interest loans, entrepreneurship support, and technical assistance for those applying for U.S. Small Business Administration loans will be available in the coming weeks. Businesses and nonprofits can find eligibility requirements for all programs on the COVID-19 Business Information Hub or use the Eligibility Wizard to identify which emergency assistance programs they may want to consider for their business’s specific needs. Comprehensive information about New Jersey’s response to the novel coronavirus outbreak is available here: https://covid19.nj.gov/.

We are in the midst of a national emergency. The government is offering benefits to victims; your new way of business is requiring new, unfamiliar technology; and uncertainty is driving you to new apps and websites in search of information to help you stay afloat—all of which are being seized upon as new opportunities by cybercriminals.

Criminals are scamming individuals and businesses of their money and data through a myriad of tricks. Current scams are related to:

• The IRS or CARES Act
• Stimulus Payments
• COVID-19

• Charitable giving sites
• Current updates – statistics and/or heat maps
• Early vaccine / treatment access

• Problems with a Bank Account or Credit Card
• Investment Opportunities
• Blood Donation

Here is what cybercriminals are doing:

Method 1: Masquerading
Cybercriminals are exploiting the necessity for individuals and businesses to deploy new IT resources and methods to conduct work remotely such as VPNs, screen sharing technologies, and remote meeting software. Criminals are developing malicious tools that appear legitimate. Unsuspecting users, in search of a tool to facilitate their needs, instead download a malicious VPN agent. It is important to discuss any new IT resources you are considering with a professional who can advise you not only on the best, but the most secure tools.

Also, as your business operations change, cybercriminals are waiting to involve themselves in the process. Man-in-the-middle attacks involve criminals intercepting emails detailing payment instructions and bank account numbers and re-routing them to off-shore bank accounts before forwarding the email to the recipient. The sender and recipient are none the wiser until they discover that the money is gone.

Method 2:  Phishing/Vishing/SMishing using COVID-19 themes

Attacks may come in the form of fraudulent emails (i.e., “phishing”), text messages (i.e., “smishing”) or voice calls (i.e., “vishing”). These attacks may take advantage of users by posing as the following:

1. The IRS
2. Charitable agencies
3. Tech Support

Remember, the IRS will NEVER call, text, or email you for payment or bank account information, nor will other government agencies. Scrutinize every unfamiliar call, text, or email and avoid disclosing your personal information.

Method 3: Fake Mobile Applications
Cyber criminals understand that we regularly download apps to facilitate our daily needs. There have been multiple cases of malicious Android applications claiming to offer information about the virus or to accommodate your business needs in these times of uncertainty. But all they really offer is attackers the opportunity to spy on you, steal information, or ransom your data.

Method 4: Malicious and Fraudulent Websites
The Palo Alto Networks threat intelligence team notes that over the past few weeks more than 100,000 websites have been registered containing terms like “covid,” “virus,” and “corona.” Many of these websites are used to deploy malicious software that can threaten your business operations and data security or trick you into thinking you are applying for stimulus loans through its interface. Some websites spread false information to create unnecessary action or panic. Such risks can be avoided by using only trusted sources.

Do the following to protect yourself from becoming a victim of a fraudulent attack:

• Use extreme caution when dealing with any email with a subject line, attachment or hyperlink pertaining to COVID-19.
• Be cautious when dealing with an email, text message, social media post, or phone call with a subject line or topic pertaining to a COVID-19 related matter.
• Use only TRUSTED Sources, such as known government websites, for updated information on COVID-19.
• NEVER trust a hyperlink in a communication stressing urgency, such as a warning about a severe problem pertaining to financial information—i.e. bank account, credit card or the IRS.

• Verify that the contact information is from a trusted source—for example, the toll-free phone number on the back of your credit card.

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• If you visit a website, open it directly from your computer or a previously used App on your SmartPhone instead of from the requesting email.
• Never provide any identifying number over the phone, such as your Social Security number, Your Medicare ID number, your driver’s license number and your bank account number.
• If you need to implement new technology or processes for your business or personal life, consult a professional.

Did you miss our webinar Paycheck Protection Program, Loan Forgiveness, and SBA EIDL Changes: What You Need to Know ?

Join Frank Turocy, CPA, MSA and Amy Reynallt, MBA as they discuss the Paycheck Protection and Loan Forgiveness Programs and the recent changes to the SBA Economic Injury Disaster Loans (EIDL).

Download the presentation materials.

As the United States enters its third month of battling the uncertain times of COVID-19, businesses are faced with the challenges of operation interruptions, cash flow and revenue concerns and volatility in the stock market. Businesses must consider the financial reporting impact and the appropriate disclosure of the coronavirus disease’s effect.

Subsequent Events
Accounting standards define subsequent events as events or transactions that occur after the balance sheet date but before financial statements are issued or are available to be. There are two types of subsequent events:

1. The first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements (that is, recognized subsequent events).
2. The second type consists of events that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date (that is, non-recognized subsequent events).



Based on the first reported positive cases of the disease in the United States beginning January 14, 2020 and the limited domestic economic impact prior year calendar year-end, it is likely that COVID-19-related subsequent events would be identified as non-recognized subsequent events. Disclosure of non-recognized events are intended to prevent financial statements from being misleading and require disclosure of the nature of the event and an estimate of the financial effect of the event (or a statement that an estimate cannot be made). The predominant subsequent events regarding this pandemic include a decline in the market value of debt and equity securities and the impact on business operations.

Market Value Declines
Significant declines in the stock market continue to mount amidst the worldwide struggle against COVID-19. Year-to-date the S&P 500 has declined with marginal signs of reduced volatility. That said, non-public entities generally do not explicitly disclose potential changes in the value of recognized assets due to foreseeable future risks. In its place, many entities include a standardized disclosure regarding the risk of market value declines of assets. Entities should evaluate whether an explicit disclosure regarding the decline in securities as a result of COVID-19 or a classic statement regarding risk of market value is necessary. Factors such as the significance of securities in relation to, and the liquidity of, remaining assets should be considered when making this determination.

Business Operations
Business operations have been considerably altered during this time of uncertainty. While a few industries have seen unprecedented highs, the majority of businesses have shuttered at the request or order of authorities. Although an estimated amount of the financial statement effect is likely not possible considering the uncertainty of the duration of this crisis, qualitative disclosure of such economic interruption should be contemplated as to not mislead financial statement users.

Conclusion
We will continue to follow developments and provide guidance and clarity surrounding COVID-19 reporting issues. We are only on the surface of the economic impact this devastating event has had on businesses. For business questions related to or to discuss COVID-19’s effect on your business, please contact your trusted HBK advisor.

The COVID-19 crisis has left many businesses struggling and in need of economic support. Recent legislation has expanded or created additional availability to business loans. The U.S. Small Business Administration (SBA) Economic Injury Disaster Loans and CARES Act Payroll Protection Program are now offering loans to qualifying businesses. We anticipate applications for the loans will be addressed, at least to some extent, on a first-come, first-served basis, so businesses that want to apply are encouraged to do so as soon as possible. Several pieces of information may be requested, including tax returns and business financial statements. The information requested will depend on the loan program requirements and the amount of the loan. Among the information that the SBA or other lender will request:

• Personal Financial Statement
• Form 4506-T
• Schedule of Liabilities
• Form 940, 941, and 944

  Personal Financial Statements, often required from individuals applying for credit, summarize a person’s net worth. For its Loans, the SBA requests use of its Form 413 for 7(a) loans, like the Payroll Protection Program, or Form 413D for disaster programs, such as Economic Injury Disaster Loans (EIDL). The information requested on both forms is similar:

• Personal assets, including cash, savings accounts, automobiles, and real estate
• Personal liabilities, including debt to banks, mortgages, and unpaid taxes
• Sources of income, including salary, investment income, and real estate income
• Contingent liabilities, including endorsements, legal claims, and provisions for federal income tax
• Life insurance policies held

  IRS Form 4506-T, the form titled IRS Request for Transcript of Tax Returns, allows certain tax transcripts to be released, fee-free, from the IRS to you or to the party you designate. Schedule of Liabilities is a suggested schedule of liabilities, as provided on SBA Form 2022, which asks for the following information on your notes, mortgages, or accounts payable:

• Creditor name
• Original loan amount
• Issue date
• Current Balance
• Whether the liability is current or delinquent
• Maturity date
• Payment amount and frequency
• How the loan is secured

  Form 940, 941, and 944 are IRS Forms that report information associated with your payroll.

• Form 940 is the Employer’s Annual Federal Unemployment (FUTA) Tax Return. Employers complete this form annually to report the company’s federal unemployment taxes.
• Form 941 is the Employer’s Quarterly Federal Tax Return. This form contains information about income taxes, social security tax, or Medicare tax withheld from employees’ paychecks. It also reports the employer’s portion of these taxes.
• Form 944 is used by small employers whose payroll tax liability is $1,000 or less. These employers file once annually instead of quarterly.

  If you are compiling payroll internally, you are likely familiar with these forms and filing requirements. If you are using an outside payroll service, they are likely providing you with copies of the appropriate forms, either in hard copy, via email, or through your payroll service online portal. As you navigate through the loan application process, the SBA or your lender will help you identify the forms and information relevant to your loan request. Not all loan applications will require the same information. Complete the requested information quickly and accurately. If you are not comfortable doing this on your own, contact HBK for assistance.