How Do I Calculate APR on an Auto Loan? #peters #auto #mall


#auto interest calculator
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How Do I Calculate APR on an Auto Loan?

There is nothing like buying a new car. That new car smell, the safety features and the process of calculating the APR on your auto loan it s definitely a memorable experience. APR stands for annual percentage rate and is the basic counterpart to the interest rate that the borrower needs to pay on a loan. When trying to calculate APR on an auto loan, APR helps to compare rates offered to the consumer across the board.

The best way to calculate APR on an auto loan is to use an online rate calculator, which are numerous and can be found throughout the internet. You can even find one that will calculate your auto loan amortization .

Since use this auto loan calculator to help determine the APR, the use the time saved calculating those numbers to research your credit score to ensure a good APR offer, or comparing auto loans to find the best offer based on your history and thoroughly researching the car you intend to purchase. With all this knowledge at hand, you will have all the skills needed to get the best car purchase deal possible.


FHA Mortgage Calculator – How Much Can I Afford? #auto #24


#bankrate auto loan calculator
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Required Annual Income:

This does not include upfront mortgage insurance if needed. Your salary must meet the following two conditions on FHA loans:

  • The sum of the monthly mortgage and monthly tax payments must be less than 31% of your gross (pre-taxes) monthly salary.
  • The sum of the monthly mortgage, monthly tax and other monthly debt payments must be less than 43% of your gross (pre-taxes) monthly salary.

DISCLAIMER: The figures above are based upon current FHA program guidelines. FHA requires a 3.5% down payment as well as an upfront and monthly mortgage insurance in many cases. Other loan programs are available. Calculations by this tool are believed to be accurate, yet are not guaranteed. See upfront and monthly calculations: FHA Mortgage Insurance Requirements .

Helpful Answers are Ready:

Can I remove MIP from my FHA if my home value goes up?

My home value has risen enough within the last year to where what I owe is 80% of the current value of the home.

I had a bankruptcy not long ago. How long do I have to wait before applying for an FHA loan?

I put in an offer on a home and the contract was accepted. The processing of our loan took longer than necessary and the appraisal in now 90 days old.

Can I pay my FHA loan in full without being penalized or charged for early payoff of the loan?

I obtained an FHA loan in 2010 and recently inherited some money from my dad’s estate. It’s enough to pay off my mortgage loan.


Do I need a commercial auto insurance policy? #auto #paint #color #chart


#commercial auto insurance
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Do I need a commercial auto insurance policy?

As a businessowner, you need the same kinds of insurance coverages for the car you use in your business as you do for a car used for personal travel — liability, collision and comprehensive, medical payments (known as personal injury protection in some states) and coverage for uninsured motorists. In fact, many business people use the same vehicle for both business and pleasure. If the vehicle is owned by the business, make sure the name of the business appears on the policy as the “principal insured” rather than your name. This will avoid possible confusion in the event that you need to file a claim or a claim is filed against you.

Whether you need to buy a business auto insurance policy will depend on the kind of driving you do. A good insurance agent will ask you many details about how you use vehicles in your business, who will be driving them and whether employees, if you have them, are likely to be driving their own cars for your business.

While the major coverages are the same, a business auto policy differs from a personal auto policy in many technical respects. Ask your insurance agent to explain all the differences and options.

If you have a personal umbrella liability policy, there’s generally an exclusion for business-related liability. Make sure you have sufficient auto liability coverage.


Cars in Bankruptcy: What Happens To My Car if I File? #sherman #auto #parts


#bankruptcy auto loans
#

Cars in Bankruptcy

Can You Keep Your Car If You File Bankruptcy?

Many people who file for bankruptcy and own a car are allowed to keep it during and after their case, especially if it is used for getting to and from work.

If you are behind on car payments, you may be able to use bankruptcy laws to keep your vehicle in your possession.

Both types of personal bankruptcy address cars, car loans and vehicles you own outright:

  • The automatic stay in bankruptcy is designed to stop repossession. In most cases, this goes into effect right after you officially file for bankruptcy.
  • Chapter 7 bankruptcy exemptions may protect your car from a forced sale.
  • Filing for bankruptcy under a Chapter 13 may allow you to repay your car loan at a more affordable rate so that you don’t lose your car to collectors.

Keep reading or fill out the below form to ask an attorney if a bankruptcy could help you save your car.

What Happens When You File for Bankruptcy?

Get answers to your bankruptcy questions.

Learn how you may be able to use bankruptcy to save your car, home or other assets.

For a free bankruptcy case evaluation with a local bankruptcy lawyer, complete the below free form:

Car Loans Under Chapter 7 Bankruptcy

Chapter 7 bankruptcy is designed to help eliminate unsecured debts such as credit cards debt or medical debt, but may provide protection for secured debts such as cars.

If you own your car outright, and owe no debts on it, then your car may be fully protected from repossession or forced sale due to Chapter 7 exemptions.

One important aspect when filing bankruptcy is whether you have a clear title to your car. If you have pledged your vehicle as security for a debt, or if you are financing or leasing a vehicle, you likely have three options for secured car loans when you file Chapter 7 .

1. Reaffirm: A reaffirmation agreement is a contract between you and the car creditor in which you agree to pay the balance owed on your car note, despite the bankruptcy filing.

You continue to make payments and the creditor promises that, as long as payments are made, they will not repossess or take back the property.

Reaffirmed debts are not discharged and the debt survives the bankruptcy.

If you do not make your car payments after you reaffirm the car loan, the car lender can repossess the car and sue you for the deficiency balance.

After the finance company repossesses the car, they will sell the car at the auto auction. Usually the finance company does not get enough money from the auction to pay off your loan.This shortfall is called a “deficiency” and you would still be legally obligated to pay the creditor the deficiency balance.

As you can see, the decision to reaffirm your car loan is a serious financial matter.

Reaffirmation agreements are strictly voluntary. You are not required by the Bankruptcy Code or other state or federal law to reaffirm your car loan. Before entering into such an agreement, you will want to speak to a bankruptcy attorney to make sure that the reaffirmation is in your best interest.

2. Redeem: In Chapter 7, you have the right to purchase or redeem your car from the creditor by making a lump sum payment equal to the car’s fair market value.

The U.S. Bankruptcy Code provides that you must pay the creditor the replacement retail cost of the car. The balance of the debt will be discharged.

For example, assume you own a car worth $5000.00, but owe the finance company $10,000.00. In this circumstance, you could redeem the vehicle by paying the creditor $5000.00 and the remaining balance will be discharged in your bankruptcy.

A local bankruptcy lawyer can advise you on the benefits of redeeming your financed car and identifying lenders that will provide the funds for your vehicle redemption.

3. Surrender: If you cannot afford the monthly payments on your car loan or if you determine that you owe more than the car is worth, you can unload the car and the debt in your Chapter 7 bankruptcy by surrendering the vehicle to the creditor.

Car Leases in a Chapter 7

If you are leasing your car when you file Chapter 7 bankruptcy, you can choose to either continue making the monthly lease payments or surrender the car back to the creditor.

If you surrender the leased car, any obligation to repay debt will be eliminated in your Chapter 7 bankruptcy case.

Car Loans in a Chapter 13 Reorganization

If you have fallen behind on your car payments, you may be able to file a Chapter 13 bankruptcy to stop the repossession of your vehicle. The amount you have to pay for your car depends upon when you bought your car.

If you own your car outright, and owe no debts on it, then your car should be fully protected in Chapter 13.

910 Claims: If you bought your vehicle within 910 days of filing your bankruptcy case, you must repay the entire car loan.

The good news is that the interest rate you pay on your car loan may be significantly reduced.

For example, if you owed $10,000 on a car loan whose blue book value was only $5000, you would be required to pay the entire $10,000 balance if the car was purchased less than 30 months, or 910 days, of filing. In short, debtors who want to keep their cars must pay the full loan amount rather than “cram down” the debt to the value of the car.

Cram Down: If you bought your car more than 910 days before you file bankruptcy, you will only have to repay an amount equal to the present value of the car.

For example, if you owed $5000 on a car that is worth only $2500, upon filing Chapter 13 you would be required to repay the finance company only $2500 over the three-to-five year term of your Chapter 13 repayment plan.

Car Leases Under Chapter 13 of the U.S. Bankruptcy Code

Your car lease usually cannot be paid through the Chapter 13 bankruptcy repayment plan that you devise with your bankruptcy attorney.

You can “assume” the lease and continue making the monthly payments. You can also “reject” the lease and return the car to the creditor.

The creditor will sell the leased vehicle, apply the sale proceeds to your lease balance and then file a claim in your Chapter 13 bankruptcy case for the lease deficiency.

This deficiency is an unsecured, non-priority claim, which means you will likely only pay that creditor pennies on the dollar.

Speak With a Bankruptcy Attorney About Protecting Your Car Today.

If you have questions about how your car will be affected if you file bankruptcy, talk with one of our sponsoring lawyers.

Fill out the form on this page to talk with a local bankruptcy attorney. Bankruptcy laws can be complex and each person’s financial situation is unique. If you’re worried about losing your vehicle, home or other assets, be sure to get the facts from a legal professional.

Don’t wait until the repo truck comes to you door or the foreclosure notices start piling up. Learn how bankruptcy can stop repossession and foreclosure and is designed to silence creditors!

The above summary of bankruptcy law is by no means all-inclusive and is not intended to serve as legal advice. Laws may have changed since our last update. For the latest information on bankruptcy laws, speak to a local bankruptcy lawyer in your state.


How should I go about buying a car? #full #coverage #auto #insurance


#buying a car
#

Feedback

“Those who expect to reap the blessings of freedom, must, like men, undergo the fatigues of supporting it.” Thomas Paine was, of course, not talking about the freedom of automobile or even horse carriage ownership. Nonetheless, there’s a point to be made: having a car can be a blessing and a burden.

Know the facts first: a car is not an investment. It is a depreciating asset, meaning it loses value over time. On average, new cars and trucks lose more than 20% of their value in the first year (Motley Fool). On the flipside, that means that if you can find a well-maintained car that’s just one or two years old, you’ll get a huge discount on an almost-new model!

The following outline will walk you through the process of selecting and purchasing a car.

1. Can you afford it?

  • Create a budget. Start setting aside money from your paycheck to buy a car if you don’t have enough in savings already.
  • Research. Determine the type of car that you want to buy, and make sure it is the best car for you. Things to consider:
    • Cost
    • Brand reputation
    • Size (sedan, truck, van etc.)
    • Gas mileage
    • Safety
    • Typical repair costs
    • Ability to meet long-term needs
  • Determine if you have the money for repairs, maintenance, gas, insurance, plates, taxes, registration, and all the other costs of owning a car. Buying the car is only one cost of owning a car.
  • These helpful websites can help you figure out pricing information:
    • Autobytel
    • Car.com
    • CarsDirect
    • How to buy a new car (Consumer Reports)
    • Edmunds.com
    • Invoice Dealers
    • Kelly Blue Book

2. Do you need a loan?

  • If you can’t pay for the car out of pocket, you can make a down payment and obtain a loan with monthly payments for the rest. To minimize the interest you pay, you should maximize your down payment.
  • Shop around for the best interest rate and other terms: check with the dealership, with local banks and credit unions, and online.
  • Read more in our car loans section.

3. New or used?

  • The biggest reason to buy used instead of new is the price. Determine if you have the means to buy a new or used car.
  • Risk of a used car: You typically buy a used car “as is,” meaning you are taking on the risk of there being any defects that you were unaware of. Unlike with a new car, which is warranted to be in new condition, you need to use caution when buying a used car and get all the details out on the table before making the purchase.
    • Ask questions and know everything about the history of a used car:
      • Number of previous owners
      • If the car was ever in an accident
      • Any previous mechanical problems
      • The maintenance history of the car
    • Have the car inspected by an independent mechanic with a good reputation, preferably one specializing in that brand of cars. If you’re buying from an individual, you can get the car appraised at CarMax and they’ll tell you if they find anything wrong with it.

4. Where do you find a car?

  • Car dealerships
  • Used car websites
  • Classifieds/Craigslist

5. At the dealership:

  • Be sure to have already done some research to try to figure out how low the dealer is willing to go on price. Don’t be afraid to negotiate. Every salesman’s goal is to get you to pay more than the bottom-line price. You may even have to walk away and wait for them to call you back. To the fearless go the best prices.
    • You can find out what dealers pay for a vehicle for $14 from Consumer Reports. Use this information to your advantage.
  • The best times of the year to buy a car are at the end of December and between July and October.
  • If you’re looking for financing, know your credit history. Get a credit report before going to dealers to make sure you’re all on the same page.

6. Before making the purchase:

  • If buying used, get a full inspection from a reputable mechanic before buying .
  • If buying used, obtain a Vehicle History Report from CARFAX.com. It will enable you to determine whether the car was ever salvaged, stolen, or recalled, the number of previous owners, whether it ever failed inspection, and whether someone has tried to create a fraudulent odometer reading.
  • Be wary of signing an “as is statement for a used car dealer. You are paying more to a dealer than you would to a private party, so you should demand at least 30 days to make sure the car is in good condition.
    • On the other hand, when you purchase a car from an individual, signing an “as is” statement is standard practice. That’s why it’s imperative to have the car thoroughly checked out before you buy it. If nothing’s wrong, you’ll get a better deal versus going through a dealer.
  • If you’re obtaining financing from a bank or credit union, have your loans finalized.

FHA Mortgage Calculator – How Much Can I Afford? #auto #city


#bankrate auto loan calculator
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Required Annual Income:

This does not include upfront mortgage insurance if needed. Your salary must meet the following two conditions on FHA loans:

  • The sum of the monthly mortgage and monthly tax payments must be less than 31% of your gross (pre-taxes) monthly salary.
  • The sum of the monthly mortgage, monthly tax and other monthly debt payments must be less than 43% of your gross (pre-taxes) monthly salary.

DISCLAIMER: The figures above are based upon current FHA program guidelines. FHA requires a 3.5% down payment as well as an upfront and monthly mortgage insurance in many cases. Other loan programs are available. Calculations by this tool are believed to be accurate, yet are not guaranteed. See upfront and monthly calculations: FHA Mortgage Insurance Requirements .

Helpful Answers are Ready:

Can I remove MIP from my FHA if my home value goes up?

My home value has risen enough within the last year to where what I owe is 80% of the current value of the home.

I had a bankruptcy not long ago. How long do I have to wait before applying for an FHA loan?

I put in an offer on a home and the contract was accepted. The processing of our loan took longer than necessary and the appraisal in now 90 days old.

Can I pay my FHA loan in full without being penalized or charged for early payoff of the loan?

I obtained an FHA loan in 2010 and recently inherited some money from my dad’s estate. It’s enough to pay off my mortgage loan.


Cars in Bankruptcy: What Happens To My Car if I File? #auto #shop


#bankruptcy auto loans
#

Cars in Bankruptcy

Can You Keep Your Car If You File Bankruptcy?

Many people who file for bankruptcy and own a car are allowed to keep it during and after their case, especially if it is used for getting to and from work.

If you are behind on car payments, you may be able to use bankruptcy laws to keep your vehicle in your possession.

Both types of personal bankruptcy address cars, car loans and vehicles you own outright:

  • The automatic stay in bankruptcy is designed to stop repossession. In most cases, this goes into effect right after you officially file for bankruptcy.
  • Chapter 7 bankruptcy exemptions may protect your car from a forced sale.
  • Filing for bankruptcy under a Chapter 13 may allow you to repay your car loan at a more affordable rate so that you don’t lose your car to collectors.

Keep reading or fill out the below form to ask an attorney if a bankruptcy could help you save your car.

What Happens When You File for Bankruptcy?

Get answers to your bankruptcy questions.

Learn how you may be able to use bankruptcy to save your car, home or other assets.

For a free bankruptcy case evaluation with a local bankruptcy lawyer, complete the below free form:

Car Loans Under Chapter 7 Bankruptcy

Chapter 7 bankruptcy is designed to help eliminate unsecured debts such as credit cards debt or medical debt, but may provide protection for secured debts such as cars.

If you own your car outright, and owe no debts on it, then your car may be fully protected from repossession or forced sale due to Chapter 7 exemptions.

One important aspect when filing bankruptcy is whether you have a clear title to your car. If you have pledged your vehicle as security for a debt, or if you are financing or leasing a vehicle, you likely have three options for secured car loans when you file Chapter 7 .

1. Reaffirm: A reaffirmation agreement is a contract between you and the car creditor in which you agree to pay the balance owed on your car note, despite the bankruptcy filing.

You continue to make payments and the creditor promises that, as long as payments are made, they will not repossess or take back the property.

Reaffirmed debts are not discharged and the debt survives the bankruptcy.

If you do not make your car payments after you reaffirm the car loan, the car lender can repossess the car and sue you for the deficiency balance.

After the finance company repossesses the car, they will sell the car at the auto auction. Usually the finance company does not get enough money from the auction to pay off your loan.This shortfall is called a “deficiency” and you would still be legally obligated to pay the creditor the deficiency balance.

As you can see, the decision to reaffirm your car loan is a serious financial matter.

Reaffirmation agreements are strictly voluntary. You are not required by the Bankruptcy Code or other state or federal law to reaffirm your car loan. Before entering into such an agreement, you will want to speak to a bankruptcy attorney to make sure that the reaffirmation is in your best interest.

2. Redeem: In Chapter 7, you have the right to purchase or redeem your car from the creditor by making a lump sum payment equal to the car’s fair market value.

The U.S. Bankruptcy Code provides that you must pay the creditor the replacement retail cost of the car. The balance of the debt will be discharged.

For example, assume you own a car worth $5000.00, but owe the finance company $10,000.00. In this circumstance, you could redeem the vehicle by paying the creditor $5000.00 and the remaining balance will be discharged in your bankruptcy.

A local bankruptcy lawyer can advise you on the benefits of redeeming your financed car and identifying lenders that will provide the funds for your vehicle redemption.

3. Surrender: If you cannot afford the monthly payments on your car loan or if you determine that you owe more than the car is worth, you can unload the car and the debt in your Chapter 7 bankruptcy by surrendering the vehicle to the creditor.

Car Leases in a Chapter 7

If you are leasing your car when you file Chapter 7 bankruptcy, you can choose to either continue making the monthly lease payments or surrender the car back to the creditor.

If you surrender the leased car, any obligation to repay debt will be eliminated in your Chapter 7 bankruptcy case.

Car Loans in a Chapter 13 Reorganization

If you have fallen behind on your car payments, you may be able to file a Chapter 13 bankruptcy to stop the repossession of your vehicle. The amount you have to pay for your car depends upon when you bought your car.

If you own your car outright, and owe no debts on it, then your car should be fully protected in Chapter 13.

910 Claims: If you bought your vehicle within 910 days of filing your bankruptcy case, you must repay the entire car loan.

The good news is that the interest rate you pay on your car loan may be significantly reduced.

For example, if you owed $10,000 on a car loan whose blue book value was only $5000, you would be required to pay the entire $10,000 balance if the car was purchased less than 30 months, or 910 days, of filing. In short, debtors who want to keep their cars must pay the full loan amount rather than “cram down” the debt to the value of the car.

Cram Down: If you bought your car more than 910 days before you file bankruptcy, you will only have to repay an amount equal to the present value of the car.

For example, if you owed $5000 on a car that is worth only $2500, upon filing Chapter 13 you would be required to repay the finance company only $2500 over the three-to-five year term of your Chapter 13 repayment plan.

Car Leases Under Chapter 13 of the U.S. Bankruptcy Code

Your car lease usually cannot be paid through the Chapter 13 bankruptcy repayment plan that you devise with your bankruptcy attorney.

You can “assume” the lease and continue making the monthly payments. You can also “reject” the lease and return the car to the creditor.

The creditor will sell the leased vehicle, apply the sale proceeds to your lease balance and then file a claim in your Chapter 13 bankruptcy case for the lease deficiency.

This deficiency is an unsecured, non-priority claim, which means you will likely only pay that creditor pennies on the dollar.

Speak With a Bankruptcy Attorney About Protecting Your Car Today.

If you have questions about how your car will be affected if you file bankruptcy, talk with one of our sponsoring lawyers.

Fill out the form on this page to talk with a local bankruptcy attorney. Bankruptcy laws can be complex and each person’s financial situation is unique. If you’re worried about losing your vehicle, home or other assets, be sure to get the facts from a legal professional.

Don’t wait until the repo truck comes to you door or the foreclosure notices start piling up. Learn how bankruptcy can stop repossession and foreclosure and is designed to silence creditors!

The above summary of bankruptcy law is by no means all-inclusive and is not intended to serve as legal advice. Laws may have changed since our last update. For the latest information on bankruptcy laws, speak to a local bankruptcy lawyer in your state.


Ssae 16 Type Ii #is #ssae #16 #needed,reports,reviewing #ssae #16,ssae #16,ssae #16 #audit #review,ssae #16 #review,ssae #16 #review #checklist,ssae #16 #reviews,ssae #review,ssae #reviews,ssae-18,ssae16,ssae16 #review,standards,third #party #ssae #guidance #review,who #is #required #to #have #a #ssae #16,who #is #required #to #have #ssae #16,why #get #ssae #16,audit #intensedebate,leave #a #reply: #name #(required): #website: #comments: #submit, #moderation,\’leave #a #reply\’ #\’name #(required)\’ #\’mail #(will #not #be #published) #(required)\’ #\’website\’ #it #services,controls,how #do #you #prepare #for #an #ssae #16 #audit,how #to #prepare #for #a #ssae #16,how #to #prepare #for #an #ssae #16 #audit,new #avenues #for #ssae #16,preparing #for #a #ssae #16,preparing #for #ssae #16,report #writing,ssae #16 #audit #preparation,ssae #16 #consulting #do #we #need,ssae #16 #preparation,ssae #16 #report,ssae #no. #16,example #soc #1 #report,soc #1,soc #1 #report,soc #1 #reports,soc #1 #type #2,soc #1 #type #2 #report,soc #1 #type #ii #report,soc #2,soc #3,soc #i,soc #report,soc #reporting,soc #type,soc #type #1 #report,soc-1 #report,soc1,soc1 #report,soc1 #reporting,soc1 #soc2,ssae #16 #reports,ssae #16 #soc #1,ssae16 #compliant #soc #1,system #and #organization #control #report,what #is #a #soc #1 #report,what #is #a #soc1 #report,what #is #ssae #16 #soc #1 #and #soc #2 #difference,at-c #320,cost,definition #soc #1 #ssae #16,how #ssea #16 #helps #auditors,prices,pricing,soc #1 #audit,ssae #16 #audit,ssae #16 #audit #checklist,ssae #16 #audit #report,ssae #16 #audit #requirements,ssae #16 #auditing #standard,ssae #16 #auditor,ssae #16 #checklist,ssae #16 #cost,ssae #16 #costs,ssae #16 #prices,ssae #17 #audit,ssae #18 #report,ssae #soc #auditing #and #reporting,ssae16 #audit,ssae16 #audit #report,ssae16 #checkilst,what #is #a #ssae #16 #audit,what #is #ssae #16 #audit,what #is #ssae16 #audit,what #is #the #purpose #of #a #ssae #16 #audit?


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The SSAE 18 Reporting Standard SOC 1 SOC 2 SOC 3 Support and Guidance for SSAE18, SOC 1, SOC 2, and SOC 3 reporting standards

Some organizations have heard of SAS 70, SSAE 16. and soon to be SSAE 18. but, don t really know WHY they need to pay to have a bunch of auditors trounce through their company for a month or two during the year, especially right after their financial audit just finished.
The answer is simple: Many companies will not even think about using your company to perform services for them without a clean Type II Report in place.
Some benefits of having an SSAE 16 performed :

  • Ability to perform outsourcing services for Public Companies.
    • If performing financially significant duties for a Public Company, they are required to use a SSAE 16 qualified provider as it is the only way to give investors assurance over controls that are not performed by the Company in question.
  • Public and Private companies are more likely to trust your organization with their data.
    • If you were to trust a company with your data, you would want complete assurance it will be handled with the utmost care
  • A year round accessible knowledge source (your auditors).
    • As a service organization, large or small, you will always have questions regarding your business and having a set of auditors in place with access to a wide array of business knowledge, it will allow you to bounce your questions and concerns off of a group of trusted individuals.
  • A third party to review your controls and activities to ensure they are functioning appropriately, and give advice on how to improve upon them.
    • Sometimes your internal audit department is good, but, not always as stringent as they should be. This will help to serve as a check on their work, as well as your staff. Additionally, if there were any findings noted, your auditors are in a great position to give you some tricks and tips to improve to ensure everything functions well the following period.
  • Improving performance of the organization.
    • Just the knowledge that a review is being performed of an employee s work that can have far reaching consequences for the company as a whole. No more, Oh, I didn t realize that reviewing user access was THAT important to do this month, sorry , now, everyone knows that if it s not done, the success or failure of the organization could rest upon them.

Think of the SSAE 16 or SSAE-18 audit as an annual investment into your company, increasing potential new clients. productivity and accountability .

This tip is focused on designing controls that reflect the process being testing, if they don t, a headache of massive proportions will be created once testing begins.
What do you do to make sure you don t screw this up? Have as many meetings as it takes to get it right.
What you need to do is sit down with the auditors, the department lead, the main employees responsible for performing the process, and anyone else whom could either play a role in testing or modifying the control in the future. Once that is done, Management should discuss what they determined the control to be and how it should operate, that is then reviewed by the auditors, and then the employees performing the tasks should be reconsulted to verify that the control still reflects their process accurately.
Many times people try to speed this process up and half-ass it, leaving many open items which upon testing could easily blow up into a huge problem. When the control isn t 100% agreed upon prior to testing and a deviation is noted, it s a tough call between failing the control and the ability to adjust it to accurately reflect the process. The problem is modifying a control after testing has begun is not proper and needs to be avoided at all costs.
Locking the controls locked down early on could save weeks in wrapping up your new SSAE 16 Report.
We have seen issues like this cause delays in issuing of the report to the client and running additional fees, since adjusting controls isn t free. Coming from the perspective of the auditor, we can let you know the pitfalls, consequences and how to best navigate the audit process. If you have any comments or questions please leave them below!

A SOC 1 Report (System and Organization Controls Report ) is a report on Controls at a Service Organization which are relevant to user entities’ internal control over financial reporting. The SOC1 Report is what you would have previously considered to be the standard SAS70, complete with a Type I and Type II reports, but falls under the SSAE 16 guidance (and soon to be SSAE 18 ).

Please see the following articles discussing the SSAE 16 guidance and additional information related to the SOC 1 (Type I and Type II) Reports:

In addition to the SOC 1 report which is restricted to controls relevant to an audit of a user entity’s financial statements, the SOC 2 and SOC 3 reports have been created to address controls relevant to operations and compliance and will be discussed in further detail in the future.

Please see the SOC 1 Reporting Guide page for additional information.

SSAE 16 is an enhancement to the current standard for Reporting on Controls at a Service Organization, the SAS70. The changes made to the standard will bring your company, and the rest of the companies in the US, up to date with new international service organization reporting standards, the ISAE 3402. The adjustments made from SAS 70 to SSAE 16 will help you and your counterparts in the US compete on an international level; allowing companies around the world to give you their business with complete confidence .

SSAE16 is now effective as of June 15, 2011, and if you have not made the necessary adjustments required, now is the time to find a quality provider to discuss the proper steps. All organizations are now required to issue their Service Auditor Reports under the SSAE 16 standards in an SOC 1 Report.

The soon to be effective, SSAE-18. is expected to follow a similar reporting structure to the SSAE-16 within a SOC 1 report.

Who Needs an SSAE 16 (SOC 1 ) Audit?

If your Company (the Service Organization ) performs outsourced services that affect the financial statements of another Company (the User Organization ), you will more than likely be asked to provide an SSAE16 Type II Report, especially if the User Organization is publicly traded.
Some example industries include:

  • Payroll Processing
  • Loan Servicing
  • Data Center /Co-Location/Network Monitoring Services
  • Software as a Service (SaaS )
  • Medical Claims Processors

What you Need to Know:

Before starting the SSAE 16 process, there are a number of considerations one must take into account that can save considerable time, effort, and money in the long run. Use the following items as a mini checklist for yourself:

  • Does my Company need an SSAE16, or, are we doing it just because someone asked?
  • Reports on the low end can run at least $15,000 a year, will the business lost be less of a burden than the cost of the report itself?
  • Does your company have defined Business Process and IT controls in place, or, will you need assistance developing and implementing them (readiness assessment)?
  • Have you determined the controls in place which affect the outsourced services being provided?
  • Have key stakeholders been defined and included in discussions?

There are many other issues to consider before engaging a CPA firm to help with your SSAE 16, for a more detailed checklist please see The SSAE 16 Checklist

You may have heard SSAE-18 is on the horizon for reports issued as of May 1, 2017. There are some important updates discussed in here: SSAE-18 An Update to SSAE-16 .

As the standard is formalized and the date approaches we will continue to provide more information to help you prepare for these changes.


Options Strategies And Your IRA Account #can #i #trade #options #in #my #ira


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Options Strategies And Your IRA Account

I receive many responses from readers of my option strategy articles. Recently one question keeps popping up, though in various forms. Do these strategies work with IRA accounts?

The simple answer is YES, to an extent. In some cases options actually work better in an IRA than in a taxable account.

One of the most common option strategies is the selling of a naked put instead of actually buying the underlying stock. The taxation of gain on any security (including options) that is sold short is at ordinary income rates. In an IRA this doesn’t matter as there is no current tax and all distributions are taxed at ordinary rates regardless of their initial source. So, from an IRA taxation standpoint there is no difference in selling puts and buying stock (though there may well be a difference in investment result).

In a taxable account the same doesn’t necessarily hold true. If you hold a stock long enough the dividends and any gain can be taxed at the lower long-term capital gains tax rate. Shorting a put is always taxed at ordinary rates and can be significantly higher. This is a factor that can reduce your net after-tax yield and should be factored into your planning.

Putting taxation aside, there are several limitations in IRA accounts you need to deal with. First is the margin account. Your IRA must establish a margin account if you are going to employ any strategy other than simply buying calls or puts. This is generally not a big deal but does require proper trading authority from the compliance department of your broker.

The simplest level of authority allows the selling of covered calls. This is really more of a stock strategy than an option strategy but I include it.

Next is the selling of “cash secured puts”. This is relatively easy to understand. Let’s say you want to buy 1000 shares of a stock trading at $15. This would require $15,000 in cash. Instead of an outright purchase you could chose to sell 10 puts (each put controls 100 shares). Your exposure is no greater than having bought 1000 shares for $15,000 and you need only “reserve,” or set-aside $15,000 of cash to enter this transaction. In essence, there is no leverage.

This is different than margin in a taxable account that can require as little as 25% in margin. Taxable margin accounts increase the leverage as much as four-fold. This is either good or bad, depending on which side you land on.

An additional limitation in an IRA account is the prohibition against short selling. Selling “naked calls” is similar to shorting the underlying and prohibited in IRAs. In a taxable account you can sell naked calls and just need to deal with margin requirements.

This means that those strategies that include selling naked calls can’t be used.

Strategies so limited include straddles, strangles, synthetic shorts and other derivations. Let’s say you wanted to sell a “straddle” on a particular underlying stock. This would require you to sell a put and a call at the same strike (usually at the same expiry, but not required). In a taxable margin account this would be permitted. The trade is “paired” and the margin requirement is computed on just one of the legs: the larger of the two.

This can be a very useful tool when a trade entered by selling a put turns against you. Selling a call can offset or reduce further losses. You use little or no margin. This can’t be done at all in an IRA margin account as a naked call can’t be paired with a put (it can be paired only with a long call).

Some readers might just “zone out” when talk turns to straddles and strangles. They often understand what they are but might not really understand how they can be used. Straddles and strangles can provide one of the easiest and most productive hedges available. Readers may want to review my article on using a strangle to hedge XLE to see these strategies in action. Unfortunately this technique isn’t available in IRA accounts.

This leads us to the available option strategies—spreads. Included in these are calendar spreads, diagonal spreads, vertical spreads and certain butterfly and condors that fully pair options. This requires a higher trading authority.

Let’s examine a vertical bull put spread to see the advantage of this higher trading authority. This strategy consists of selling a put at one strike and buying a protective put at a lower strike (both with same expiration). An example would be a stock trading at $25. You could sell 10 out-of-the-money puts with a strike of $24 and buy 10 protective OTM puts with a strike of $20.

If you did not have the higher trading authority it would break down as two separate transactions. 1) a cash covered put requiring $24,000 in reserve ($24 times 1000 shares) plus 2) a cash buy of the lower strike put. With the higher authority the margin requirement is simply the difference in strikes ($4) times the number of shares (1000) or $4,000.

Many of my portfolio strategies consist, in part, of buying far dated options and selling near dated or weekly options (calendar spreads). These spreads are all permitted in an IRA account and one need only take into account available margin balances. The IRA margin calculation for a calendar spread is the same as the vertical put. It is just the difference in strikes times the shares. So, if you bought 10 September OTM calls at $24 and sold 10 OTM December calls at $19 your margin requirement is $5000 ($5 strike differential times 1000 shares).

If you sold a call at a higher price than the one you bought, there is no margin requirement, just cash. It is viewed very much the same as a covered call.

Additionally, if you sell a put at a lower strike than the one you bought there is no margin, just cash.

Whenever spreads are used in an IRA account a trading complexity can exist.

Let’s say your IRA had $100,000 in total value broken down to $60,000 in stocks and $40,000 in cash. Let’s further say you wanted to enter into a bull put spread for 10 options on SPY (currently trading at $125). You sell ten OTM puts at a strike of $123 and buy ten protective OTM puts with a strike of $120. Your margin requirement is only $30,000 ($3 strike differential times 1000 shares) and well within your cash balance.

A snake lays waiting for you in the brush. Let’s say SPY drops and your ten puts are assigned. This means 1000 shares are bought at $123 for a total cost of $123,000 and you only have $40,000 in cash.

This isn’t too big a deal in traditional margin accounts as you can use margin to sell the shares. It doesn’t work that way with IRA margin and this presents a problem that may require you to liquidate other securities and suspend your trading privileges. You need to discuss how your broker will handle this to be sure you aren’t further restricted.

This requires constant monitoring of the extrinsic value of the option to determine its likelihood of assignment. When the extrinsic approaches just a few cents the assignment likelihood increases. If the likelihood is great, you need to pre-mpt the assignment by rolling the option beforehand. If you just use cash secured puts you never have to worry about assignment as there is always enough money to cover the assignment.

A similar problem can occur if you sell a call as part of a paired strategy and the call is assigned. You end up being short the underlying. Since IRAs can’t be short you need to cover the short immediately and need enough cash in your account to do so. If you don’t have enough cash you may encounter a trading violation and that restricts your future trading.

When various spreads allow you to trade options with a “sticker price” in excess of your account value (leverage) you need to monitor them carefully to make sure they aren’t assigned.

In conclusion, if you can secure the necessary trading authority many of the option strategies will be available to you. Margin requirements will restrict some of the leverage available when compared with taxable accounts. Assignment can also become a greater problem than a taxable account and requires monitoring. These are not major obstacles, but ones that need to be kept in mind.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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