PKM Alumni & Friends Tailgating Event

AUDIT TAX SYSTEMS ADVISORY
Always Accretive. . . …
Arvil Stanford
Audit Partner

Always Accretive…
Accounting Playbook
Expectation -
General Areas of Discussion -
Q&A
Highlight Real
Focus on awareness
Private Company Council (PCC)
Selected Accounting Standard Updates (ASU)
FASB Simplification Initiative
U.S. & International Convergence

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Alumni & Friends Tailgate - A&A Playbook
Selected Accounting Standard Updates for 2014
ASU 2014-08
ASU 2014-09
ASU 2014-10
ASU 2014-15

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ASU 2014-08
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity
April 2014

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ASU 2014-08 Reporting Discontinued Operations & Disclosures of Disposals of Components of an Entity
Why Is the FASB Issuing This Accounting Standards Update?
Feedback to Board –
 Too many disposals recurring in nature qualify for discontinued operations presentation.
That results in financial statements that are less decision useful for users.
Other stakeholders noted –
 Some of the guidance on reporting discontinued operations results in higher costs for preparers
It can be complex and difficult to apply.
The amendments in this Update address those issues
by changing the criteria for reporting discontinued operations
Enhancing convergence with IASB reporting requirements.

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What are the main provisions?
The amendments in this Update change the requirements for reporting discontinued operations in Subtopic 205-20.
A disposal is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when any of the following occurs:
The component of an entity meets the criteria to be classified as held for sale.
The component of an entity is disposed of by sale.
The component of an entity is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spinoff)

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Requires an entity to present, for each comparative period, the assets and liabilities of a disposal group that includes a discontinued operation separately in the asset and liability sections, respectively, of the statement of financial position.
The amendments require additional disclosures about discontinued operations, including:
Major classes of line items constituting pretax profit or loss
Total operating and investing cash flows or depreciation, amortization, capital expenditures, and significant operating and investing noncash items
Reconciliation of major classes of assets and liabilities of the discontinued operation classified as held for sale
Reconciliation of major classes of line items constituting pretax profit or loss as disclosed in the notes to the financial statements.

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Requires all other entities to provide disclosures about a disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements, including:
The pretax profit or loss attributable to the component of an entity for the period in which it is disposed of or is classified as held for sale
If the component of an entity includes a noncontrolling interest, the pretax profit or loss attributable to the parent for the period in which it is disposed of or is classified as held for sale.

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Expands the disclosures about an entity’s significant continuing involvement with a discontinued operation, including:
The amount of any cash inflows (outflows) from (to) the discontinued operation following its disposal
Information about a discontinued operation in which an entity retains an equity method investment after disposal transaction.

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Effective Dates:
Public entities – apply amendments prospectively for events occurring within annual periods beginning on or after December 15, 2014, and interim periods within those years
All other entities – apply amendments prospectively for events occurring within annual periods beginning on or after December 15, 2014, and interim periods within annual periods beginning on or after December 15, 2015

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ASU 2014-09
Revenue from Contracts with Customers
May 2014

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ASU 2014-09 Revenue From Contracts with Customers
Why is the FASB Issuing This Accounting Standards Update?
Revenue is an important number to users of financial statements.
Previous revenue recognition requirements
in U.S. GAAP differ from those in IFRS,
and both sets of requirements were in need of improvement.
Previous revenue recognition guidance (U.S.) comprised
broad revenue recognition concepts together with numerous revenue requirements
for particular industries or transactions,
which sometimes resulted in different accounting for economically similar transactions.
In contrast, IFRS provided limited guidance
IAS 18, Revenue, and IAS 11, Construction Contracts, could be difficult to apply to complex transactions.
Additionally, IAS 18 provides limited guidance on important revenue topics such as accounting for multiple-element arrangements.

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The FASB and the IASB initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS that would:
Remove inconsistencies and weaknesses in revenue requirements.
Provide a more robust framework for addressing revenue issues.
Improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets.
Provide more useful information to users of financial statements through improved disclosure requirements.
Simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer.

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To meet those objectives,
the FASB is amending the FASB Accounting Standards Codification® and creating a new Topic 606, Revenue from Contracts with Customers,
and the IASB is issuing IFRS 15, Revenue from Contracts with Customers.
 The issuance of these documents completes the joint effort by the FASB and the IASB to meet those objectives and improve financial reporting by creating common revenue recognition guidance for U.S. GAAP and IFRS.

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What are the main provisions:
The core principle of the guidance is an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

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To achieve that core principle, an entity should apply the following steps:
Identify the contract with a customer
Identify the performance obligations (promises) in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations in the contract
Recognize revenue when (or as) the reporting organization satisfies performance obligations

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How will the New Standard Change Current U.S. GAAP
Today….
Under the new guidance….
There are numerous requirements for revenue recognition.
Consistent principles for revenue recognitions, regardless of industry and/ or geography.
Other than disclosures in accounting policies and segment reporting, most companies provide limited information about revenue contracts.
The new guidance includes a cohesive set of disclosure requirements that will provide users with useful information about contracts and customers.
Many goods and services promised in a contract with a customer are deemed not to be distinct revenue-generating transactions when in fact those promises might represent separate obligations.
Companies will identify each of the goods and services promised to a customer, determine whether those goods and services represent a performance obligation, and recognize revenue when (or as) each performance obligation is satisfied.

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How will the New Standard Change Current U.S. GAAP
Today….
Under the new guidance….
In multiple element arrangements the amount of consideration allocated to a delivered element is limited to the amount that is not contingent on delivering future goods and services.
Companies will allocate the transaction price to each of the performance obligations in the contract on the basis of the relative standalone selling price of the underlying goods or services, except when a discount or variable amount of consideration relates entirely to one or more of the performance obligations in the contract.
Accounting for variable consideration differs greatly across industries.
A single model to consider for variable consideration, which includes rebates, discounts, bonuses, or a right of return. Variable consideration will be included in the transaction price to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

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Effective Dates:
Public entities – annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Early application is not permitted.
All other entities – annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early application is permitted, but not earlier than the effective date for public companies.

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ASU 2014-10
Development Stage Entities: Elimination of Certain Financial Reporting Requirements
June 2014

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AUP 2014-10 Development Stage Entities – Elimination of Certain Financial Reporting Requirements
Feedback from users told the Board;
The development stage entity distinction
The inception-to-date information
And certain other disclosures currently required under GAAP in the financial statements of development stage entities
Provide information that has limited relevance and is generally not decision useful.
As a result, the amendments in this Update remove
All incremental financial reporting requirements from U.S. GAAP for development stage entities,
Thereby improving financial reporting by eliminating the cost and complexity associated with providing that information.

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ASU 2014-10 Development Stage Entities – Elimination of Certain Financial Reporting Requirements
Remove the definition of a development stage entity from the Codification.
In addition, the amendments eliminate the requirements for development stage entities to:
Present inception-to-date information in the statements of income, cash flows, and shareholder equity,
Label the financial statements as those of a development stage entity,
Disclose a description of the development stage activities in which the entity is engaged, and
Disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

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ASU 2014-10 Development Stage Entities – Elimination of Certain Financial Reporting Requirements
Effective Dates:
Retrospective application
Public entities – effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.
For other entities – effective for annual reporting periods beginning after December 15, 2014, and interim reporting periods beginning after December 15, 2015.

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ASU 2014-15
Presentation of Financial Statements – Going Concern
August 2014

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Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern
Under GAAP
Continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements
Unless and until the entity’s liquidation becomes imminent.
Even if an entity’s liquidation is not imminent
There may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.
In those situations
 FS’s should continue to be prepared under the going concern basis of accounting,
But the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events.

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There is no guidance in GAAP about management’s responsibility
To evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern
Or to provide related footnote disclosures.
Feedback to the Board
Indicating that because of the lack of guidance in GAAP
And the differing views about when there is substantial doubt about an entity’s ability to continue as a going concern,
There is diversity in whether, when, and how an entity discloses the relevant conditions and events in its footnotes.
The amendments provide guidance about management’s responsibility to
Evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern
And to provide related footnote disclosures.

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An entity’s management should evaluate whether there are
Conditions or events,
Considered in the aggregate,
That raise substantial doubt about the entity’s ability to continue as a going concern
Within one year after the date of issuance.
Substantial doubt about an entity’s ability to continue as a going concern exists when
Relevant conditions and events,
Considered in the aggregate,
Indicate that it is probable that the entity will be unable to meet its obligations as they become due
Within one year after the date that the financial statements are issued.

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When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern,
Management should consider whether its plans that are intended to mitigate those relevant conditions or events
Will alleviate the substantial doubt.
The mitigating effect of management’s plans should be considered only to the extent that
It is probable that the plans will be effectively implemented and, if so,
It is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

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If substantial doubt exist,
But the substantial doubt is alleviated as a result of consideration of management’s plans,
The entity should disclose information that enables users of the financial statements to understand all of the following:
Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans)
Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations
Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

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If substantial doubt exist,
 and not alleviated after consideration of management’s plans,
an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.
Additionally, the entity should disclose the following:
Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern
Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations
Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

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Effective Date:
Effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.
Early application is permitted.

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Private Company Council (PCC)
ASU 2013-12
ASU 2014-02
ASU 2014-03
ASU 2014-07

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Private Company Council
The Private Company Council (PCC) has two principal responsibilities:
The PCC and the FASB,
Have mutually agreed on a set of criteria to decide whether and when alternatives within U.S. GAAP
Are warranted for private companies.
Based on those criteria,
 PCC will review and propose alternatives within U.S. GAAP
 To address the needs of users of private company FS’s.
The PCC also serves as
The primary advisory body to the FASB on the appropriate treatment for private companies,
For items under active consideration on the FASB’s technical agenda.

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ASU 2013-12
Definition of a Public Business Entity
December 2013

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ASU 2013–12 Public Business Entity
The primary purposes of this update are to:
Amend the Master Glossary of the FASB Accounting Standards Codification
To include one definition of public business entity for future use in U.S. GAAP
That definition will be used
By the Board,
The Private Company Council (PCC),
And the Emerging Issues Task Force (EITF)
In specifying the scope of future financial accounting and reporting guidance.
Minimize diversity in practice as to what constitutes a non-public entity and a public entity.

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The amendment specifies that:
An entity that is required by the SEC to file or furnish financial statements with the SEC, or does file or furnish financial statements with the SEC, is considered a public business entity.
A consolidated subsidiary of a public company
Is not considered a public business entity for purposes of its standalone financial statements
Other than those included in an SEC filing by its parent
Or by other registrants or those that are issuers and are required to file or furnish financial statements with the SEC.

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The amendment specifies that:
A business entity that has securities that are not subject to contractual restrictions on transfer and that is by law, contract or regulation required to prepare U.S. GAAP financial statements (including footnotes) and make them publicly available on a periodic basis is considered a public business entity.
All Non-profits (NFPs) are excluded from definition of public business entity.
Employee benefit plans are excluded from the definition of public business entities.

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ASU 2013 – 12 Public Business Entity
Effective Date:
There was no actual effective date for the amendment in this Update.
However, the term public business entity was used in Accounting Standards Updates No. 2014-01, Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill, and No. 2014-02, Derivatives and Hedging (Topic 815): Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps—Simplified Hedge Accounting Approach, which are the first Updates that will use the term public business entity.

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Alumni & Friends Tailgate - Accounting Playbook
ASU 2014-02
Accounting for Goodwill
January 2014

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ASU 2014-02 Accounting for Goodwill for Private Companies
The Private Company Council (PCC) added this issue to its agenda
In connection with a separate but related issue addressing identifiable intangible assets acquired in a business combination.
Goodwill is a residual asset calculated after recognizing other (tangible and intangible) assets and liabilities acquired in a business combination,
Any modifications to the initial recognition and measurement guidance for identifiable intangible assets would correspondingly
Change the goodwill amount recognized in the business combination.
Accordingly,
The PCC decided that it should take such modifications into consideration in determining how private companies should account for goodwill after a business combination.

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The amendments allow
An accounting alternative for the subsequent measurement of goodwill
An entity within the scope of the amendments that elects the accounting alternative
Should amortize goodwill on a straight-line basis over 10 years, or less than 10 years if the entity demonstrates that another useful life is more appropriate.
The accounting alternative applies to all existing goodwill and subsequently acquired goodwill.
An entity that elects the accounting alternative is further required
 To make an accounting policy election to test goodwill for impairment
 At either the entity level or the reporting unit level.

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Goodwill should be tested for impairment when a triggering event occurs
Indicates that the fair value of an entity may be below its carrying amount.
When a triggering event occurs,
An entity has the option to first assess qualitative factors to determine whether the quantitative impairment test is necessary.
If that qualitative assessment indicates that it is more likely than not that goodwill is impaired,
The entity must perform the quantitative test to compare the entity’s fair value with its carrying amount, including goodwill.
If the qualitative assessment indicates that it is not more likely than not that goodwill is impaired, further testing is unnecessary.

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Effective Dates:
The accounting alternative should be applied prospectively.
 Effective for,
Goodwill existing as of the beginning of the period of adoption
And new goodwill recognized in annual periods beginning after December 15, 2014,
and interim periods within annual periods beginning after December 15, 2015.
Early application is permitted,
including application to any period for which the entity’s annual or interim financial statements have not yet been made available for issuance.

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Alumni & Friends Tailgate - Accounting Playbook
ASU 2014-03
Accounting for Certain Receive-Variable, Pay- Fixed Interest Rate Swaps – Simplified Hedge Accounting Approach
January 2014

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ASU 2014-03 Simplified Hedge Accounting for Private Companies
Feedback received,
 Private companies often find it difficult to obtain fixed-rate borrowing.
Therefore, some private companies enter into a receive-variable, pay-fixed interest rate swap to economically convert their variable-rate borrowing into a fixed-rate borrowing.
Under U.S. GAAP,
a swap is a derivative instrument.
GAAP requires that an entity recognize all interest rate swaps on its balance sheet as either assets or liabilities and measure them at fair value.
To mitigate income statement volatility of recording a swap’s change in fair value,
GAAP permits an entity to elect hedge accounting if certain requirements under that Topic are met.

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The objective of the amendments is to
Address the concerns of private company stakeholders
By providing an additional hedge accounting alternative
For certain types of swaps that are entered into by a private company
For the purpose of economically converting a variable-rate borrowing into a fixed-rate borrowing.
This hedge accounting alternative acts as
A practical expedient to qualify for cash flow hedge accounting
If certain conditions are met.

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The amendments in this Update allow
The use of the simplified hedge accounting approach
To account for swaps that are entered into for the purpose of
Economically converting a variable-rate borrowing into a fixed-rate borrowing.
Under this approach,
The income statement charge for interest expense
Will be similar to the amount that would result if the entity had directly entered into a fixed-rate borrowing
Instead of a variable-rate borrowing and a receive-variable, pay-fixed interest rate swap.
Documentation required to qualify as a hedge must be completed by the date the financials are available to be issued.

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Effective Dates:
For annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015, with early adoption permitted.

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ASU 2014-07
Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements
March 2014

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Alternative VIE Guidance for Common Control Leasing Arrangements
Feedback received from private company stakeholders
Indicated that the benefits of applying variable interest entities (VIE) guidance to a lessor entity under common control do not justify the related costs.
Because the Private Company Decision-Making Framework focuses on
User-relevance and cost-benefit considerations for private companies,
The PCC decided that the concerns expressed about the cost and complexity of applying VIE guidance
And the lack of relevance to users when consolidating lessor entities under common control
Indicated that a change to VIE guidance should be explored.

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The amendments permit a private company lessee to elect an alternative not to apply VIE guidance to a lessor entity if:
The lessee and lessor entities are under common control
The lessee has a lease arrangement with the lessor entity
Substantially all of the activities between the lessee and the lessor are related to leasing activities
If the lessee explicitly guarantees or provides collateral for any obligation of the lessor entity related to the asset leased by the private company, then the principal amount of the obligation at inception of such guarantee or collateral arrangement does not exceed the value of the asset leased by the private company from the lessor entity

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Election of alternative is an accounting policy decision that must be applied to all current and future lessor entities under common control
Under the alternative, lessee would not be required to provide the VIE disclosures about the lessor entity
Lessee company is required to disclose:
The amount and key terms of liabilities recognized by the lessor that expose the lessee to providing financial support
Qualitative description of circumstances not recognized in the financial statements of the lessor that expose the lessee to providing financial support

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Consolidation, effective date & transition:
If any of the conditions to use the alternative cease to be met,
An entity needs to consider if it must consolidate under VIE requirements.
Effective Date;
Periods beginning after 12/15/14; Early adoption permitted for any unissued statements
Transition
Adoption of a new accounting principle
Retrospective application to all periods presented
Deconsolidation may result in a cumulative effect adjustment to retained earnings

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FASB Launches Initiative to Simplify Accounting Standards

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FASB Simplification Initiative
What is the Simplification Initiative?
The FASB has launched a initiative to
Make narrow-scope simplifications and improvements to accounting standards
Through a series of short-term projects.
The projects included in the initiative are
Intended to improve or maintain the usefulness of the information reported to investors
While reducing costs and complexity in financial reporting.

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The FASB added the following projects to the agenda:
Simplifying the Measure of Inventory:
The proposed update issued for comment in July 2014
Seeks to address concerns about the complexity of measuring inventory
By requiring organizations to estimate only net realizable value.
Extraordinary Items:
The proposed update issued for comment in July of 2014
Seeks to simplify income statement presentation
By eliminating the notion of separately presenting extraordinary items.

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Presentation of debt issuance costs:
The project is expected to simplify the accounting by aligning the presentation of debt discount or premium and issuance costs.
Measurement date of defined benefit pension plan assets:
The project is expected to reduce cost
By aligning the measurement date of defined benefit pension plan assets
With the date that valuation information is provided by third-party service providers.

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Balance sheet classification of debt:
The project is expected to reduce cost and complexity
By replacing the existing fact-pattern specific guidance
With a principle to classify debt as current or noncurrent
Based on the contractual terms of a debt arrangement and an organization’s current compliance with debt covenants.

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Accounting for income taxes:
The project is expected to simplify accounting for income taxes by:
Eliminating the requirement for organizations that present a classified statement of financial position to classify deferred tax assets and liabilities as current and noncurrent, and instead require that they classify all deferred tax assets and liabilities as noncurrent.
Eliminating the prohibition on the recognition of income taxes for transfers of assets from one jurisdiction to another.
Stock-based Compensation:
The project is intended to make some relatively narrow simplifications and improvements to accounting for stock compensation to employees.

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Other projects in which the FASB is looking to simplify accounting standards and reduce cost and complexity in financial reporting include:
Clarifying Certain Existing Principles on Statement of Cash Flows
Accounting for Financial Instruments – Hedging
Liabilities & Equity – Short-term Improvements

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Taking credit – Recently completed FASB projects that, while not part of the Simplification Initiative, did simplify some elements of GAAP:
Discontinued Operations
Development Stage Entities

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U.S. & International Convergence

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International Convergence
During the past ten years, the FASB and IASB collaborated through joint projects to develop common standards.
The FASB has issued those standards as U.S. GAAP and
The IASB has issued them as IFRS.
Over time, the two sets of standards are expected to both
Improve in quality
And become increasingly similar, if not identical.
The four remaining joint projects are:
revenue recognition;
financial instruments;
leases;
and insurance.

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Revenue Recognition
Revenue is an important indicator for users of financial reports
In assessing a company’s performance and prospects
However, revenue recognition guidance differs in GAAP and IFRS
And many believe both are in need of improvement
To that end, the Boards embarked on a joint project aimed at establishing the principles to report useful information to users of financial statements about the nature, timing, and uncertainty of revenue from contracts with customers
On May 28, 2014, the FASB and the IASB issued converged guidance on recognizing revenue in contracts with customers
The new guidance is a major achievement in the Boards’ joint efforts to improve this important area of financial reporting

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Leases
Leases are an important source of financing for many companies that lease assets.
However, many lease transactions currently are recognized off-balance sheet.
The objective of the leases project is to increase transparency and comparability among organizations that lease assets by recognizing assets and liabilities that arise from lease transactions on a lessee’s balance sheet.
The Boards issued for public comment a revised Exposure Draft on Leases in May 2013.

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Financial Instruments
The objective of the joint project on accounting for financial instruments
provide financial statement users with a more timely and representative depiction of a company, institution, or not-for- profit organization’s involvement in financial instruments,
while reducing the complexity in accounting for those instruments.
The Boards are conducting this project in three phases, and both have issued proposed standards on the first two phases:
 accounting for credit losses
and recognition and measurement of financial instruments.
Both Boards have proposed expected credit loss models to replace the current incurred loss model, but their proposed models differ on when those losses should be recognized. Following the conclusion of the comment period on credit losses, the Boards will determine if there is common ground in developing a converged standard. The third phase of the accounting for financial instruments project looks at hedging.

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Insurance
Existing U.S. GAAP comprehensively addresses insurance accounting.
However, IFRS currently lacks specific accounting requirements for insurance contracts.
The Boards undertook the Insurance Contracts project to develop
common, high-quality guidance that will address
recognition, measurement, presentation, and disclosure requirements
for insurance contracts (including reinsurance),
even if the contracts are not issued by an insurance company.
In general, the Boards are developing a model that would reflect current estimates of the amount necessary to fulfill an insurance obligation. However, they have not reached consistent conclusions about some elements of the model.

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Q&A

University of Georgia Research: Why It Matters
David Lee
UGA Vice President for Research
December 3, 2014

Porter, Keadle, Moore LLC – December 3, 2014
2
University Research – Why Do It?
Promotes understanding of complex issues for decision makers and citizens
Addresses grand challenges as only universities can
Keeps the land-grant mission fresh
Provides unique educational opportunities for students
Fuels America’s discovery pipeline
Promotes technology-based economic development

3
The Innovation Pipeline
University basic research
University translational research - proof of concept, prototyping
Industry licensing and development
Industry testing/scale-up
Industry implementation
$?
?

4
Some University Discoveries
Insulin
Saccharin
LCD
Heart Pacemaker
Polio Vaccine
Seat belts
Penicillin
Gatorade
Streptomycin
Plexiglass

5
What’s the Economic Impact?
•$388 billion impact on the U.S. GDP from university and non-profit patent licensing, 1996-2010
•More than 4000 new university-based startups since 1980, with 818 launched in 2013
•3 million jobs created because of university and nonprofit patent licensing, 1996-2010
•719 new university-derived market products in 2013 alone
•153 new FDA-approved drugs, vaccines, or new uses for existing drugs, past 30 years

6
Technology-based Development

7
UGA’s Research Statistics
•$143M research expenditures (FY14)
•84% funded by federal grants
•Major federal sources:
•National Institutes of Health, 42%
•National Science Foundation, 26%
•US Department of Agriculture, 14%
•Current national ranking: 83rd
•Not where we want to be, but UGA is on the move!

8
2004: Regenerative Bioscience Center
2004: Institute of Bioinformatics
2005: College of Public Health
2006: Coverdell Center for Biomedical & Health Sciences
2007: Faculty of Infectious Diseases
2009: Integrated Life Science Program
2010: Four-Year Medical Education Program
2011: Health Sciences Campus
2012: Animal Health Research Center
2012: College of Engineering
2012: Center for Molecular Medicine
Dramatic Changes Last 10 Years
Coverdell Building

9
UGA’s Research Profile
Agricultural Sciences
Environmental Sciences
Behavioral Sciences
Biomedical and Health Sciences
Public Health
Engineering
Improved crops,
conserved water,
safer food
New vaccines, drugs
Better diagnostics – humans and animals
Understanding changes, balancing with development
Improved production of biofuels and commodities
Prevention of addictive behaviors, enhanced family support
Workplace health, obesity prevention, health policies

10
•UGA scientists receive $30+ million over 10 years to help lead a federal bioenergy initiative to make biofuels cost-effective
•Professor Jessie Kissinger receives $13 million over 15 years to develop a comprehensive gene database for human infectious pathogens, as a step towards new vaccines and drugs
•An all-Georgia consortium (UGA, Emory, GA Tech, CDC, Yerkes Primate Center) receives $20 million NIH contract to better understand malaria infections – how to crack this disease!
•Professor Ralph Tripp and other UGA scientists participate in NIH’s $33 million Regional Center of Excellence for Influenza Research & Surveillance based at Emory
Some Recent Major Developments

11
•Professor Dan Colley leads $34 million effort by the Gates Foundation to reduce the impact of schistosomiasis worldwide
•Professor Geert-Jan Boons receives $7.4 million NIH grant to better understand the critical role of sugar chains in life, from plants to humans
•Professor Gene Brody receives two NIH awards totaling $13 million to understand how genetic predisposition combines with environment to forecast poor behavioral outcomes among youth and to improve intervention programs
•UGA scientists receive $6 million from the NSF to improve corn varieties for drought and disease resistance
Other Major Developments

12
•We need more successes like these to “move the needle”, and we need to support the faculty responsible for these successes
•Note how prominent UGA’s biomedical research has become, though we see successes in other areas as well
•Don’t let anyone tell you that Georgia’s research universities aren’t collaborating!
Thoughts on Major Developments

13
Multifaceted –
Aggressively moving UGA discoveries into the marketplace via licensing to industry
Supporting new business startups
Collaborating with industry
Doing our part for advanced workforce development
Ensuring access to UGA assets for industry and economic development
Research to Economic Development

14
Moving inventions from the lab/field to the marketplace is a high priority –
•525+ products on the market, with 28 added in 2014
•Over 1200 active IP licenses, 25% with GA companies
•500+ U.S. and foreign patents, with licenses worldwide
•“Top 5” university for licenses and options (7th consecutive year)
•132 companies started based on UGA research, with 904 jobs created, a $100 million economic impact, 300+ student interns
Licensing of UGA Discoveries

A Prominent UGA Invention
15
… $80 million in royalties to the inventor, her department and college, and the UGA Research Foundation

Other Successful UGA Inventions
16
•GA #1 state for blueberry production
•UGA cultivars >50% of Georgia market
•$255M crop value for Georgia in 2011
•UGA cultivars ~95% of Georgia market
•Georgia #1 in peanut production U.S.
•$892M crop value for Georgia in 2012

A Very Successful UGA Startup
17
SYNAGEVA -
•Founded in 1998 on UGA technology
•Using chicken eggs to produce therapeutics
•Dedicated to rare human diseases
•Traded on NASDAQ (GEVA)
•Current valuation >$2.5 billion
•Over 170 employees and growing
•HQ in Boston, new facility in Athens area

Last Thoughts
18
•Discoveries at America’s universities fuel the innovation pipeline and ignite the imaginations of our future advanced workforce
•Top-flight research universities are key to Georgia’s long-term success in the global innovation economy
•Partnerships – among our universities, and with industry and government are key to success
•So is continuing to strengthen and broaden our research base, including at UGA
•Research universities like UGA must ensure robust transfer of new technology to the marketplace and actively engage in economic development

Economic Development Office
19
Sean McMillan

20
These Are Exciting Times At UGA!
Go Research Dogs!

AUDIT TAX SYSTEMS ADVISORY
Always Accretive. . . …
Terry Ammons Tim Davis
Systems Partner Systems Senior

Always Accretive…
Recent (2014) Cyber events
Ebay – 233 million users personal information
Montana Health Department – in excess of 1 million records of current and former residents including health information
PF Chang’s – unknown number of customer payment records
Evernote/Feedly – DDoS attacks
Domino’s - European customer records held for ransom

Always Accretive…
Impact of Cybersecurity Events
Financial Loss
Reputation
Legal Liability

Always Accretive…
Bank Regulators Pushing Back
OCC Thomas J. Curry – at 10th Annual Community Bankers Symposium
-“Financial institutions are often on the hook to compensate customers for fraudulent charges, and replace credit and debit cards and monitor account activity for fraud at significant cost.”
-Recent incidents highlight the need for improved cyber security “but they also demonstrate why we to level the playing field between FIs and merchants. The same expectations for security of customer information and customer notification when breaches occur should apply to all institutions. And when breaches occur in merchant systems, it only seems fair to me that they should be responsible for some of the expenses that result.”

Always Accretive…
Impact – Federal Government
Executive Order – Improving Critical Infrastructure Cybersecurity
-One of the most problematic elements of cybersecurity is the quickly and constantly evolving nature of security risks.
-Current controls in place are inadequate to protect against cybersecurity attacks on financial infrastructure.
-FI regulators and security officials have expanded their focus from fraud detection to cybersecurity prevention.

Always Accretive…
Impact – Federal Government
Increased Government Involvement – Executive order – Safeguarding Consumer’ Financial Security*
-Requiring chip and PIN payment technology for all government related CC payments
-Pushing retailers to adopt more secure technology
-Resources for assisting victims of identity theft
-Easier access to impacts of credit scores
-Push for national Data Breach and Cybersecurity legislation
* - Fact sheet: Safeguarding Consumers Financial Security 10/17/14

Always Accretive…
Impact – Industry Groups/New Technology
FFIEC - Cybersecurity and Critical Infrastructure Working Group
PCI – Increased focus on more vulnerable transactions – Card Not Present and ecommerce
NIST – recommendations for Federal Information in Non federal Information Systems
Retailers – adoption of POS systems that encrypt transactions from throughout the its lifecycle
Apple Pay
Peer to Peer payment systems – Pay Pal, Google Wallet

Always Accretive…
Elements of a Cybersecurity Risk Management Program
Threat intelligence and collaboration – Internal & External Resources
Incident response and resilience
Third -party service provider and vendor risk management

Always Accretive…
Threat Intelligence – The Threat Environment
Businesses with fewer than 500 employees*
-77% do not have a written Internet security policy
-48% do not have a cybersecurity plan
-40% do not have an incident response plan
* National Small Business Study by the National Cybersecurity Alliance and Symantec

Always Accretive…
Defining Cyber Threat Intelligence
Acquisition and analysis of information to identify, track and predict cyber capabilities, intentions and activities that offer courses of actions to enhance decision making.
Gathering, monitoring, analyzing and sharing information from multiple sources on cyber threats and vulnerabilities.

Always Accretive…
Threat Intelligence
Source
Motivation
External Hackers
Challenge Ego Game Playing
System hacking Social engineering Dumpster diving
Internal Hackers
Deadline Financial problems Disenchantment
Backdoors, Fraud, Poor documentation
Terrorist
Revenge Political
System attacks Social engineering Letter bombs Viruses Denial of service
Poorly trained
employees
Unintentional errors Programming errors Data entry errors
Corruption of data Malicious code introduction System bugs Unauthorized access
Actions

Always Accretive…
Threat Management and Incident Response
Understand your Threat Position
-Where is my data?
-What types of systems do I have?
-What controls are in place?
-Will this threat affect me?

Always Accretive…
Overview of
Heartbleed vulnerability

Always Accretive…
Whether it originates internally or externally, a cybersecurity incident is a virtual certainty.
Be Prepared:
-Update your incident response program (IRP) to include cybersecurity events.
-Ensure your IRP contains the following elements:
The incident response team members
A method for classifying the severity of the incident
A response based on severity, to include internal escalation, and external notification.
Periodic testing and Board reporting

Always Accretive…
Business Internet Banking/
Cash
Management
High
High
High
Heartbleed
?
?
?
?
User ID’s and passwords Network hardening IPS/IDS
?

Always Accretive…
Business Internet Banking/
Cash
Management
High
High
Acceptable
Heartbleed
Multi factor
authentication
?
?

Always Accretive…
Threat Intelligence – Impact Triangle
My
Institution
My
Vendors
My
Customers

Always Accretive…
Third-party Service Provider and Vendor Risk Management
Managing cybersecurity relies on managing the risk originating at third-parties
-Focus on vendors with access to your network, customer data and/or other sensitive information
Pay particular attention to the following:
-Pre-contract planning and negotiation
-Review of current contracts with critical vendors
-Ongoing monitoring of vendor practices
-Prompt notification of material incidents
-Termination/disengagement with noncompliant vendors

Always Accretive…
Third Party Risk example
– Information Request

Always Accretive…
Third Party Risk example
- Response

Always Accretive…
Threat Management “Take Aways”
Implement threat intelligence monitoring--Identify and monitor cybersecurity threats to your organization, your vendors and your customers.
Threat Intelligence Internal & External Monitoring Tools:
-Financial Services Information Sharing and Analysis Centers (ISACs) - https://www.fsisac.com/
-U.S. Secret Service Electronic Crimes Task Force (ECTF) - www.secretservice.gov/ectf.shtml
-FBI InfraGard - www.infragard.org
-NCUA Cybersecurity Resources - www.ncua.gov/Resources/Pages/cybersecurity-resources.aspx
-FDIC Cyber Challenge: A Community Bank Cyber Exercise – www.fdic.gov/regulations/resources/director/technical/cyber/cyber.html

Always Accretive…
Do you know your Enterprise Security Posture?
Monitor
Validate
Design
MONITOR
IT audit and other point in time evaluations
VALIDATE
Network Vulnerability and penetration
DESIGN SANS 20 Critical IT Controls

Always Accretive…
Questions?
Terry Ammons
Systems Partner
(404) 420-5679
tammons@pkm.com
Timothy Davis
Systems Senior
(404) 420-5793
tdavis@pkm.com

PKM Alumni & Friends Tailgating Event

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