This presentation will provide construction and construction related entities an update on the status of various financial and tax topics as well as review of economic and industry trends. The webinar will be hosted by senior leaders of the McKonly and Asbury construction practice. A tax update related to year end tax extenders and current legislation with federal and state tax topics will be discussed. There will also be a financial statement planning discussion around current and proposed changes in GAAP and financial reporting that construction entities need to plan for and be aware of. Finally, there will be a review of current economic indicators and future trends to help assist construction entities with business planning and forecasting.

4. YEAR END CONSTRUCTION
INDUSTRY UPDATE
David Blain, Partner
Michael Hoffner, Partner
Michael Eby, Senior Tax Manager

5. INTRODUCTIONS
David Blain
- McKonly & Asbury
- Partner
- CPA & CVA
Michael Hoffner
- McKonly & Asbury
- Partner
- CPA
- Business Unit Director
Michael Eby
- McKonly & Asbury
- Senior Tax Manager
- CPA

6. ACCOUNTING UPDATE
Michael Hoffner, CPA
Partner

7. ACCOUNTING STANDARDS UPDATE
Note: Please see FASB.org for full listing of updates. This presentation is designed to highlight status
of major projects and recent updates deemed relevant to the Construction Industry, and excludes
ASU’s that may be relevant to your organization.
• Revenue Recognition
• Leases
• Financial Statement Disclosures
• Compilations and Reviews

8. REVENUE RECOGNITION
May 2014: Final standard issued in ASU 2014-09 Revenue from Contracts with Customers
• Addressed many of the significant concerns of the Construction Industry that arose out of the initial exposure drafts
• Still leaves some uncertainty in the application of new standard
• Generally expected to continue pattern of revenue recognition, with some differences, but further interpretation
necessary
August 2015: ASU 2015-14 Deferral of Effective Date
• Annual reporting periods beginning after December 15, 2018
• Public business entities, certain nonprofits, and certain EB plans – 1 year earlier
Working groups still addressing areas of concern
• See FASB.org project page for summary of open documents

9. LEASES
Current Status (as of 10/7/15)
• Lessee Accounting Model – Dual Approach
• Most existing capital / finance leases would be “Type A” leases
 Amortization of the Right-Of-Use asset separately from interest on the lease liability
• Most existing operating leases would be “Type B” leases
 Recognize a single total lease expense
• Note: IASB elected a single-approach – all leases will be Type A
• Small-Ticket Leases
• Assessment at portfolio level permitted
• Short-Term Leases
• Recognition and measurement exemption for lessee’s short-term leases ( < 12 months)
• Expected final standard: Q4 2015

10. FINANCIAL STATEMENT / DISCLOSURES
Simplification Project
• Balance Sheet Classification of Debt
• Subjective Acceleration Clauses, Waivers of Covenant Violations
Consolidation of VIE (2014)
• Common Control Leasing Arrangements (ASU 2014-07)
Various projects underway regarding disclosures
• Defined Benefit Plans (Exposure Draft expected Q4)
• Fair Value Measurement (in initial deliberation)
• Income Taxes (in initial deliberation)
• Inventory (in initial deliberation)

11. COMPILATIONS AND REVIEWS
Statement on Standards for Accounting and Review Services (SSARS) No. 21
• Effective for ALL reviews and compilations (and preparation engagements) for periods ending on or after
December 15, 2015
• Introduces concept of “Preparation Engagement”
• No “report” – each page of financial statement includes language such as “No assurance is provided on these financial
statements”.
• Geared towards an accounting preparing financials prior to an audit or review by another accountant, or to be presented with
tax returns, etc.
• Compilation Engagements – Accountants Report reduced to one basic paragraph
• Review Engagement Changes
• Permits review engagements on more than just historical financial statements
• Some changes with regard to wording of report

12. TAX UPDATE
Michael Eby, CPA
Senior Tax Manager

13. FEDERAL TAX EXTENDERS
Accelerated depreciation
• “Bonus” Section 168(k)
• 50% first-year depreciation
• Brand new assets
• No income or asset cost
limitations
• Currently not available for
2015
• Extended for 2015?
• Section 179
• Can fully expense an asset in first year
• Does not have to be brand new asset
• Both active income and asset cost limitations
• Currently only allowed for $25,000 worth of
assets in 2015
• Allow for $500k deduction ($2 million phase-out)?

14. CREDITS AND DEDUCTIONS
R&D Tax Credit
• Able to be utilized against AMT?
• Allow start-ups to use against payroll taxes?
• Become permanent?
Work Opportunity Tax Credit (WOTC)
Section 179D
• Contractors and Architects: Expand to work performed for nonprofit work in
addition to government work?

15. NEW TAX RETURN DUE DATES
H.R. 3038 Highway Funding Bill – July 31, 2015
• Partnerships will now be due the 15th day of the 3rd month (March 15 for calendar
year)- same as current S Corps
• C Corporations will now be due the 15th day of the 4th month (April 15 for calendar
year)
• Applies to taxable years beginning after December 31, 2015 (March & April 2017
filings for calendar year)

16. CONSTRUCTION
ECONOMIC TRENDS
David Blain, CPA & CVA
Partner

17. KEY ECONOMIC INDICATORS
• Confindex Quarterly Reading
• Architecture Billing Index (ABI)
• FMI Construction Outlook Report
• ENR Construction Industry Confidence Index
• Associated Builders and Contractors Construction Backlog
Indicator (CBI)

18. MACRO INDUSTRY ANALYSIS
• Each economic indicator has varying results
• Overall, the mood and climate for the construction industry appears
to be moving in a positive direction
• Most industries, construction types and regions of the country
continue to show solid growth
• Long-term outlook for the construction industry continues to show
slow and steady growth through 2015 and into 2016.

19. CONFIDEX QUARTERLY READING
• CONFINDEX is a leading economic indicator of the health of
commercial construction in the US.
• CONFINDEX is CFMA's proprietary confidence index survey of CFOs in
the commercial construction sector.
• Survey consist of 300 randomly selected CFMA General Members
with the title of CFO in commercial construction companies

20. CONFIDEX QUARTERLY READING
• The second quarter CFMA
CONFINDEX Survey stands for the
proposition that the construction
recovery is set to continue, but the
pace of recovery won’t be quite as
brisk as many had anticipated from a
first quarter perspective.
• The index is up 1.6% from a year ago
but down 4.4% from the prior
quarter

21. ARCHITECTURE BILLING INDEX (ABI)
• The Architecture Billing Index (ABI) is produced by The American Institute of
Architects (AIA)
• The ABI is an economic indicator that reflects the approximate nine to twelve
month lag time between architecture billings and construction spending
• The monthly ABI index scores are centered around 50, with scores above 50
indicating an aggregate increase in billings, and scores below 50 indicating a
decline in billings

22. ARCHITECTURE BILLING INDEX
• ABI has trended downward over past twelve
months
• August ABI score was 49.1, down from a mark
of 51.9 in May
• The new projects inquiry index continues to
remain above 60 and is up sharply from a low
of a reading of 56 from February 2015.
• Sector index breakdown
• Commercial / Industrial (49.7)
• Residential (49.5)
• Institutional (53.7)

23. FMI CONSTRUCTION OUTLOOK REPORT
• FMI is the largest provider of management consulting and
investment banking services to the engineering and
construction industry
• The report details Construction Put In Place (CPIP) in three
residential building, 11 nonresidential building and five non-
building structure categories.

24. FMI CONSTRUCTION OUTLOOK REPORT
• Construction activities are expected to
grow at 5 percent in 2015, levelling off
from the previous forecast of 8 percent
in Q1 2015 to a forecast of $1.012B.
• Outlook reports the highest total for
construction put in place since 2008
• Areas with strong growth forecasted
include residential, manufacturing,
commercial, amusement and
recreation, office, lodging and
transportation.
• Power is only sector with negative
growth forecasted.

25. ENR CONSTRUCTION INDUSTRY CONFIDENCE INDEX (CICI)
• The CICI measures executive sentiment about the current market and
reflects their views on where it will be in the next three to six months
and over a 12- to 18-month period.
• The index is based on responses to surveys sent out to more than
6,000 U.S. firms on ENR's lists of the leading contractors,
subcontractors and design firms.

26. ENR CONSTRUCTION INDUSTRY CONFIDENCE INDEX (CICI)
• The first-quarter 2015 CICI rose to a record 78 points
on a scale of 100, which represents a continued
growing market.
• Virtually all the market sectors measured by the CICI
continue to grow with the exception of Petroleum.
• Respondents believe the overall market will continue
to grow over the next 18 months. For example, 60%
say the current market is growing, up from 55% in the
last quarter, and 67% believe the market will be in
growth mode in three to six months, up from 61%.

27. ASSOCIATED BUILDERS AND CONTRACTORS
CONSTRUCTION BACKLOG INDICATOR (CBI)
• CBI is a forward-looking national economic indicator that reflects the amount
of work that will be performed by commercial and industrial contractors in
the months ahead
• Focused on the U.S. commercial and institutional, industrial, and
infrastructure construction industries.
• CBI is measured in months and reflects the amount of commercial and
industrial construction work under contract, but not yet completed

28. ASSOCIATED BUILDERS AND CONTRACTORS
CONSTRUCTION BACKLOG INDICATOR (CBI)

29. ASSOCIATED BUILDERS AND CONTRACTORS
CONSTRUCTION BACKLOG INDICATOR (CBI)

30. QUESTIONS?
David Blain
DBlain@macpas.com
Partner
CPA & CVA
Michael Hoffner
MHoffner@macpas.com
Partner
CPA
Business Unit Director
Michael Eby
MEby@macpas.com
Senior Tax Manager
CPA

33. QUESTIONS?
David Blain
DBlain@macpas.com
Partner
CPA & CVA
Michael Hoffner
MHoffner@macpas.com
Partner
Business Unit Director
CPA
Michael Eby
MEby@macpas.com
Senior Tax Manager
CPA