Robert A. Bonavito, CPA PC

RABCPA PC Blog

Understanding The $38 Trillion Bond Market

A bond is just like a mortgage there is a lender and the borrower. Bonds have a stated interest rate, i.e. 5%. The face value of the bond is usually issued in increments of $1,000. As the bonds trade the value of the bond will fluctuate but the interest rate will say the same. This means the effective rate of the interest on the bond will have to change.   For example, if everybody is buying the bond, the effective rate will probably go down from 5%, and conversely if no one is buying the bond effective rate of the bond will have to increase above 5%.

Posted October 25, 2017 by Robert A Bonavito in Educational Videos, Forensic Accounting

Forensic Fraud Income Reconstruction

In our firm we have many techniques to reconstruct income. Two of the most  popular and widely used are, bank deposit analysis and financial status analysis. Under the bank deposit analysis, we take a look at all your deposits and compare your gross income reported to the total deposits in the bank. This is a simple but straightforward method to get a good idea of any inconsistencies.   The second one financial status analysis, also called the Cash-T analysis. In the Cash -T Analysis we basically reconstruct your lifestyle. Once we know your lifestyle we can figure out how much money you will need to support that lifestyle. After looking at these two basic methodologies we can then proceed to more complex analysis.

Posted October 18, 2017 by Robert A Bonavito in Forensic Accounting

Framework for Teaching Financial Planning in High School

The importance of understanding finances cannot be understated, financial mistakes will be long-lasting. I think a good template for teaching financial planning in high school is the same one that we use for drivers’ education.   Most kids learn to drive initially by constantly watching their parents drive. At some point in high school they have to take a driver’s education class which requires them to pass a written exam at the end of that class. Once this exam is passed they spend 15 hours of driving with a professional driver. After that they receive what’s known as a temporary driving permit. With restrictions they continue to drive for one year and if they have a good driving record they then can take a driver’s test. If they pass the driver test they still have a two-year probationary period under which your driving is monitored. The whole training takes between two and three years before they earn their driver’s license.   I would propose a similar type of education requirement for financial planning, where you’d have to take a class and pass a written test; upon passing that written test you’d be given a bank account, credit card, investment account, a retirement account, and a small loan. These accounts would be set up and monitored by an experienced professional. For one year you would use these various accounts for spending, your credit card, paying a small loan off, balancing your checkbook, investing a small portion in a retirement account. After one year, your performance would be evaluated to make sure you properly handle these various accounts. After you met those requirements you then would go to the next phase where you’d actually use these accounts for a period of two years which again,   would be monitored by professionals. After two years, if you didn’t have any major problems you then would be free to manage these accounts on your own.   I think the best way to learn financial planning and finances not only by studying but actually doing it, and the plan that I’ve outlined would accomplish both of these goals.

Posted October 12, 2017 by Robert A Bonavito in Educational Videos