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Summary of Significant Accounting Policies (Policies) | 9 Months Ended
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Sep. 30, 2019
Accounting Policies [Abstract] |
Description of Business | Selected Terms Used in Notes to the Consolidated Financial Statements ASA – Administrative Service Agreement. ASC – Accounting Standards Codification. ASU – Accounting Standards Update. CPA firm – Certified Public Accounting firm. FASB – The Financial Accounting Standards Board. GAAP – United States Generally Accepted Accounting Principles. LIBOR – London Interbank Offered Rate. Legacy ASC Topic 840 – ASC Topic 840, Leases. New Lease Standard – ASU No. 2016-12, Leases. ROU – Right-of-Use Asset. SEC – United States Securities and Exchange Commission. Tax Act – Tax Cuts and Jobs Act of 2017. Topic 220 – ASU No. 2018-02, Income Statement – Reporting Comprehensive Income. Topic 606 – ASU No. 2014-09, Revenue from Contracts with Customers. Topic 815 – ASU No. 2017-12, Derivatives and Hedging. Description of Business: CBIZ, Inc. is a diversified services company which, acting through its subsidiaries, has been providing professional business services since 1996, primarily to small and medium-sized businesses, as well as individuals, governmental entities, and not-for-profit enterprises throughout the United States and parts of Canada. CBIZ, Inc. manages and reports its operations along three practice groups: Financial Services, Benefits and Insurance Services and National Practices. A further description of products and services offered by each of the practice groups is provided in Note 16. Segment Disclosures, to the accompanying consolidated financial statements.
Basis of Consolidation | Basis of Consolidation: The accompanying unaudited condensed consolidated financial statements include the operations of CBIZ, Inc. and all of its wholly-owned subsidiaries (“CBIZ”, the “Company”, “we”, “us”, or “our”), after elimination of all intercompany balances and transactions. These condensed consolidated financial statements do not reflect the operations or accounts of variable interest entities as the impact is not material to the financial condition, results of operations or cash flows of CBIZ.
Unaudited Interim Financial Statements | Unaudited Interim Financial Statements: The condensed consolidated financial statements have been prepared in accordance with GAAP and applicable rules and regulations of the SEC regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. In the opinion of CBIZ management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows for the interim periods presented, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2019.
Use of Estimates | Use of Estimates: The preparation of condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Changes in circumstances could cause actual results to differ materially from these estimates.
Changes in Accounting Policies | Changes in Accounting Policies: Except for the adoption of New Lease Standard, w e have consistently applied the accounting policies for the periods presented as described in Note 1. Basis of Presentation and Significant Accounting Policies, to the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Effective January 1, 2019, we have changed our accounting policy for the New Lease Standard as described below in Note 2. New Accounting Pronouncements.
Correction of Prior Period Errors | Correction of Prior Period Errors: The Company has corrected an immaterial error related to the presentation of cash equivalents on the condensed Consolidated Statement of Cash Flows related to amounts included within funds held for clients. The correction resulted in an increase of $81.5 million of cash used in investing activities for the period ended September 30, 2018, an increase of $148.9 million of cash, cash equivalents and restricted cash at January 1, 2018 and an increase of $67.4 million of cash, cash equivalents and restricted cash as of September 30, 2018 as reflected on the Consolidated Statement of Cash Flows. The Company’s Statement of Comprehensive Income for the three months ended September 30, 2019 included a correction of an immaterial prior period accounting error related to the gains and losses associated with the value of the investments held in a rabbi trust related to the Company’s deferred compensation plan. The correction resulted in an increase of $6.0 million in “Operating expenses”, $0.7 million in “Corporate general and administrative expenses”, and $6.7 million in “Other income, net” for the three months ended September 30, 2019. The non-qualified deferred compensation plan has no impact on “Income from continuing operations before income tax expense” or diluted earnings per share from continuing operations.
New Accounting Pronouncements | The FASB ASC is the sole source of authoritative GAAP other than the SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an accounting standard to communicate changes to the FASB codification. We assess and review the impact of all accounting standards. Any accounting standards not listed below were reviewed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements of the Company. Accounting Standards Adopted in 2019 Leases: Effective January 1, 2019, we adopted the New Lease Standard using the modified retrospective method of applying the new standard at the adoption date. We elected the package of practical expedients permitted under the transition guidance which allowed us to carry forward historical lease classifications. The adoption of the New Lease Standard had a significant impact on our consolidated balance sheets and resulted in the recording of the operating lease ROU assets and corresponding operating lease liabilities. The consolidated balance sheet prior to January 1, 2019 was not restated and continues to be reported under the Legacy ASC Topic 840, which did not require the recognition of operating lease ROU assets and liabilities. The expense recognition for operating leases and finance leases under the New Lease Standard is consistent with the Legacy ASC Topic 840, therefore, as a result, there is no significant impact on our results of operations, liquidity or debt covenant compliance under our current credit agreements. The following table presents the impact of adopting the New Lease Standard on our consolidated balance sheet.
|  | Balance at |  |  |  |  |  |  | Balance at |
|  | December 31, 2018 |  |  | New Lease Standard |  |  | January 1, 2019 |
Operating lease right-of-use asset, net |  | $ | — |  |  | $ | 148,884 |  |  | $ | 148,884 |
Total assets |  |  | 1,183,031 |  |  |  | 148,884 |  |  |  | 1,331,915 |
Operating lease liability - current |  |  | — |  |  |  | 28,407 |  |  |  | 28,407 |
Total current liabilities |  |  | 321,314 |  |  |  | 28,407 |  |  |  | 349,721 |
Operating lease liability - non-current |  |  | — |  |  |  | 120,477 |  |  |  | 120,477 |
Total non-current liabilities |  |  | 268,054 |  |  |  | 120,477 |  |  |  | 388,531 |
Total liabilities and stockholders' equity |  |  | 1,183,031 |  |  |  | 148,884 |  |  |  | 1,331,915 |
Office facilities account for approximately 96% of our total lease liability. The lease liability for our office facilities is based on the present value of the remaining minimum lease payments, discounted utilizing our secured incremental borrowing rate at the effective date of January 1, 2019. We also have other leases that consist primarily of information technology equipment and automobiles. The present value of the lease liability associated with other leases are measured based on the discounted remaining minimum lease payments at the effective date of January 1, 2019. The Company has elected not to separate lease and non-lease components and elected the practical expedient to exclude short-term leases at adoption. Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income: On January 1, 2019, we adopted ASU 2018-02 which provides the optional election for the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. The adoption of Topic 220 resulted in a reclassification between accumulated other comprehensive income and retained earnings of $0.1 million, and had no impact on our consolidated financial position or results of operations. Derivatives and Hedging: On January 1, 2019, we adopted Topic 815 which improved and simplified accounting rules for hedge accounting to better present the economic results of an entity’s risk management activities in its financial statements and improves the disclosures of hedging arrangements. The adoption of Topic 815 did not have a material impact on our consolidated financial position or results of operations. Accounting Standards Issued But Not Yet Adopted Internal-Use Software: In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), which aligns the requirements for capitalizing implementation costs incurred in a service contract hosting arrangement with those of developing or obtaining internal-use software. This standard is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. We do not expect this guidance to have a material impact on our consolidated financial position or results of operations. Fair Value Measurement: In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. This standard amends existing fair value measurement disclosure requirements by adding, changing, or removing certain disclosures. ASU No. 2018-13 will be effective for us as of January 1, 2020, with early adoption permitted. We are currently reviewing the effect of this new standard on our consolidated financial statements.

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