Category Archives: AICPA

Three Words for 2018? We Got This!

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Over the last week, I have been thinking about 2018. I don’t know about you, but 2018 snuck up on me. One moment I was caught up in the day-to-day of 2017 and the next moment 2018 was just a couple of weeks away! After my initial panic, I thought – well, it’s great because I get to think of my three words. Three words? Well, if you haven’t been on this journey with me before, I shall explain. In 2012, I met and was inspired by Tom Hood and he introduced me to the Three Words approach, which came from Chris Brogan. At the start of every year, now, I sit and think about what three words I would like to guide me through that year. During the year, I come back to those words, to help center, direct and motivate me. Over the last few days, I have thought about how to make this work better for me, and I determined that I must display these words to remind me, even when I am not thinking about being reminded, to move me when I feel stuck and to hold me accountable. I say this in part because, 2017 was a challenging year for me and I found that I often lost track of my guiding lights. Involved in, and sometimes overwhelmed by, the moment, I often forgot to even look for my words. Putting the words everywhere, will go a long way to keeping me mindful of that.

Last year, I started looking back over my year and I have found this to be a great way to assess how things went and to help me set my intentions for 2018. My three words:

Imagine. This is the first word that came to me. During 2017, in part through work and volunteering with the New York State Society of CPAs and the AICPA, I have had some truly new experiences. I have learnt how to play poker and how poker skills can benefit me in the workplace; I have worked with a team to consciously inch towards better health – physically, emotionally, and spiritually – and that has included laughing more and skating in Byrant Park; I have collaborated with incredible people and presented in various spaces, from a national conferences to a college campus. During the year, I have been involved in conversations that have opened my eyes, that have ventured into spaces that are often afraid to even tiptoe into, that have renewed my hope when things have seemed bleak. I have often reminded myself to listen and to hear because that is when I find the moments that hit me hard and that get me to imagine and those moments are incredible. When we imagine, and step outside of what we know, we can find brilliance, we can find understanding and, just as important, we can also see and revise the not so great. In 2018, I want to imagine without fear of where my imagination will lead me. I want to imagine and be okay with when what I imagine doesn’t always work out. I also want to make sure that I make the time and space for my imagination. Back in 2015, I tried to create space for me to be bored, which is a big part of creating the space for imagination and, as the exercise stated, brilliance. It did free my mind in great ways and, looking back and looking at now, I know I need a lot more boredom in my life. And I still haven’t finished my Starry Night jigsaw puzzle!

Innovate. During 2017, I listened and took part in conversations about change. The conversations were about artificial intelligence (AI) about blockchain (and cryptocurrencies, like Bitcoin) and about cybersecurity. Other conversations were about what diversity, inclusion, and belonging mean and if and why it is important. We had conversations about what to do about all the change happening in our professions, in our world and in our lives. We talked about how we react to it and how we can embrace, be ahead of and even create greatness out of all the change. Beyond the conversations, we brainstormed and tried new things. We looked at the new approaches other took and ran with them. I spend a lot of time looking at challenges and how, sometimes, people take the same approach to resolving them and see minuscule results. As much as we tout how “change is good”, it is a human thing to resist changing the status quo. During this year, I want to innovate. I want to collaborate and brainstorm and determine to try something new. I want to embrace the difficult conversations, appreciate and improve upon feedback and, on my part, provide truly constructive feedback. I want to remember the power of synergy and never forget that the best innovations come through a community of people sharing, listening and taking risks.

Act. My third word came to me after I wrote and thought about my 2017 look back. When it comes to training, I have established and go with what gets me to success. If I have a race, I print up a daily timetable that includes rest days, cross training days and exactly what I shall do on each day (distance, goals, tempos if needed). The night before every training, I put out exactly what I am going to wear on the day and I determine my route. I think about and take away all my excuses so that, when I wake up, I just do exactly as planned and that gets me a step closer to where I need to go. I keep my schedule on the wall and tick off each day as I go along. During 2017, I often did not apply this approach. As a result, especially where I felt the stakes were high, I became adept at getting cold feet, at second-guessing myself and at putting things off until I decided it was too late to do them. There are many reasons why this happened but knowing the reasons and doing nothing about them is not helpful. I am going to do more acting in 2018. To help me do this, I am going to find the ways to take away my excuses, and I am also going to be more realistic about what I can get done, so that I don’t end up doing many things in a mediocre manner that only serves to disappoint me and others. I also must remember to be kinder to myself when I act and to see the power in action. I must remember that it is through action that I can bring value and have impact.

Before diving into 2018, I want to take a moment and meditate upon my previous three words:

2013 – Change, Discover & Motivate
2014 – Transform, Pursue & Collaborate
2015 – Receptive, Synergy & Service
2016 – Learn Fear & Community
2017 – Embrace, Persevere & Monchu

Several years ago, I went to Hawaii with friends and decided to take surfing lessons. I was a couple of months out of surgery and hesitated before I went out – I wasn’t at full strength, everyone else was going on a fun outing and I would be doing this solo, as no one else was interested. But, I had been thinking about taking a surfing lesson and I had told my surfing neighbor (who ultimately became my husband) that I was going to take a lesson and that made me feel accountable. During the lesson, I fell countless times, I scraped my knee and sometimes even got to the point where I was able to ride a wave while kneeling on the board. Then, I stood, and rode, and didn’t fall off. It was glorious and totally worth every fall, and the skin missing from my leg. When I finally fell off the board, I rose out of the water with a victorious yell! It is this that I must remember – it is a journey but it can only happen if I Imagine, Innovate AND Act.

Happy and wordy 2018 to you! Please share with me – what are your words for 2018?

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Checking Up

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Several years ago, I was working on an assignment that had me flying out to Boca Raton, Florida, every Monday and returning to New York City on Friday night. It was great because it was a brutal winter in New York City and pleasantly warm in Boca Raton. It was terrible because it was close to impossible to get anything done over the weekend. One week, I had to admit that there I needed to get one of my teeth looked at. It had been causing me some pain and I knew I had to sort it out before it started hurting a lot. My challenge was to find a dentist who took patients on weekend days and who I could get to easily. I found one online and went in to see him on a Saturday morning. He determined that I needed a filling fixed and he got to work. What I remember about that day is how incredibly painful it was and how unsympathetically the dentist kept ordering me to “be strong”. I was traumatized – so much so that I did not go anywhere near a dentist’s office for years after that. I knew I should, but the memory of the pain and a dentist who was in need of a heart kept me away. Other aspects of my body were very well taken of; I went to my annual physical and that was always a pleasure, compared to my dental disaster. I brushed my teeth but, other than that, they were pretty much on their own.

One nights, I fell asleep while sucking on a throat sweet and, the next morning, I woke up feeling as though my teeth were about to fall out of my head. I was in a panic; I was too young to be toothless. I was desperate and looked up dentists located close to my office. Thankfully, I was able to find a dentist, a few blocks away, who was able to fit me in that very day. As he examined me, a poem from my childhood, “Oh, I Wish I’d Looked After Me Teeth” ran through my head. Fortunately, this time around, I get to keep my teeth. My dentist was a great guy who doesn’t believe in causing pain and suffering and NEVER says to me, “be strong”. I did, however, have to go through a series of appointments to repair the damage that had accumulated over the years that I had avoided the dentist, dentist I could have avoided. I have not missed an appointment since, although I get nervous when the machine turns on, even just to polish my teeth.

Like my teeth, a business needs regular checkups to maintain its financial health. Yes, a lot of companies review their financials on a monthly or quarterly basis, but how many are assessing their control systems and taking steps to update and analyze how they prevent and detect fraud? The fact that the median length of a fraud is 18 months before it is detected and that many frauds can last many years as in the cases of Bernie Madoff and Rita Crundwell, to name a few high profile cases, implies that these steps are not taken often and rigorously enough. No one really thinks that it will happen to them and some people think that their finance department, accountant or auditor will keep them safe from fraud. This is because they do not fully understand the roles and duties of their auditors and accountants. Other people don’t want to spend the money on fraud prevention and detection. However, when you start thinking that Rita Crundwell stole over $54 million and a quick search of the internet brings up many other recent cases of embezzlement of millions of dollars that have been discovered. There are many more that either have not been recorded or are of lesser amounts.

Think about this:

  • Fraud goes on for an average of 18 months but many go on for much longer.
  • Usually fraudsters start out stealing a little money but as times goes on and they are not caught, the amounts stolen grow and grow and grow
  • The knowledge that a company has allowed theft to go on under its nose for years can negatively affect its reputation, leading people to believe that it may not be a safe and ethical place to do business

These are just a few things to think about when it comes to detecting and preventing fraud in your company. It only makes sense to get a qualified Forensic Accountant, Certified in Financial Forensics to assess and evaluate your companies systems in order to beef up your fraud prevention programs and also, perhaps to detect possible fraud? Now, I learnt a very painful lesson before I started to take care of my teeth. Do you want to learn a hard, and possibly expensive, lesson before you take proper care of your business?

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Stuff It

Back in the early days of my time as an auditor, I went on many inventory counts. Because companies would have to close their businesses while the inventory count was going on, they tended to happen over the weekend. I am yet to meet anyone who likes to spend their weekends at work and it is even worse when all of your friends are going to be sleeping in or doing something fun while you are at work. I could complain (and I am sure I did) but it was a necessary part of the work that I did and so I spent several weekends at a client, observing their inventory counts and carrying out audit tests. One particular assignment sticks in my head. I went to a company that had a very large inventory of bags of cement. I cannot, for the life of me, remember what the company did – whether it was construction or the manufacture and sale of cement. Either way, there was a huge warehouse, filled with stacks of these bags. I don’t know how much you know about cement but, what I found out that day is that cement is very powdery and the small particles are very good at escaping the bags that they are put into. You could see the air in the warehouse; it looked a little like the inside of a snow globe, except for the fact that no one would ever make a snow globe of mountains of brown bags. One of my tests involved test counting areas of inventory to see if my numbers tied up with the numbers counted by the client. I walked around sections of the warehouse and counted stacks of bags – the length, breadth and height – and multiplied numbers to come up with totals. I was not done though. I had to make sure that the mountains were made up of cement bags all the way through and not, say, hollow in the middle. So, I climbed up the dusty stacks of bags, fighting my fear of heights in the name of my mission, and checked to make sure that the stacks were not hollow. I then also had some of the staff at the company move some bags around to make sure that the stacks were made up of only cement bags and not bags of some other filler. I went home that day coated in a film of cement dust. I know my neighbors were wondering how an auditor could get so dirty at work – didn’t I just work with a calculator and pen? Ink stains were expected, but not cement. For all the complaining that I did about spending my Saturdays on inventory counts, I found a lot of the assignments, like this one, to be a lot of fun and rather exciting. I got to be queen of the cement mountains and bound about, on high, in the name of thoroughness.

If you have a company that sells or makes any kind of stuff, you will have inventory, which is also called stock. In accounting lingo, inventory is considered to be an asset because it is something that is expected to make you money in the future. For the very reason that inventory is expected to make you money in the future, it is important, for the health of your company, to safeguard your inventory, so that someone else doesn’t make off with it and, thus, your future money. I have spoken many times about many ways to prevent fraud and error with financial statements, but a lot of these steps can be translated into making sure that you hold on to your stuff.

In the world of inventory, your stuff disappearing is referred to as shrinkage. It makes it sound like you didn’t follow the instructions for laundering clothing, but it basically means that someone is stealing from you and, I don’t know about you, but I don’t like it when people steal my stuff. Any advice I can take to keep that from happening is good advice to me. The first step, in order to protect your inventory, is to keep it locked up. I have told you before about the steps my husband took to install physical barriers to access to his belongings in his studio. These are the types of steps that you should take in physically safeguarding your inventory, your stuff. Depending on what you have and what your needs are, the physical safeguarding may be locks, cameras, doors with security codes or even those fancy retina scanners that we see on crime shows. You should not only keep your inventory under lock and key but also limit access to the inventory to a few authorized parties. Only people with a reason to get to the inventory should have access. This makes it easier to trace the movements of inventory and it also serves as a deterrent to those who might think about pilfering inventory. If the list of suspects is a short one, those people might think twice about stealing.

The segregation of duties is also vital with inventory. The cycle of inventory begins with its purchase. Inventory is then stored until it is needed for manufacture or sale. Sometimes inventory is damaged, expires or is otherwise no longer of value to you and your company. When this happens, the inventory is either destroyed or sold, at a loss, to someone else who still finds it useful. Now, if one person has control over this process, from purchase to sale or destruction, there are many opportunities for fraud. For example, a person may take inventory, sell it for a profit and then write off that inventory as obsolete, pocketing the money made from the sale. Another example of fraud is ordering and receiving, say, ten items, but claiming that only nine were received. This person can then take the tenth item for personal use or profit.

Another very useful and important control is the use of preprinted, prenumbered documentation. These documents range from order forms, to receiving reports and shipping reports. All movement of inventory coming in and going out must be documented and those documents must be prenumbered. Gaps in the document numbering, or repeated numbers, will raise red flags that should be investigated. Missing documents should also raise red flags that should be investigated.

Inventory is your company’s stuff and it is important to seek out the advice and guidance of qualified CPAs to best protect it. Doing so dissuades potential criminals from trying to take it and also will make it easier to track it down, should someone take it. Taking the time to adequately plan and incorporate these controls into your inventory system can protect you from loss. I know I get worked up about people messing with my stuff and I am pretty sure you feel the same about the stuff that helps your business run.

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Hear Ye, Hear Ye! It’s The Future!

 

Toward the end of June, I went into the New York State Society of CPAs offices (very lovely offices, I must say) to be part of a roundtable discussion on the future of the accounting profession. The discussion was distilled into a piece in August’s CPA Journal. Personal interest aside, it is a great read with a diversity of opinions on various issues regarding the CPA profession and the value of the designation. Along with me were three other professionals, all with different career paths within the designation of CPA. Somya Munjal is the founder of CPA for the People, which is a CPA services, business consulting and social venture firm. She is also the founder of Youthful Savings, whose mission is “empowering the next generation with financial education and entrepreneurship training”. Michael Durant is working on his master’s degree in taxation, while pursuing his CPA designation. That’s right, a master’s in taxation; that should begin to convey just how complicated taxation can be. Michael is also the cochairman of the advisory board for the Bronx School of Law and Finance, a school that he is an alumnus of. Jordan Frey is a senior account in EisnerAmper’s private business services group. As you can see on the company’s website, the group provides a wide range of services to businesses of all types and sizes. And then there is me – figuring financial forensics. So, in a room of four CPAs, you have a tax man, a social venture, financial education and entrepreneurship training guru, a private business services expert and a forensic accountant. Walking into the room, I was encouraged to find that I was in a room with people who validate my claims about the variety of professional paths that a CPA can take. It’s always a good feeling when your claims are validated.

We had a very interesting discussion about the different directions in which our CPA designation was taking us and, for all the differences in career we had, we had some real similarities. We were drawn by the high standards and ethics that are integral to being a CPA. I have written about how a CPA is considered to be a trusted professional, a characteristic that is an asset in someone you are dealing with when it comes to financial matters. I am happy to find that I am not alone. It is one thing for me to stand on my soap box and wax lyrical about the virtues of the CPA; it is completely something else, in a very good way, to be in a room with others who feel as passionately as I do about what we do.

I am sharing our conversations with you and, if you feel as though reading The CPA Journal diminishes your street cred, you can throw in a little Wu Tang Clan as your backing track, as you read a little bit about the future…

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Easy Going Down

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I am big on Ethics and I am glad when they are spelled out in a straightforward way. So, I am excited to see that the AICPA’s revised Code of Professional Conduct has made the subject of ethics easy to access and clearer. This is where the standards that CPAs are held up to are put into words and the easier those words are for everyone to understand, the better it is for all of us. It’s not just “trust me, I know what I’m doing”, it’s “look here and see what I am supposed to be doing. There is a code that I abide by and here it is in plain English.”

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