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2015! Three Years, Three Words…

James Petrozzello

James Petrozzello

Three years ago, I was inspired by Tom Hood, by way of Chris Brogan. As someone who gave up on New Year’s resolutions years ago, partly because I was not very good at keeping them, partly because I would change my mind about them and partly because I would often lose track of where I had written them down, I found power in the concept of Three Words. I embraced the magic and power of three during my lessons in Latin and in rhetoric. I have found my three words a great theme song that plays in my head throughout the year. They pop up in conversations, in my planning and often at unexpected, random moments. And this year, the magical and powerful three are Receptive, Synergy, and Service.

Receptive: This year, for Christmas, I gave my husband a Bluetooth headset. Ever since I came across my first Bluetooth headset, I have hated those things. People walk around with those things constantly plugged in an ear and it always seems to me that they are only giving you a small piece of their attention and are, essentially, waiting for something more interesting and important to beep in their ear. I have often felt as though people wear the headsets to make themselves feel important and busy. Around Christmas, when my husband mentioned that he wanted one, I started thinking about the Bluetooth headset in a different way. He spends a lot of time travelling and alone in an office. It makes sense that, should he wish to answer the phone, it would make sense to be able to do this and still be able to use both his hands. He has promised to put it in his ear only when he needs it and to not wear it when we are together. Beyond me and my relationship with the Bluetooth headset, I am realizing more and more, how essential it is to success and happiness to be receptive to new (and old) concepts and ideas. At work and as a part of the various boards and committees that I serve on, I have discovered how essential it is to listen to the opinions of others and process them before concluding how I feel about a situation or idea. At times, the ideas of others are better than anything that I had considered; other times, after taking their opinions into consideration, we can come up with a great plan or compromise. In order to continue the spirit of my words from last year, Transform, Pursue and Collaborate, being receptive is key.

Synergy: Last year, one of my words was collaborate. There is the saying, no man is an island, and I have found it to be true. I have lived and learnt in many places and my world and experiences have been touched by an incredible spectrum of people. All this has contributed to who and what I am today. Collaboration is so very much of getting things done but, this year, I want to hone in on synergy. I want to really think about the wonderful notion of how one plus one can equal more than two (sometimes significantly so). So collaboration will not be solely for the purpose of doing things together; to do this without thinking about how to best leverage the power of collaboration can be wasteful, frustrating and diminish the contributions of each party. I want to be mindful of the concept of synergy and ask myself, often, how can we do this so that what we achieve together is greater than what we could achieve acting alone.

Service: I have talked before about the CPA’s obligation to “serve the public trust, honor the public interest, and demonstrate a commitment to professionalism.” As a forensic CPA, this is a very important aspect of our profession. Often there are pressures upon us and, it is at times like this, that it is necessary to act with integrity, in order to honor our obligation to the public and to our profession. As a member of various committees of my State Society of CPAs and the American Institute of CPAs, and as I prepare to take over the presidency of our chapter, I, along with my fellow members must always keep in mind that our goal is to serve the public, our members and our profession with the work that we do.

A couple of years ago, my husband, James, and I traveled to Berlin for a wedding. I had often told him how much I love karaoke and so, when we heard about Bearpit Karaoke, we had to find it. The place was packed and the singers were excellent. My husband encouraged me to put my name down to sing. After hearing the caliber of singers, and after seeing how many people were in attendance (a dauntingly large crowd), I hesitated and tried to make excuses. He finally convinced me and I put my name on a long list. I was told that I probably would not get a chance to sing as many people were ahead of me and they were shutting down soon. I was pretty okay with that – it was enough for me to have been part of the crowd and to almost get a chance to sing. At six o’clock, the time the karaoke was to end, we were just walking away when I heard my name being called. I was nervous and James whipped out his camera. As I got onto the stage and introduced myself and the song I had chosen, Fame, an old man in the crowd caught my eye and gave me a thumbs up. As I sang, the crowd joined in for the chorus and a little kid ambled onto the stage. When I had moments of panic, I looked at him and took courage from his cute face, gazing up at me. Because I chose to be receptive to the idea of singing in front of this crowd, I found that I added a joy to our day that was magnified by our coming together in happiness. And, of course, what a gift and public service this Bearpit Karaoke is. If you are in Berlin, go and get yourself some joy.

The spirit of my words
From 2013: Change, Discover and Motivate
From 2014: Transform, Pursue and Collaborate
carry on and to that spirit I add my three for 2015
Receptive, Synergy and Service.

What are your three words will bring you magic and power this year?

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Watchoo Talkin’ ‘Bout

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Before I studied accounting, I went to college and got a degree in economics and mathematics. Armed with this degree in issues of money and numbers, I figured that accounting would be a relative walk in the park. I had learnt about debits and credits in economics, I had created intricate formulae in mathematics and I had tested theories on what had happened during the Salem witch trials in statistics, so I felt more than ready for accounting. Boy, was I wrong.
It had been a while since I had felt so overwhelmed. Nothing that I read made sense to me. When I asked my coworkers, who had been studying accounting for a while, they were confused. How could I not understand the accounting concepts. I was studying the most basic things – how could it not make sense. I spoke to my parents and warned them that I might not last in accounting. I prepared them for my failure. My mother, who had taken some coursework in accounting, stated that she had faith that I would work things out. It’s nice to have family who have faith in you, even when all around you look at you like you are the biggest dummy about. She encouraged me to look at some of the books that she had, “Maybe they will help.” I did and, fortunately for me, I found a book that explained accounting in a way that made it all clear to me. I almost couldn’t believe that it had been so difficult before. Now, I felt like I had a brain and it was more than luck that had gotten me through college the first time around.
As I have mentioned before, forensic accounting is a specialty practice of accounting where the work done is suitable for a court of law. The work done here is in anticipation of or as a result of litigation. Often a forensic CPA, usually Certified in Financial Forensics, will testify as a forensic expert before a judge and jury. Forensic CPAs are also often expected to present reports to their clients, to judges or to juries. Because most of the audiences that forensic accountants speak to are not financial experts in any way, it is imperative that they can communicate their work in a way that is understood by all the parties that they deal with. One of those parties could be you.
Many people that I talk to, who have accountants, have no idea exactly what their accountants do, or why. What they are is grateful that their taxes are filed on time and that they either had a small tax liability or a decent refund. This should never be your attitude with your forensic CPA and you should not give the time of day to a forensic accountant who does not explain everything to you. When it comes to forensic issues, you, as a client dealing either directly with a forensic CPA or through a lawyer, are the party to the potential litigation. Doesn’t it just make sense that you know exactly what is going on? Also, if they can’t explain things to you, how much faith could you have that they will be able to explain it to anyone else? My attitude is, if they are not doing a good job with me, and I’m the one hiring them, how can I expect them to do a good job anywhere else?
You should have a forensic accountant that you understand, are comfortable with and doesn’t treat you as though you are not smart enough to understand the complicated work that they do. Yes, the work they do can be very complex and involved but, part of being a good forensic accountant, is being able to take this complicated work and explain it in a way that can be understood by a jury of ones peers (generally a jury of people who did not major in accountancy). I often hear the phrase “explain it as though you are talking to a six year old”, but I would be happy if it was explained to me like someone was talking to an economics and mathematics major. Don’t let them make you feel dumb. Chances are, if they do, they may not be so clever themselves.

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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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True Tone at the Top

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I am reading “Tragedy of Fraud – Insider Trading Edition“, a book recently released by James Ulvog. This is the story of Scott London‘s journey from KPMG partner to prison inmate. James Ulvog covered this story in depth, from the moment it broke up to when Scott London went to prison. I would not be surprised if Jim picks up the story again when London is released from prison. In the book, Jim has spoken about the possible consequences of London’s crime and a lot of these stretch well into the future, potentially affecting him both professionally and personally. It is always a big disappointment when members of the CPA profession completely disregard the ethical and professional standards that have been set by the various governing boards. It is, therefore, important when people like Jim of Attestation Update and Francine McKenna of re: The Auditors
call out the CPAs who are setting a terrible tone at the top of their profession.

It is equally important, if not more so, to recognize those who have provided a positive contribution to the CPA profession. We are trusted professionals for a reason; it’s not just empty rhetoric. A little over a week ago, I had the indescribable privilege of meeting Bernadine Coles Gines, CPA. I am pretty sure this is not a name you have heard before, but she is a woman worth learning more about. I met her at a New York State Society of CPAs (NYSSCPA) ceremony honoring the 60th anniversary of Bernadine Coles Gines’ CPA license. This is a big deal because Gines was the first black woman to receive the CPA license in New York State. It becomes even more of a big deal when you learn more about the challenges she faced, both while working towards becoming a CPA and beyond.

Bernadine Coles Gines moved to New York City from Virginia, where she is originally from, to get her master’s degree at New York University. She moved because, at the time, Virginia’s segregation laws kept her out of graduate school in that state. Once Gines had graduated and passed her CPA exams, she looked for work. She found that she could not find work with a black CPA firm in New York City because they would not hire women. She also found that she could not find work with white CPA firms because they would not hire black people. While interviewing at a white firm, one partner told her that, even though he could not hire her, perhaps Gines could help his wife, who was looking for a maid. She was finally hired by a two-partner Jewish firm, but only after she had convinced them that she was not a communist. Of course, getting work was in no way the end of her challenges but at no time did Gines give up or compromise. She persevered and continued to work toward achieving her goals, despite (or perhaps more resolved, because of) the challenges in her way.

I read a little about Bernadine Coles Gines before I met her, but when I met her, I was even more impressed. She spoke of her principles and her determination and her story is living proof of both. To come to face to face with a person who epitomizes unwavering grit and the drive to stand by what she believes in is truly motivating. To learn about people like Bernadine Gines reminds us about the types of people who have made CPA the trusted professionals that they are and they also show why we harshly judge those who give us a bad name. They are a reminder to us and to those we serve of those of us who are professional, ethical and will stand strong, despite the pressures put upon us.

You should go out and learn more about Bernadine Gines and others like her. As though her achievements were not enough, she shared during her interview, that her sister, Ruth Coles Harris, was the first Black woman to be certified as a CPA in Virginia, in 1963. Ruth Coles Harris faced challenges of her own when she decided she wanted to be a CPA. I wonder what those family reunions are like – I would hate to be the black sheep in that family (if they even have one). I am truly fortunate that I had this incredible opportunity to meet Bernadine Coles Gines and that I was reminded how important it is to uphold ethics and principles and that I should not compromise, especially when things are very challenging.

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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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Here’s My Number And A Dime…

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“If you see something, say something”. Living in New York City, this is a message I come across often. I see it advertised all over the subway, I see it on buses and I have even seen it on television. Although the messages tell us to inform a police officer, MTA employee or call a toll-free number in the cases that we do see something and want to say something, I have often thought about the logistics of this. On my way home from work, I tend to end up in the last subway car. Now, say I get onto the train and I see something and I want to say something. I am in the last car and can barely see the subway conductor who is in the middle of the train. Do I try to run up the platform to get to the MTA employee before the train doors close and the train sets off? Do I perhaps hope that there is a police officer that I can alert, hanging out on the subway platform? My subway station is one of the few that now has cellphone reception, so I could call the toll-free number. However, I have never taken the time to actually take the number down so I have no idea what it is. All this said, I like to think that, on the day that I do see something and need to say something; it will be like the movies and things will fall in place and work out.

Previously, when talking about controls, I have discussed the importance of the segregation of duties and how having several people involved in a process means that there are other people who are watching what is going on and who, therefore, can report any untoward activities that they see. Annually, the Association of Certified Fraud Examiners (ACFE) publishes a Report to the Nations on Occupational Fraud and Abuse. The 2014 report stated, “Over 40% of all cases were detected by a tip – more than twice the rate of any other detection method.” That is a staggering statistic and emphasizes just how important people who see and say something are when it comes to fraud detection. The knowledge that there is an easy way for fraud to be reported may also serve as a deterrent to those contemplating committing fraud. In response to a series of huge financial scandals that led to losses in the billions of dollars and the end of companies such as Enron and WorldCom, the Sarbanes- Oxley Act was passed in 2002. Among its various provisions, it required that publicly traded companies establish a whistleblower system that makes it easy for employees and third parties to anonymously report financial misdeeds.

There is a television show called “The First 48”. The premise of the show is that the chances of solving a murder are cut in half, if investigators do not get a lead within the first 48 hours. On a few occasions, I have watched as detectives go from door to door in a neighborhood, asking people if they know anything about the homicide that occurred. Generally, the police are met with silence, shaking heads and closing doors. However once they get back to the police station, their phones start ringing and people leave anonymous tips that often lead to an arrest. Anonymity is a very important aspect of creating a whistleblower system. The fear of punishment for reporting fraud, such as being fired, demoted or even physically attacked, can keep a witness silent. It is vital that a person knows that they can safely make a report and remain unidentified, should they wish to do so.

There should be several reporting options available to the whistleblower, such as the telephone, an electronic system and U.S. mail, giving the whistleblower the opportunity to use the method that they are most comfortable with. Also, the system should be available 24 hours a day, 365 days a year. With the whistleblower hotline, a trained interviewer, who knows how and what to ask the caller should answer the phones. The last thing a nervous caller wants to deal with is voicemail.

In order to make the whistleblower system most effective, a corporate entity’s staff, vendors and other third parties need to know that there is a way that they can report wrongdoing and that action will be taken. This means that a company with a whistleblower system should distribute literature and hold training sessions on ethics, processes and how to report any financial wrongdoing. Several years ago, I caught a cab from Manhattan to Brooklyn. During my ride, the cab driver complained about having to drive to Brooklyn and tried, several times, to drop me off at a subway station. I insisted that he take me to Brooklyn, as I had requested. He then spent the rest of the ride swearing and protesting. Once we reached my destination and I stepped out of the taxi, he yelled out the window, “Bitch”, and drove off. Suffice to say, I was upset by this experience. Shaking, I walked into the building and called 311, New York City’s non-emergency information and complaint service. I told the operator about my experience and gave her the taxi driver’s medallion number. She took my report and asked whether or not I wished to remain anonymous. I chose not to, wound up facing the driver in a hearing, and winning my case. I did all this because I did not appreciate how the taxi driver had treated me and felt that I should not let him think that it was okay for him to behave in that manner. More importantly, I did this because I knew about and had access to an easy, and well-publicized service where I could lodge my complaint and have my issue investigated and resolved.

I have mentioned that publicly traded companies in the United States are mandated to set up a whistleblower system. It is in the interest of other entities to consider a system by which anyone who comes across financial crime can report the crime, knowing that something will be done about it and that no one will come after them for making the report. Sometimes something as simple as an anonymous mailbox can make a big difference – just knowing that there is a way to report crime gets people reporting crime. Then again, as an employee or a third-party, such as a vendor or a customer, there may be times when you feel as though the corporate culture is so corrupt that no one within the company will respond to your complaint. At times like this, you should look to the law for assistance. In New York City, you can call 311 for guidance and assistance. You can also visit the District Attorney’s website for information on how to report a financial crime. The power of people speaking up when they see something amiss cannot be underestimated and voicing your concerns is easier than you imagine; remember whistleblowers are the number one (by far) way in which fraud is discovered. So, really, if you see something, say something. You don’t even have to worry about the train leaving you behind.

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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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I Trust You, But…

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Last Saturday, my husband showed off some of his work in an open studios event at Industry City. He did the lion’s share of the work but, on Friday evening, he asked me to come over and help him a little. He assigned me the job of placing 5×7 prints of some of his work in 5×7 frames. It sounds straightforward enough and I am sure that my husband trusts me and has great confidence in my abilities. Nevertheless, after I had framed a few photos, he came over and checked my work. It turned out that some of the photos were not quite centered in their frames. He handed them to me, offered me some tips on how best to center photos in frames, and asked me to redo them.

This reminded me of when I was a kid and my parents would check my homework. I know that they felt that I could do it. I know this because they would say things like, “You can do better than this; try again.”Most of the time the issue was that my handwriting was barely legible on a good day. Knowing that my work would be reviewed, on days when I was tempted to rush through my homework, maybe because I wanted to play or watch TV, I willed myself to slow down and get it done correctly the first time around. I did not want to get into trouble and I definitely did not want to have to do my homework over again.

Recently, I have been reading stories about people in charge of a business’s finances perpetuating fraud. These people carried on their shenanigans and were not caught until the businesses they were employees of were practically going under. You know why? Because no one ever checked their work. Ever. In the cases that I read, the business owners were all charmed by the charismatic and capable people that they hired to manage their finance departments. The business owners gave these managers unfettered access to the companies’ bank and credit accounts and, boy, did those managers take full advantage of this access. They opened new credit accounts, they maxed out existing accounts and they went shopping! These business owners only found out what was going on when purchases they were trying to make were declined because their accounts were wiped out. In every case, the owners had left the finances up to the managers that they had hired so that they could focus on operations. They seemed to forget that an essential part of a business is the money needed to run it. They did not keep tabs on where the money went after it came in.

Because none of us is infallible and because too many among us are not always honest, it is vital that work is checked by someone else. Depending on the size and complexity of an entity, there are various ways in which to incorporate checks into a system to prevent and detect error and fraud.

  • There must always be a review of another party’s work. In a very small business, this may mean that the business owner is periodically reviewing bank and credit card statements. It may mean that the business owner will check incoming mail on a random basis, to make sure that unauthorized statements have not been opened in the name of the business. In larger businesses, there should be processes where the work done by one employee is reviewed by another employee for error and misstatement.
  • Someone other than the person booking cash entries in the ledger should perform reconciliations of the bank and credit accounts. Reviews and reconciliations of payable and receivable accounts should also be performed.
  • Make sure that staff take vacations and that, while they are on vacation, someone else does their work. In this way if anything is amiss, a new pair of eyes may catch mistakes or other missteps that are being made. In addition to this, having someone else do the work also means that one person does not have exclusive knowledge of a process in a business. In this way, no employee is indispensable. Also, when more people understand a process, and employee is less likely to try hide fraud in the process.
  • If possible, move work around among employees, again, so that more people in a department have a greater understanding of what is going on. The saying is familiarity breeds contempt; it can also breed careless errors. People operating in autopilot can become too comfortable with the work that they are doing and make careless mistakes because they are not paying close enough attention to the work.

Check, check and check again. If people know that there are effective checks in a system, they are likely to be discouraged from trying to steal from an entity. If people know that their work will be checked, they are more likely to pay attention to details so that they don’t have to do the work over again. Even when I was frustrated because the photographs seemed to shift all by themselves when I tried to secure them in the frames, I growled, I complained, and I started over and over again until I got it right. You know why? Well, because I like to do a job well AND I didn’t want my husband handing the work back to me and calling me out on getting it wrong.

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Don’t Put Baby In the Dusty Corner!

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You know who could use a really good PR person? Arizona. Nowadays, every time I read about Arizona, it’s not complimentary. Whether it is a piece about the “right-to-refuse-service” bill, immigration issues or the sheriff of Maricopa County, the articles tend to speak of controversy and a lot of angry people. You would think it was a terrible place to live in or visit, unless you are going to watch the Arizona Wildcats play basketball.

Fortunately for me, my mother in law lives in Tucson, Arizona, and despite the less than flattering news about Arizona, I go out to visit her on occasion. I love it every time I go there. Granted, part of it is that I am solar powered and the sunny warmth of Arizona recharges me. However, there is so much more to that. I honestly could spend every day hanging out in my mother in law’s backyard, chatting – you can’t help but adore a woman who loves art, sport and having fun – but wait, there’s more! I get up in the morning and start my day with an incredibly scenic run and I often end it with a lovely walk in some new and beautiful place. It’s not just the scenery; I meet interesting and interested people, I meet kind and polite people, I just come across some great characters while I am in Arizona. I go there and I think, wow, someone needs to really work on the word on Arizona that gets out.

It got me thinking about my days in audit and when I go on due diligence assignments. When I worked in audit, before assignments, we would often talk about what kind of office our client would decide to put us in. Would the office have a window and would it even be clean? Would they drag their feet, complaining about how difficult we were, in response to our requests? Would they treat us as though we were wasting their time and doing unnecessary, and expensive, work? Often I wondered why clients treated us as though we were Typhoid Marys, bringing a horrible plague to the company.

When a CPA comes in to a firm, whether they are performing an audit or a forensic investigation, they are coming in as a trusted professional to give outsiders a level of assurance about the financial state of the company. If you have a business and tell your mother how well your business is doing, I am sure that she will believe you and perhaps even brag about you to her friends. A random stranger on the street may not be so willing to take you at your word. In the hierarchy of opinions, the least trusted opinion regarding the state of a business’s financials is the opinion of the business owners and the most trusted is that of an independent third party. This is because you, as the business owner, have a vested interest in showing yourself in the best possible light, they are more likely to trust a third party over you, and the word of an independent third party carries a lot of weight. Independence means that the third party has no financial interest in the company, either as an owner or as a customer. The interest of this third party is only in the facts.

CPAs conducting an audit or forensic investigation are held up to the very high standards of the profession. Knowledge of these standards factors greatly into the level of confidence that users have in the results produced by CPAs. The CPA Code of Conduct requires objectivity, independence and integrity from CPAs and it is for these reasons that CPAs are trusted professionals.

CPAs are obligated to serve the public interest, honor the public trust, and demonstrate commitment to professionalism. The goal of CPAs is not to destroy your business or to embarrass you by finding misstatement or fraud. They are objectively carrying out their assignment, which may be to give assurance that your financial statements are fairly stated or to investigate suspected fraud within a business. This means that even if CPAs find misconduct, errors or misrepresentation, they can point it out to the company’s management and even work with management to take adequate steps to resolve matters.

So, when independent CPAs come into your firm to conduct an audit or forensic investigation, don’t see them as the enemy. Even if you give them the airless, cramped office that qualifies as a closet in a Texas apartment, at least get the cleaning service to dust it a little.

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