RISK MANAGEMENT

Fraud: It’s Where the Money Is

By

Click to enlarge

CPA firms have opportunities here. Bonus: infographics.

By CPA Trendlines

Covid-19 isn’t the only pandemic ravaging the world. There’s a financial virus going around, too.

MORE in RISK MANAGEMENT: In These Turbulent Times, Leaders Must Lead!  |  Indemnification Helps Partners Sleep Well  |  Tax Season Is Hacker Season  |  2020 Outlook: Top 5 Emerging Risks for CPAs  |

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

It’s called fraud – maybe not contagious, but it pops up everywhere. On average, an estimated 5 percent of the world’s revenue is lost to fraud each year, a median loss of $125,000, an average loss of $1,509,000.

The prevalence and seriousness of fraud is both opportunity and obligation for CPA practices, not to mention internal audit departments.

According to the 2020 Global Study on Occupational Fraud and Abuse, just issued by the Association of Certified Fraud Examiners, external audits were the source of detection in only 4 percent of 2,504 organizations analyzed in 125 countries. Internal audits accounted for 15 percent of detection, and internal controls seem almost not worthwhile, finding only 2 percent of cases of known fraud.

Despite increasingly sophisticated fraud detection techniques, tips are still by far the most common way fraud is discovered, responsible for 43 percent of detected cases. READ MORE →

In These Turbulent Times, Leaders Must Lead!

By

cpatrendlines.comSix things you needed to start doing yesterday.

By Allan Koltin

In the face of this unprecedented global pandemic, Leaders must Lead! We need to fill our days with talking to our people, clients, and our families and engaging them in the reality of the situation while at the same time stressing the positive things going on.

RELATED: All CPA Trendlines Special Coronavirus Coverage

I was on a call this morning with a client and I was sharing how wonderful it was to have all three kids back home (they would have been studying abroad, at college, or going to high school) and how nice it was to have family dinners together again. I was also sharing the positives with the kids that their grandparents were healthy, safe, and getting calls from so many family members and how important this was to them. As I was walking the dogs this morning it occurred to me that I heard birds chirping and that I had been “so busy being busy” for the past four decades that beautiful sounds like this or the smell of the morning air were never on my mind. At a deeper level, and to equate it to a sporting event, I feel like the proverbial “scoreboard” has malfunctioned and there is now a new way to keep score, and it is becoming the new normal.

READ MORE →

Indemnification Helps Partners Sleep Well

By

Businessman sleeping with a giant dollar bill for a blanket7 common conditions.

By R. Peter Fontaine

Whenever a professional liability lawsuit is lodged against an accounting firm, chances are one or more of the firm’s partners will be named. They are “front and center” in the client relationship, and the client looks to the partner to make sure everything is right.

MORE: The Physics of Accounting Firm Mergers | A Lawyer’s Guide for Spring Cleaning Your Accounting Firm | 6 Types of Due Diligence Procedures | Cultural Optimization: Making Mergers Successful | What to Ponder Before Issuing a Letter of Intent | The Four Ways ‘Non-Competes’ #FAIL in the Social Media Age
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

Current and former partners of CPA firms are wise to ask, “How am I covered in the event of a lawsuit is brought against me?” With the right indemnification and professional liability insurance coverage, both active and former partners should be able to sleep well at night.
READ MORE →

Tax Season Is Hacker Season

By

Checklist: Five things to do today to protect your firm and your clients.

The CPA Trendlines Busy Season Barometer:
New year, new strategies
Join the survey. Get the results.

By Jess Coburn
Applied Innovations

Businesses of all sizes are targets from what has become the most vicious, innovative, and lucrative criminal endeavors we’ve ever witnessed. And tax practitioners are particularly easy targets.

MORE ON BUSY SEASON 2020: IRS Urged to Form Tax Preparer Strategy |  5 Small Leaks That Can Sink a Tax Season |  Data Points Down as Tax Season Opens |  The Fight for New Tax Clients |  5 Tax Review Keys |  Tax Pros Forecast a Better 2020 |  See all Tax Season 2020 coverage here

GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

The financial services industry is perhaps the most targeted because of the value of data it possesses. And the most frequently targeted are CPAs and those who prepare tax returns.

READ MORE →

2020 Outlook: Top 5 Emerging Risks for CPAs

By

Young businessman walking on bungee cord between question mark and dollar signAnd the top five emerging opportunities, if you handle them right.

By Ken Mackunis
Executive Vice President
Aon Affinity, Professional Firms

Risk can come from unexpected places. As CPAs look to capitalize on economic and industry trends to grow their business in 2020, they need to be vigilant in identifying and mitigating the risks that go hand in hand with the expansion of capabilities and capacity.

Here’s a look at the top five areas that can pose the most risk – and reward – for CPAs in the new year. READ MORE →

Deducting Litigation Expenses: New Appellate Court Decision

By

Statue of scales of justiceAuditors said the activity wasn’t profit-seeking.

Portrait of Christopher DeMayo
DeMayo

By Christopher M. DeMayo
Withum

The Fifth Circuit Court of Appeals issued a decision on March 29, 2019, that explains some of the requirements for deducting litigation expenses.

The facts of the case are bizarre, but the controlling legal principles are not.

In a nutshell, the taxpayer was the sole shareholder of a company that was a commercial cleaning franchisor (“Company”). In November 2002, the taxpayer traveled on vacation with his girlfriend and two employees of his company to the Caribbean island of St. Maarten, where he owned a home. One of the employees was a bodyguard and the other was a former girlfriend.

READ MORE →

Who Pays the Auditors?

By

Doron

How the PCAOB could assure real independence.

By Kayleigh Padar
CPA Trendlines

Is the U.S. ready to move to a third-party payer system for audits?

The author of an article in the influential New York State Society’s CPA Journal magazine says the time has come to bring the discussion into the open.

In the article, Michael Doron, Ph.D, CPA, an associate professor in the department of accounting and information systems at California State University in Northridge, examines relationships between auditors and the public in countries which have more regulation, the results of an experiment with a third-party payer and how the United States government handles similar regulation in other industries.

Although he recognizes changing this process could be seen as “politically radical,” evidence shows it could work. Organizations such as the Public Accounting Oversight Board (PCAOB) already regulates the American auditing profession. In addition to being seen as radical, he acknowledges the shift would be a “tremendous change.” READ MORE →

The Why, What and How of Cybersecurity for Accountants

By

Lush

Checklist: Protect your firm in 10 steps.

By Hitendra R. Patil and Jeffrey Lush

Jeffrey Lush is  CEO and Co-founder, BAP Solution, a cybersecurity firm Lush is known widely as a passionate technologist with more than 34 years of IT experience. Before serving as CEO for BAP, he worked as the CTO for both HPE and Dell Federal. Lush’s US federal experience includes serving as the Executive Chief Technology Officer for the US Department of Veterans Affairs. He has served on US Presidential workgroups focused on cyber and has extensive knowledge of cybersecurity standards and policies throughout the globe, with a focus on US Federal policies to include NIST, FISMA, FedRAMP, DFARS, PCI, and HIPAA.

It is no secret that cybersecurity continues to top the list of business concerns for businesses of all sizes. Small independent business, mid-size business and large organizations can all be impacted by a cyber attack.

READ MORE →