RISK MANAGEMENT

PPP Traps: 1 in 5 Accountants Report Shady Dealings

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Fake employees, fake businesses, and lavish spending mar the COVID relief program.

Have you walked away from any PPP engagements?
PPP Practice Management Do’s and Don’ts:
Join the Survey. Get the Results.

By Sandi Leyva

With fast money comes fast fraud, and the arrests and jail terms are only just beginning for individuals who applied for PPP money under false pretenses and have already been caught. You’ve seen the headlines, where people from every walk of life including reality TV stars, rappers, a Wal-Mart manager, and even an NFL player have been arrested on charges of PPP loan fraud.

PPP fraud has likely already impacted your firm. The extent of the fraud is the real story.

One thing is fairly predictable: “Audits will pick up,” says Bradley Burnett, tax attorney and instructor of the PPP Forgiveness webinars being conducted by Accountant’s Accelerator and CPA Trendlines.

According to respondents of an ongoing survey being conducted by CPA Trendlines and Accountant’s Accelerator, preliminary results show that just over 1 out of every five accounting professionals offering PPP services (22 percent) has had to walk away from at least one PPP engagement.  And one firm has had to walk away from more than five PPP engagements.

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The Clients that Keep You Awake at Night

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Masked man carrying large money bagWhen even the best internal controls fail, guess who the client will blame?

By Ed Mendlowitz
Call Me Before You Do Anything: The Art of Accounting

I have addressed the importance of controls when trying to get a client. But it is also important to retain the client.

MORE: Clients Don’t Lose Sleep for Overpaying Taxes | 6 Ways to Increase Your Fees … If You Dare | The Clients that Got Away | Upselling Made Painless | Boosting a Fixed Fee Substantially | Creative Ways to Retain Staff | What CPAs Can Learn from Lawyers and Doctors | My Top 10(ish) Regrets
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A good system that is not monitored is a sure way to lose your client – and your sleep.

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Fraud: It’s Where the Money Is

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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  |

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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 →