October 2016 Article Archives

5 steps to strengthen internal controls at small businesses and not-for-profits

Published on October 25, 2016

Internal controls may lag at smaller organizations as managers sacrifice them for the sake of service delivery, particularly at cost-conscious not-for-profits and start-up organizations.

Yet the risks are too great to ignore. Consider that the Association of Certified Fraud Examiners (ACFE) in its Report to the Nations on Occupational Fraud and Abuse: 2016 Global Fraud Study found that businesses with fewer than 100 employees are more vulnerable to occupational fraud. The median annual fraud loss for religious, charitable, or social service organizations was $82,000. This amount does not take into account the cost to the organization’s reputation. Because charitable organizations are in the public eye, the occurrence of fraud, or even allegations of fraud, can significantly affect an entity’s ability to attract support.

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Fraud risk management guidance updated by COSO

Published on October 25, 2016

Managing the risk of fraud is a challenge for organizations of all sizes.

A typical organization loses 5% of revenues in a given year as a result of fraud, according to the 2016 global fraud survey results contained in the Report to the Nations on Occupational Fraud and Abuse.

But governing boards, senior management, staff at all levels, and internal auditors can deter fraud in their organizations by following guidance contained in a newly updated Fraud Risk Management Guide published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), of which the AICPA is a member. The Association of Certified Fraud Examiners (ACFE) is a co-sponsor of the report.

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3 Trends Driving Changes in Accounting

Published on October 25, 2016

The accounting sector has arguably been slow to adopt new technology, eschewing new, and often unproven, technology for older, tried and true tools. However, in the immortal words of Bob Dylan, “the times they are a-changin’”.

With the changes to the audit threshold among other things, accounting firms are finding themselves reassessing and looking to expand their client services in order to continue growing their businesses. A big part of achieving this is improving efficiency. It’s becoming harder to ignore the potential gains in efficiency and revenue that can be achieved with the right technology. As a result, those in favor of change have reached a critical mass. The following are the top technologies enabling this change:

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Accounting for Cooperative Business Combinations

Published on October 25, 2016

The cooperative landscape continues to change throughout the country as agribusiness organizations consolidate. Historically, consolidation has been a result of distressed cooperatives or privately held businesses looking to combine with a stronger company. Today’s environment is much different — cooperatives with strong balance sheets are consolidating to improve customer service, reduce overhead, upgrade technology, or address leadership changes as management ages.

One of the first questions that should be asked early in the process of a cooperative merger is, “What impact will this combination have on my cooperative’s balance sheet?” To answer this question, the management and board of directors for both cooperatives will need to consider several factors.

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Eight Practices That Help Prevent Fraud in Your Agribusiness

Published on October 25, 2016

Agribusinesses that become victims of employee fraud tend to place unrestricted trust in those they shouldn’t — including the credentialed controller or CFO they hired to help run their business. In fact, sometimes the individual who commits fraud is a long-term employee in a finance role. These individuals have the capability of doing the most damage, so it is important to use financial and operational protocols that remove opportunities for fraud.

Fraud in agribusiness
As an agribusiness, you may have been a victim of internal fraud, and it occurs more frequently than you might imagine. Though the patterns of theft and the results were all different, the victims shared five similar shortcomings:
• Leadership failed to establish a tone of vigilance in the organization.
• Employees did not know how to report suspected fraudulent activity.
• The part-time or absentee owners trusted their fraudulent employees completely.
• They either did not have internal controls in place at all or those they had were not followed.
• The perpetrator was caught by chance, not through systematic fraud controls.

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