Transforming Client Accounting Blog

James C. Bourke CPA.CITP on Workflow Automation and Data Security

Comments on 2011 AICPA Top Technology Initiatives Survey

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Several Ways to Protect Your Firm and Your Clients from A/P Fraud using Cloud Computing

Some firms are using cloud computing to offer clients new consulting models. Is this the future of the CPA profession?

According to the 2010 Report to the Nations on Occupational Fraud & Abuse from the Association of Certified Fraud Examiners (ACFE), organizations around the world lose an estimated five percent of their annual revenues to fraud. To that end, it's not surprising there have been so many recently published internal fraud-related articles from well-know resources such as AccountingWeb, CPA Success, and CPA Insider.

Has internal fraud become more commonplace for your clients? Has it simply being talked about more openly through social media channels and with the mainstream media?

In a recent interview, Jason Blumer, from Blumer and Associates, suggests small- to mid-size firms leverage the cloud, or web-based solutions, to help mitigate internal fraud with and for their clients. "Small businesses — those who don't have, or can't afford it — are disproportionately affected by fraud and lack the processes in place to prevent fraud," he said. "Preventing fraud on the front end is far less expensive than detection on the back end."

In a recent CPA2Biz webcast, featuring Jason Blumer and co-host Jeff Schultz from Bill.com along with a video clip from Bob Harris, several tips were shared on ways in which a firm can leverage a cloud-based bill pay solution to help reduce fraud within its clients' workplace, including:

• Establishing prevention procedures: Be aware. Identify key areas where your firm is most vulnerable and know who is accountable for each area. Determine the types of fraud that may occur and how they would likely be concealed. Then establish internal controls to keep these possibilities from becoming realities.
• Going paperless. By preventing "lost" bills and invoices, you reduce the risk of manipulation and information theft, while maintaining an audit trail of access.
• Enforcing separation of duties & payment control: Clearly define user access to the data, ensuring one single user does not authorize, process, and record financial transactions within the business. For example, an employee who enters bills into the accounting package should not have the ability to authorize payments for those bills. By segmenting role-based controls, you make sure that no one person has access to information and the ability to edit accounting data (vendor addresses, etc.).
• Automating work processes: Enable different members of your staff to access client bill workflow, from data entry to verifying amounts to collaborating and providing transparency to the client. By automating payment deadline reminders and an audit trail, you ensure that nothing falls through the cracks.
• Eliminating checks (incoming and outgoing): A single check contains every piece of information needed to access your money. By doing away with paper checks entirely, you protect client and firm account numbers, eliminate risk of lost, stolen or manipulated checks, and can access archived checks securely on Bill.com instead of via email.
• Performing more regular internal audits: Automated systems make regular audits much easier, creating an online audit trail with full remittance data, cleared check images and approval confirmations.

What are you doing to help your clients prevent fraud within their small- to mid-sized business?

Share your success stories here.

Press Release - AICPA Publishes Guidance on Next Generation of SAS 70

New Reporting Options Respond to Growth in Cloud Computing 

Will Cloud Computing Help Your Practice Comply with the New IRS E-filing Requirement?

How is your practice planning to comply with the IRS mandate that will require all professional tax preparers to file electronically?

While the IRS recently announced that the requirement for all tax-preparers to e-file would be phased in over two years—requiring all preparers who anticipate filing over 100 returns over the year to make the transition by January 1, 2011, and for all providers who anticipate filing 11 or more returns to comply by January 1, 2012—it is clear that the IRS is following its Congressional mandate to make the process of tax filing primarily electronic.

For many tax preparers who have already adopted e-filing, this deadline will pass unnoticed, and may even provide a competitive advantage. For other preparers who have put off adopting, or simply have not seen the need for a digital workflow, this is a crucial time to make long-term strategic decisions about technological adoption and cost management.

If your firm is faced with a need to upgrade its workflow in order to maintain current levels of efficiency while complying with the IRS e-filing regulation, the preferable strategy might be to spend as little as possible until the technology begins to truly benefit the practice.

Increasingly, firms and preparers are meeting this challenge by adopting cloud financial solutions.

One of the best reasons to start doing business in the cloud now is that cloud-based solutions can accommodate a paperless workflow. In this scenario, administrative support staff may scan incoming documents, which are then identified, labeled, and bookmarked by an automated, cloud-based software platform, where the tax preparer can quickly access the information to save valuable time.

“Smart Scanning” has been around for a while. In a recent study, 70 percent of firms reported that they were scanning tax documents. However, while scanning is the first step to a paperless workflow, cloud-based financial solutions, such as Copanion GruntWorx for tax document automation, and XCM for firm-wide tax workflow, help tax-preparers to leverage this practice, making them more efficient during the busy tax season.

Mandatory e-filing means that all tax preparer workflows will end in the digital space, so consider the ROI implications of using cloud financials to implement a streamlined, paperless process for your entire firm. Some of the questions firms should ask are:

• Will adopting a cloud-based workflow solution pay off by increasing productivity; and
• Will choosing more user-friendly solutions mitigate training costs?

As James Bourke, CPA.CITP, of WithumSmith+Brown, puts it, “Before deploying new technologies or replacing existing ones you need to ask yourself, ‘How will this deployment make us a better, more profitable firm, and is this technology aligned with our strategic plan?’”

With conventional, non-cloud-based software solutions, firms must consider not only the cost of the licenses, but also increased IT costs and the “planned obsolescence” model of traditional software, requiring additional large expenditures to upgrade.

Cloud financials, by contrast, are priced on a rolling per-user, per-month basis, with ongoing support, training, and upgrades to the platform included in the Service Level Agreement (SLA).

Some of the benefits of this model are:

• Ease of fitting cloud financials into a tight budget;
• Having new users trained as needed ; and
• Limiting IT expenditures

How is your firm preparing to meet the e-Filing requirement? Is your firm moving to a paperless tax workflow? Let us know by leaving a comment.