by John Cohen

Company credit card purchases are more often than not potentially serious problems which fall under the radar in most organizations. Virtually every case of embezzlement includes some type of credit card abuse. However, the issue of controls over company credit cards is much broader, and the problems created may not actually be part of an effort to defraud.

The best way to avoid company credit card problems is not to issue any. The employee uses his/her credit card and submits a request for reimbursement which is reviewed, approved, and processed in much the same way any purchase/payment is processed. The company reimbursement can be made before the employee’s payment to the credit card company is due.

However, companies which have decided they have need for company credit cards all too often abandon their internal control mind-set. At one of our clients, the organization used the controller’s personal credit card as the company credit card. Each month, the controller analyzed his bill, prepared and authorized the reimbursement, and maintained the credit card invoice file. At another company, at least one employee thought that by giving him a company credit card, the company was authorizing him to buy “company goodwill” lunches, flowers, etc. at his own discretion. The purchases/payments were not individually reviewed and approved, because the management incorrectly believed it would catch any problems by line item budget versus actual reviews. Unauthorized purchases reached $30,000 before the problem came to light.

Policies and procedures necessary to appropriately control credit card purchases vary from organization to organization. It is one of the first processes we review for our clients, and we are very adept at customizing “best practices” to individual situations. If you have questions about any of your organization’s policies and procedures, give us a call.

NPA Consultants are interim CFO/Controllers and Process Improvement Specialists in Policies, Procedures, Internal Controls, and Financial Reporting.  We help accounting departments run “better, faster, cheaper,” and Boards of Directors/senior managements fulfill their fiduciary duties at the highest possible level.  We are happy to answer any questions.  Contact us at info@NPAccountants.org or 617 694 4600.

by John Cohen

QuickBooks has a huge market share of sole proprietors and small businesses/nonprofits, probably well earned because of its simple structure and user friendliness.  But its simple structure and user friendliness also create some of its more serious problems.

For even small organizations, the biggest QuickBooks weaknesses are the lack of built-in internal controls, the poor reporting flexibility, and the sometimes awkward and time-consuming tasks to accommodate complex situations.  Lack of internal control is the most dangerous, since it means the organization is subject to increased risk of undetected errors and even fraud.

Most users don’t use QuickBooks to its full potential anyway, so professionals like NPA Consultants spend a fair amount of time maximizing the QuickBooks features for our clients.  But in any case, “the big question” has always been at what point should an organization move up to a more sophisticated software solution.  The answer is not absolute, but here are a few suggestions for users to think about.

IF you have more than one or two accounting staff inputting data, you have enough volume to start thinking about a better software package.  At the very least, you should have someone review your general internal control procedures and maximize the usefulness of the program while reducing risk.

IF you have multiple profit or cost centers, you may even be using “classes” in QuickBooks, but your staff may be spending excessive time in input and “work-around” reporting, especially using Excel spreadsheets.

IF you can’t produce financial statements without re-entering the QuickBooks trial balance into another program (e.g., Excel) you should consider a program which accommodates your reporting needs or supports one of the popular report writer programs.

IF you are using a “bolt-on” product which downloads to QuickBooks, you may be able to simplify the process, reduce staff time and confusion, provide for more detail, and reduce risk of error by using one integrated system.

IF you have a number of fixed assets and have been keeping track of them (and depreciation) on Excel sheets, you should either purchase a separate fixed assets program or consider moving up to a more sophisticated accounting program which has a fixed asset module.

 by John Cohen

A CEO I once worked for loved the mantra, “Turn your weakness into strengths.”  He was very successful at it, and I have often used that adage as a guide.  At one of our clients, the CFO and the CPA Audit Partner created a “win-win” situation that seems to be a living example of that rule.  Here’s the short version of the story:
 
It was no secret that the CFO was stretched thin on staff and was unable to get his budget appropriately increased.  Both the CFO and the CPA firm had a cordial, but dry, highly regimented, compliance-oriented relationship with the Audit Committee.  But an attitude of “status quo” ruled the day.
 
The breakthrough came when the CFO and the Audit Partner agreed to support each other in discussing a “Long Term Continuous Improvement Campaign” with the Audit Committee.  Almost immediately,  Audit Committee Members showed that they were thrilled to be part of a process which was a progressive, pro-active effort to improve the organization, and viewed both the CFO and the Audit Partner as being much more important “value-added resources” than previously thought.  The Audit Committee agreed to the importance of setting aside a budgeted amount each year in the next few years for this initiative and directed the CFO to present his multi-year recommendations.
 
When we were called in, it took about two hours for the CFO and us to develop a prioritized “hit list” of projects which needed to be done and the approximate cost of each.  With the “blessing” of the CPA firm, the Audit Committee recommended the additional funds for the first year, and we were hired as the process improvement consultants to perform the work.  As a result, the organization has streamlined many of its processes, improved its internal controls, and reduced its dependence on Excel sheets; and both the CFO and the Audit firm have a highly improved profile within the organization.
 

NPA Consultants are specialists in Policies, Procedures, Internal Controls and Financial Reporting.  We help accounting departments run “better, faster, cheaper,” and Boards of Directors/senior managements insure that they are performing their fiduciary duties at the highest possible level.  We are happy to answer any questions.  Contact us at info@NPAccountants.org or 617 694 4600.

(Boston, MA – August 30, 2011). In the last month alone, the Massachusetts Office of the State Auditor has issued two audit reports highly critical of the operations and internal control of two large agencies receiving Federal and State funds. As a result, the State is asking that hundreds of thousands of dollars be returned. In both situations the audit reports cited internal controls as a major element. Continue reading Why Nonprofits Should Consider Accounting Procedures Manuals Mandatory →

(Boston, MA) In 2003, I was fortunate enough to be one of a handful of project managers charged with investigating, documenting, and quantifying the largest fraud in the history of the planet, WorldCom. Eventually the fraud reached 10 or 12 Billion dollars, and the CEO was put away for 20+ years. Continue reading Odyssey of Corruption – The Latest Massachusetts Nonprofit Scandal →

(Boston, MA – October 16, 2011) An audit by a federal IG (Inspector General) staff or any government audit is under the best of circumstances a disruption to your agency’s operations – sometimes for months – and cause for concern. Even the most assiduous amongst us make innocent mistakes (or incorrect interpretations), and the thought of having to return money spent with good intentions is not pleasant. Continue reading How to Avoid Some of the Most Common (and Expensive) Findings from an IG or State Audit →