Monthly Archives: July 2017

Hire and Retain Great CPA Firm Employees
Jul 31

How to Hire and Retain Great CPA Firm Employees

By Charles Hall | Accounting and Auditing

Do you desire to hire and retain great CPA firm employees? Today we’ll discuss how you can do just that.

Last month I visited two small CPA firms, one in Georgia and one in North Carolina. Both firms are located in remote areas, so it’s difficult to attract solid talent. Also, firm fees are lower and–as a result–wages are less. Consequently, these firms are not able to provide compensation comparable to Atlanta or Charlotte.

Nevertheless, I found that both firms have great people. So, how did they do it?

Hire and Retain Great CPA Firm Employees

Mine Locally

First, they are mining the gold locally. What do I mean? Well, they are constantly looking in their own neck of the woods for talent. Is there a local college student majoring in accounting. They are inquiring. Has a new CPA moved into the community? They are putting out feelers. If there is a possible match, they are digging for it.

Give Them What They Want

Second (and I think this is key), they are giving new-hires what they want. No, they are not offering Atlanta or Charlotte wages. They can’t. But they are offering other things. Like what?

Well, first of all, flexible hours. If a young female accountant has children at home and desires to spend time with them, then these CPA firms are crafting work schedules that allow Mom to be with her children but still work. For many people–especially Millennials–being able to put family first is everything. Give them what they want. This is good for the employee and the firm. Why? Happy staff members make for productive and loyal employees.

Employment should always be win-win. Too many CPA firms think only about what is good for them, and not their employees. But this is a mistake–is it not? There are two parties. The firm and the employee. Both need to be happy.

Ask yourself, “Is the firm better off with an excellent employee for twenty hours a week or a bad one for forty?” You know the answer.

And while we are talking about giving them what they want, let’s discuss remote work.

Working From Home

Many smaller CPA firms require their employees to come to the office, but what if a potential new-hire lives two hours away? Both of the companies mentioned above allow employees to work from home. While this arrangement has its challenges, consider the option anyway. Ask yourself: “Are you better off with a great remote worker or no worker at all?” I know, getting the technology working can be challenging. But look at what you gain. A competent employee that is not available in your locale.

You may be wondering, “Charles, do you do this?” Yes. My administrative assistant lives in Colorado (I’m in Georgia), and one of my associates works in South Carolina. May I say, “They are awesome!” I don’t know what I’d do without them. Resolving technology and training issues requires effort. But I’m telling you, my employees’ distance has almost no downsides (other than I’d like to see them sometimes).

These two employees have remote access to our paperless files (we use Caseware). And Basecamp (project management software) enables us to stay on the same page. Additionally, we use Zoom for conferencing purposes. So, I can share my computer screen and talk with them about anything. It’s almost better than being in the same room.

One other ingredient to hiring and retaining wonderful employees is having a positive work environment.

All in the Family

One thing I noticed in the two CPA firms is a sense of family. You could tell everyone enjoyed being there. 

If you want your employees to feel like family, treat them that way. Say thank you — a lot. Give unexpected gifts. Celebrate achievements. Have a Thanksgiving and Christmas dinner together. Go to an Atlanta Braves game (and do the tomahawk chop). Give them a day off for their child’s sporting event. Culture matters.

And this may sound silly but love matters. (Yes, I used the L word–going out on a limb.) We might be accountants but we are still humans, people that desire approval and genuine concern.

Great or Mediocre Employees — It’s Your Choice

If you’ve had no success in attracting talent to your small- to medium-sized CPA firm, think about the above. Too many firms can’t hire quality personnel because they refuse to change their hiring practices or work environments. But we live in a different world today. Millenials don’t think like the Baby Boomers. So maybe the Boomers need to think like Millenials. Then those great employees might magically appear on your doorsteps.

theft of cash from local governments
Jul 26

Thefts of Cash From Local Governments are Common

By Charles Hall | Asset Misappropriation , Local Governments

Thefts of cash from local governments are common, are they not? 

How many times have you seen a local newspaper article like the following?

Johnson County’s longtime court clerk admitted today to stealing $120,000 of court funds from 2015 through 2016. Becky Cook, 62, faces up to 10 years in federal prison after pleading guilty to federal tax evasion and theft.

Thefts of Cash from Local Governments

Usually, the causes of such cash thefts are (1) decentralized collection points and (2) a lack of accounting controls.

Thefts of Cash from Local Governments

1. Decentralized Collection Points

First, consider that governments commonly have several collection points.

Examples include:

  • Recreation department
  • Police department
  • Development authority
  • Water and sewer department
  • Airport authority
  • Landfill
  • Building and code enforcement
  • Courts

Many governments have over a dozen receipting locations. With cash flowing in so many places, it’s no wonder that thefts of cash are common. Each cash receipt area may have different accounting procedures – some with physical receipt books, some with computerized receipting, and some with no receipting system at all. 

A more centralized receipting system reduces the possibility of theft, but many governments may not be able to centralize the receipting function. Why? Here are three reasons:

  1. Elected officials, such as tax commissioners, often determine how monies are collected without input from the final receiving government (e.g., county commissioners or school). Consequently, each elected official may decide to use a different receipting system.
  2. Customer convenience (e.g., recreation centers and senior citizen centers) may drive the receipting location decision.
  3. Other locations, such as landfills, are purposely placed on the outer boundary of the government’s geographic area.

What’s the result? Widely differing receipting systems. Since these numerous receipting locations have varying controls, the risk of theft is higher. 

2. Lack of Accounting Controls

Second, consider that many governments lack sufficient accounting controls for cash.

It’s more likely cash will be stolen if cash collections are not receipted. If the transaction is recorded, then the receipt record must be altered, destroyed or hidden to cover up the theft. That’s why it’s critical to capture the transaction as early as possible. Doing so makes theft more difficult.

Additional steps that will enhance your cash controls include the following:

  1. If possible, provide the government’s administrative office (e.g., county commissioners’ finance department) with electronic viewing rights for the decentralized receipting locations (e.g., landfill).
  2. Require the transfer of money on a daily basis; the government’s administrative office (e.g., county commissioners’ finance department) should provide a receipt to each transferring location (e.g., landfill).
  3. Limit the number of bank accounts.
  4. Deposit funds daily.
  5. Periodically perform surprise audits of outlying receipting areas.
  6. Use a centralized receipting location (and eliminate the decentralized cash collection points).
  7. Persons creating deposit slips and handling cash should not key those receipts into the accounting system.
  8. The person reconciling the bank statements should not also handle cash collections.
  9. Don’t allow the person billing customers to handle cash collections.

If segregation of duties is not possible (such as 7., 8. and 9. above), consider having a second person review the activity (either an employee of the government or maybe an outside consultant).

Final Thoughts About Fraud Prevention for Cash

When possible, use an experienced fraud prevention specialist to review your cash collection procedures. Can’t afford to? Think again. The average incidence of governmental fraud results in a loss of approximately $100,000.

Finally, make sure your government has sufficient fidelity bonding. If all else fails, you can recover your losses through insurance.

For more fraud prevention guidance, check out my book on Amazon; click the book below. Also, see my free slide deck titled Finding and Preventing Fraud in Local Governments. Additionally, here’s a post concerning how to audit cash.


Audit planning analytics for first year
Jul 19

Audit Planning Analytics for First-Year Businesses

By Charles Hall | Auditing

How do you create audit planning analytics for first-year businesses? We commonly compare current year numbers to the prior period, but, in this case, there are no prior year numbers. What other options are available?

Audit Planning Analytics for First Year

Courtesy of

Planning Analytics for First-Year Businesses

Audit standards don’t require the use of any particular analytics, so let’s think outside the box (of comparing current and prior year numbers). There are at least four alternatives:

  1. Nonfinancial information
  2. Ratios compared to industry averages
  3. Intraperiod totals (e.g., monthly or quarterly)
  4. Budgetary comparisons

How can we use nonfinancial information?

AU-C 315, paragraph .A7 states:

Analytical procedures performed as risk assessment procedures may include both financial and nonfinancial information (for example, the relationship between sales and square footage of selling space or volume of goods sold).

First Option

So one option is to compute expected numbers using nonfinancial information. Then compare the calculated numbers to the general ledger to search for unexpected variances.

Second Option

A second option is to calculate ratios common to the entity’s industry and compare the results to industry benchmarks. While industry analytics can be computed, I’m not sure how useful they are. An infant company often will not generate numbers comparable to more mature entities. But we’ll keep this choice in our quiver, just in case.

Third Option

A more useful option is the third–comparing intraperiod numbers. First, discuss the expected monthly or quarterly revenue trends with the client before you examine the accounting records. The warehouse foreman might say, “We shipped almost nothing the first six months. Then things caught fire. My head was spinning the last half of the year.” Does the general ledger reflect this story? Did revenues and costs of goods sold significantly increase in the latter half of the year?

Fourth Option

The last option we’ve listed is a review of the budgetary comparisons. Some entities, such as governments, lend themselves to this alternative; others, not so–those that don’t adopt budgets.


So, yes, it is possible to create useful risk assessment analytics–even for the first year of operation.

Remember: planning analytics are for the purpose of detecting risk. If the numbers don’t line up as expected, then you have a risk indicator. It is here that you may need to respond with substantive procedures.

Other Ideas?

What planning analytics do you perform for first-year audit clients?

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10 Ways to Prevent Small Business Fraud
Jul 18

Episode 9 – Ten Ways to Prevent Small Business Fraud

By Charles Hall | Fraud

10 Ways to Prevent Small Business Fraud

10 Ways to Prevent Small Business Fraud

Many small businesses think they can’t prevent fraud. Why? There are not enough people to segregate accounting duties. Also, small businesses may feel like they don’t know how to prevent fraud (even if they had more people). 

Here are ten ways to lessen the threat of fraud regardless of your company’s size. But these suggestions are even more important for the small business that has a limited number of employees.

Check these suggestions out to save yourself plenty of heartaches.

The Power of Story in Teaching CPAs
Jul 14

The Power of Story in Teaching CPAs

By Charles Hall | Accounting and Auditing

Storytelling enhances communication, but most CPE classes are void of narrative. CPAs need more than information. We need (at least some) emotion.

This post provides information about the power of story in teaching CPAs.

Power of Story in Teaching CPAs

The Power of Story in Teaching CPAs

Think of your last educational class, particularly the slide deck. You recall the presenter saying, “Here’s all the information I have regarding variable interest entities.”

And the bullets began:

  • A variable interest entity is …
  • Obligation to absorb…
  • Scope exceptions include…

It’s here you said to yourself (in a Steve Martin tone), PLEEEASE!

Speakers must first remember we are talking to human beings, people with passion and fears and heartbeats. (Yes, CPAs qualify.)

If a speaker’s goal is to transfer knowledge, what’s the best way to do so? Start with a story.

I hear your rejoinder now, “About variable interest entities?”


VIEs are not tantalizing. But dig deeper and you will find the story. (There’s always a story.)

Start with Story

In searching for the spice, you ask yourself questions. Why do the VIE standards exist? What events led to their creation? The result: a story to wet your audience’s appetite.

In teaching the class, you start with Enron and its use of special purpose entities. You describe the immeasurable damage done by Ken Lay and his lieutenants, and that Mr. Lay never served a day of time–his life cut short just before sentencing. You tell the tantalizing story of the courageous whistle-blower, Sherron Watkins (a Time Magazine Person of the Year). And since your audience is full of CPAs, your Arthur Andersen vignette does not fall on deaf ears.

Boring? Not you.

Your story creates context and breathes life into an otherwise tedious set of standards.

Now your listeners are receptive.

The Formula

So your formula is: Story, then content. Create appetitive. Then feed.

Following this path, you find your audience listening, even leaning forward.

Brain Rules

John Medina, in his book, Brain Rules, suggests that teachers “bait the hook” every ten minutes. Medina says, “After 9 minutes and 59 seconds, the audience’s attention is getting ready to plummet to near zero.” Stories are one of those hooks. The book goes on to say, “Fear, laughter, happiness, nostalgia, incredulity–the entire emotional palette can be stimulated, and all work well.”

Brain Rules lists three elements of a hook (to engage your class):

  1. The hook has to trigger an emotion.
  2. The hook has to be relevant.
  3. The hook has to go between segments.

Four Steps to Delightful Accounting Presentations

Using stories is just one of four steps to delightful accounting presentations.

Key Fraud Survey Insights
Jul 12

Key Fraud Survey Insights from the ACFE’s 2016 Report to the Nation

By Charles Hall | Fraud

If you are to prevent fraud, you must first know how it occurs. Every two years the Association of Certified Fraud Examiners issues its fraud survey titled Report to the Nation. Below you’ll see key fraud survey insights from the 2016 study.

Key Fraud Survey Insights

Key Fraud Survey Insights

  • A typical organization loses 5% of revenues in a given year as a result of fraud
  • The median loss for all cases was $150,000
  • 23% of the cases involved losses of more than $1 million
  • Asset misappropriation occurred in more than 83% of cases
  • Of the asset misappropriation cases, billing schemes and check tampering schemes pose the greatest risk
  • The median duration of the frauds was 18 months
  • Schemes that lasted more than five years caused a median loss of $850,000
  • In 94.5% of the cases, the perpetrator took some efforts to conceal the fraud (usually creating or altering documents)
  • 39% of the cases were detected by tips
  • Whistleblowers are most likely to report fraud to their direct supervisors (20.6% of cases) or company executives (18%)
  • Approximately two-thirds of the cases targeted privately held or publicly owned companies
  • Corruption is more prevalent in larger organizations
  • Check tampering, skimming, payroll, and cash larceny schemes are twice as common in small organizations when compared to larger organizations
  • Fraud is most prevalent in the following industries: Banks, governments, manufacturing 
  • The presence of anti-fraud controls correlates with both lower fraud losses and quicker detection (33% to 50% more quickly)
  • The most prominent weakness is a lack of internal controls (cited in 29.3% of cases)
  • The perpetrator’s level of authority is strongly correlated with the size of the fraud
  • More occupational frauds originate in the accounting department (16.6%) than in any other business unit
  • The more individuals involved in an occupational fraud scheme (collusion), the higher the losses tend to be
  • For schemes with five or more perpetrators, the median loss was $633,000
  • One of the more common red flags was the fraudster was living beyond his or her means
  • Only 5.2% of perpetrators had previously been convicted of a fraud-related offense
  • In 40.7% of cases, the victim organizations decided not to refer their fraud cases to law enforcement
Dangers of a Trusted Bookkeeper
Jul 10

The Dangers of a Trusted Bookkeeper

By Charles Hall | Fraud

Many small businesses experience great harm because they do not understand the dangers of a trusted bookkeeper. This article explains how.

The Dangers of a Trusted Bookkeeper

So your company has a wonderful bookkeeper, Joan Hardison. Just last week you told your banker, “Joan does such a good job, I don’t have even think about my bookkeeping.” But does your trust create potential dangers–some that might be significant?

Dangers of a Trusted Bookkeeper

Bookkeeping Password

Is Joan the only person with the password to your bookkeeping software? If yes, why? Oh, she’s trustworthy. I see. But can she control when he dies?

If Joan is hit by a bus and passes from this earth, can you access your bookkeeping information?

If your company has years of bookkeeping information and Joan is the only person with the password, then you may lose it all. Yes, you have the printed copies of your financial statements, but the details of your financial life may be lost forever. 

Intentional Destruction of Bookkeeping Information

Here’s another threat. Joan becomes angry.

Well, now she can intentionally destroy your financial records. In some systems, this is as simple as hitting a delete key. So provide the bookkeeping password to multiple people (if the system does not allow multiple users). If a bookkeeper leaves, remove that person from the system as soon as possible. Sabotage is an ugly thing. 

Also, consider the potential for harm if your bookkeeper is the administrator in your bookkeeping software. He or she controls who gets in and who can’t. It may be wise to make someone other than the bookkeeper the administrator, or–if the system allows–set up two administrators. Main point: Don’t allow one person (the bookkeeper) to control everything.

Additionally, back up your data, or use a cloud service that does this for you. 

The Threat of Theft

Oh, and here’s one more danger: Theft.

Many small businesses trust their bookkeeper too much, not reviewing what the person is doing. This is a recipe for fraud.

If your bookkeeper prints your checks, then she can write checks to herself, can she not. And if she alone reconciles the bank statement, then you really have a problem. She may be the only person that sees cleared checks. If you’re the business owner, you may be thinking, “But I’m the only authorized check signer.” Good luck with that. I’ve seen plenty of forged checks.

As I tell my clients, “Trust your mother but cut the deck.”

Too many small business owners fail to review the work of their bookkeepers, and these businesses often are not audited. Since the bookkeeper knows no one is watching (and that no one will), it’s easy to steal. What’s the solution?

While not a silver bullet, have the bank statements mailed to the small business owner (or someone other than the bookkeeper). Have this person open the bank statements and review the cleared checks. Thereafter, provide the bank statement to the bookkeeper. This simple step can save you. Now, the bookkeeper knows someone is paying attention, and your risk of theft is diminished. 


So, if you have a trusted bookkeeper, great! But you still need to do the following:

  • Provide the bookkeeping password to more than one person
  • Backup your bookkeeping information
  • Have your bank statements mailed to someone other than the bookkeeper

Go ahead. Lessen the dangers of a trusted bookkeeper. You’ll sleep better.

Click here for more articles about white-collar crime.