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Personal IRS Identity Theft Experience

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Wednesday, March 30, 2016

In my post of March 11, 2016, “IDENTITY THEFT KINGPEN CAUGHT BECAUSE HE FLUNKED GEOGRAPHY”, I mentioned identity theft was becoming personal.  My daughters’ electronically filed tax return was rejected since someone had already filed a tax return using her social security number.   The solution was to file a paper tax return with the IRS.  In my post, I said to ‘stay tuned for further developments’.

 Monday, March 28, my daughter received a letter from the IRS.  The letter contained instructions to go to a website and answer some personal questions, or call a specific number of the IRS.  She first went to the website and answered some specific questions. One of the questions was the birthdate of a former sister-in-law of her husband.  Another was a question about different addresses.  After answering the website questions, she was then directed to call a specific IRS number.  She called and was placed on hold for an hour.  The fraud department of the IRS is shorthanded and very busy.

Finally, after an hour she was able to talk to an IRS representative.  The representative stated the fraudulent tax return filed had been flagged since it did not fit the profile of her previously filed tax returns.  “The IRS is getting smarter because of the amount of fraudulent tax returns being filed.  We now track the trends of taxpayers.”  After proving her identity, she was told to expect her refund in about six weeks, as opposed to the 10 days it normally takes for an electronically filed tax return. She was also told to expect a letter from the IRS advising her of other action to take, such as contacting the Social Security Administration, Credit Bureaus, and other action to take.  She will also receive a specific pin number to use when filing future tax returns.  


Tags:  accountants  fraud  identity protection  taxes 

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Films That Inspire Accountants

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Thursday, March 3, 2016


Films That Inspire Accountants

The CPA Letter Daily, March 1, 2016, contained an article, ‘5 Films to Inspire CPA’s’.  I had never thought of the films as inspiring, although they are some of my favorite movies.  These films are:

·         All the President’s Men 1976.  The film earned four Oscars.  It is an inspiration to accountants since it is the quest for the truth, even at personal risk.  This is a canon of the AICPA Code of Ethics, not to shade the numbers, or stated another way; do not paint the financial picture to hide the facts.  I particularly relate to the story since at the time I was traveling to Washington DC on business trips.  I was involved on a large utility case and in hearings, and stayed in the Watergate Hotel on one trip.  They also have a real nice restaurant that overlooks the Potomac.

·         Schindler’s List 1993. As noted by Dr. Sara Kern CPA, associate professor of accounting at Gonzaga University, her favorite quote was when Schindler said to Stern(the accountant),”My father was fond of saying you need three things in life: a good doctor, a forgiving priest, and a clever accountant.  The first two I’ve never had much use for.”   They devised a plan that saved some 1,200 Polish Jews from the death camps. The film won seven Oscars.

·         The Shawshank Redemption1994.  The film depicts a person with financial skills being able to escape from a brutal prison by providing financial advice to the guards and the warden.  As stated by Dr. Ken Milani CPA, University of Notre Dame, “It also displays the power of information and how information can be used for good and evil.” 

·         The Untouchables 1987.  The story of FBI agent Eliot Ness, and his brainy US Treasury accountant Oscar Wallace, bringing down famous gangster Al Capone for income tax evasion.  

·         Wall Street 1987.  Set in New York City, the story based on the excesses of the 1980’s portrays Michael Douglas in a cesspool of illegal activities, insider trading and securities fraud.  The famous line “Greed is good!”  Douglas earned a best actor Oscar for his part.  Charlie Sheen plays a young ambitious stockbroker, a mentee of Douglas.  Joseph Rugger, CPA and CFO of Jonesboro Prosthetic ad Orthotic Laboratory notes, “At some point in all of our careers, we as accountants are faced with the challenge of whether or not we want to stay on the good side, or take shortcuts to the bad side. It is a great reminder of the good, bad, and the ugly that comes with blind ambition.”

Personally, I would add one more film to the list that inspire accountants.  That film is “A Few Good Men”, where Tom Cruise plays a young attorney that brings down a superior officer played by Jack Nicholson.  Nicholson won an academy award.  To me it portrays the courage to pursue the truth at the risk of personal loss and sacrifice.  Although Tom Cruise won the battle, had he lost would he have regretted not pursuing the truth?  If he had not pursued the battle would he have regrets over not continuing the battle? 

Tags:  Accountants  Ethics  Finance  Inspiration 

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Steps to Reduce Fraud in Your Small Business

Posted By Lance Martin, Ledger Solutions LLC, Friday, September 4, 2015

Fraud can cost a business more than money.  It can damage relationships with customers and vendors and at its worst it can lead to bankruptcy.  While there is no fool proof method for eliminating fraud completely there are some things a small business can do to help reduce the risk of fraud.

Employee Background Checks

Before hiring any new employee (especially employees that have access to cash and bank accounts) you should perform a background check.  A credit check is also recommended for employees that will handle the accounting functions of a business.  Employees that can’t handle their own personal finances won’t be good at handling the finances of your business so be careful in who you hire.

Have Someone Oversee or Review Their Work

Accountants and bookkeepers of small businesses should not have independence in their position.  Ideally, you will want to limit their roles when they have access to cash and/or check stock.  The person making the deposits should not be the one reconciling the bank account. The person entering the bills and cutting the checks should not be the one signing the checks. Business owners with a few employees who don’t have the time or expertise to oversee the accounting functions should hire an independent accountant to review their work and to reconcile the bank accounts.  When an employee is held accountable and knows someone is checking their work they will think twice about taking advantage of you.

Implement Best Practices

Deposits should be made daily and reconciled to customer invoices or daily sales receipts. Check stock should be locked in a safe place with limited access.  Never use a signature stamp on checks and never sign blank checks for use when you’re out of the office.  Always get a Form W-9 from your vendors before paying them.  Review invoices for accuracy and review your vendor list on a regular basis for new vendors.  Double check phone numbers and addresses of new customers and vendors.  Conduct an internet search to see if a new business customer or vendor is registered to do business in your state.

Do you need someone to review your accounting functions and to help with best practices? Ledger Solutions of Tucson is an accounting firm that specializes in accounting and bookkeeping for small businesses like yours. You can reach us by phone at (520) 618-5390 or by requesting information through our website.

Tags:  accountants  BOOKKEEPING  business owners  Small Business 

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Dodge The Unknowns In Your Business

Posted By Jason Trujillo, Woodbury Financial, Monday, January 12, 2015

Dodge The Unknowns In Your Business by Steve Parrish

Article originally appeared on on January 12, 2015.

Click here to read original post.

The New Year is a great time to challenge our assumptions concerning what we know about our businesses. A fresh look includes questioning whether business givens are all that accurate. You may be aware of Donald Rumsfeld’s famous comment about the dangers of the unknown:

"But there are also unknown unknowns…the ones we don’t know we don’t know…it is the latter category that tend to be the difficult ones."

In the business world, the point of this idea is that we need to keep an eye out for those things we don’t know – but think we do. Bad assumptions lead to bad business judgments.

5 assumptions that can lead to bad outcomes

Paraphrasing to protect the innocent, these comments I heard in 2014 demonstrate the business risk of bad assumptions you can avoid in 2015.

  1. I start tax planning late in the year, after I have an idea how the business is doing.” This sounds good on paper, but unfortunately, your options are limited late in the year. Sure, you can make some last-minute equipment purchases, harvest some losses and possibly prepay a mortgage. But the really significant tax opportunities require planning. For example, if you want to capture deductions with a qualified plan or save executive taxes with a nonqualified plan, you need time to research, create and fund these plans. It’s more than just writing a check late in December.
  2. I know the law on this topic because I researched it recently.” I’m preparing to teach a graduate school class on business law and wanted to update my knowledge, so I attended a university lecture on insider trading in December. The professor did a great job. But a week after his lecture many of his points were rendered moot when a federal appeals court in New York overturned two insider-trading convictions. As another example, the Affordable Care Act has already had more than 42 changes from all three branches of the federal government. It’s not the same law it was even six months ago.
  3. Exit planning begins when I’m ready to exit.” Would you want your employees to say they’re not going to worry about retirement planning until they retire? Business exit planning rarely entails just packaging the company financials and walking over to a business broker’s office. Because of some S Corp tax rules, I tell business owners they should start exit planning as early as 10 years before actually selling or leaving their business.
  4. My business will sell for what it’s worth.” This common misconception assumes a perfect marketplace where the seller’s and buyer’s assessment of the business are identical. Unfortunately, no market is perfect. From the buyer’s perspective, the value of a business is dependent on what their objectives are for that business. The offer could be based on the company’s liquidation value, earnings values or strategic value. For the seller, there is the opportunity to proactively take steps that increase the market value of the business. Just as a $4,000 investment in updating a house’s kitchen can increase sale value by $20,000, so too can a business be prepared and staged for sale. Sometimes it is a simple as making capital improvements, finding the right intermediary and timing the market to maximize price.
  5. It’s best to keep my wealth in the business so I can keep control of it.” This is a classic “unknown unknown” for owners of privately held businesses, particularly family businesses. It is assumed that, as wealth builds in the business, it should remain in the business, where it can stay under the watchful eye of the owner. In reality, a family business is almost never a good place to park family wealth. It subjects these assets to additional creditors, generates additional taxes and can create long-term liquidity issues for the owner and family.

5 ways to avoid bad assumptions

No business owner wants to rely on erroneous assumptions. There are ways to maintain a healthy, ongoing review process of business judgments.

  1. Stay current – Busy owners sometimes see knowledge as an item for the to-do list. Learn a topic, and move on. A better approach is to dedicate a certain amount of time to ongoing education. Commit to a set time each week to read relevant magazines, blogs and business journals. Look at knowledge as an ongoing business process rather than a single transaction.
  2. Learn from others – Involvement in breakfast clubs, study groups and online chat rooms is more than just a diversion. It’s a way to test assumptions, identify unknown unknowns and maintain a healthy check on egos.
  3. Use an advisory board – Particularly for single-owner businesses, an advisor board is one of the most effective ways to get a big picture perspective on the business. Trusted advisors can help challenge assumptions and question business judgments.
  4. Use advisors, not transactors – A common complaint I hear from owners who have fast-growing businesses is that they’re outgrowing their advisors. This does indeed happen, and the owner must make sure the advisor team has the competence to advise. Attorneys should do more than draft, accountants more than report and financial advisors more than execute. Again, your advisor team should be able to test your business assumptions.
  5. Work ON your business, not just IN your business – Often the source of bad business assumptions is simple inaction. What worked in the past is the model for the future. A good way to avoid this potentially fatal mistake is to dedicate the time and resources to work on your business as an actual asset. If, on a structured basis, you step away from the day-to-day to treat the business as your key asset, you may expose the assumptions that need to be challenged and reworked. You can be your own best judge, but you have to take on that role.


Tags:  accountants  advisors  attorneys  business knowledge  business owners  Donald Rumsfeld  exit planning  family wealth  financial advisors  long-term liquidity  New Year  ongoing education  Principal Financial Group  retirement planning  small business  stay current  Steve Parrish  tax planning 

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