Sunday, 30 April 2017

Accounting Fraud: How to Protect Your Small Business?

Various reports indicate situations of what can happen any time businesses depend far too much on their “trusted” bookkeeper. Examples of embezzlement as well as fraud can continue for many years before getting exposed, and usually have a damaging effect that may place the entire small business in danger. Even though it is very unlikely to get rid of all threats linked to internal and external scams, following ideal procedures can considerably decrease threat within your company.

Put into practice a risk management system
bank account reconciliation servicesThe starting point to minimizing your company’s chance of fraud would be to put into practice a risk Human Resources department regarding their recruitment techniques to ensure they thoroughly scrutinize their employees.
management system. Senior administration has to make it clear—through their thoughts as well as actions—that absolutely no kind of dishonesty is tolerated. For ideal procedures, evaluate your insurance plan on a yearly basis to make sure you are guarded against internal as well as external thefts, thereby making certain that your accounting company is effectively bonded. Furthermore, talk to your

Have confidence in but validate by putting into practice proper internal controls
Account reconciliations
Although profitable finance companies encourage a culture of faith, employing sufficient control structures could certainly validate your employees’ activities. With the intention to minimize scams and error threats, churn out a segregation of tasks by dispersing business roles to more than one individual or division. For instance, have distinct people arrange and authorize new vendors, authorize bills to be paid, mark checks/initiate electronic payments, authorize new hires, authorize and modify pay scales, payroll processing as well as reconciliation of bank accounts.

Everyone in the staff associated with handling the books and data of a business needs to be efficiently screened. Determine their work history, credit rating, and residence address and bankruptcy track record along with legal and civil court details. A lot of accounting professionals trapped in a scam are not prosecuted; hence they proceed to their next target. A complete background check will assist you in have an understanding of whether or not a potential employee corresponds into a high threat or low threat category.
Comprehend your numbers
With fiscal clarity, it gets far easier to recognize unanticipated expenditures or perhaps balance sheet problems that are sustained as a result of fraud by an accountant. That’s the reason why balance sheet reconciliation is essential and also comparison of your finance-related results with budget per month. Ensure that you:
  • Run each cash receipt through a company banking account. Although it might appear simpler to make use of cash from the cupboard to cover petty cash, this method results in an atmosphere wherein money can readily be misdirected.
  • Evaluate all bank as well as credit card statements. In the paper dependent community, it is suggested that entrepreneurs get the unopened bank statements instantly. In the digital environment, entrepreneurs can easily take a look at bank data on the internet on a regular basis and set up updates to inform them of any major or unexpected transactions.
  •  Have a finance outsourcing company assess your books on a consistent basis. A regular audit from an external finance company can make a substantial discouraging factor to scam.
  • Handle your books on an accrual principle. To minimize the differences that happen depending on the cash basis of accounting (documenting earnings whenever money is received and expenditures whenever checks are issued), make use of the accrual basis of accounting (documenting income any time received and expenditures whenever incurred). This helps you in identifying unforeseen results.
  •  Balancing your balance sheet on a monthly basis. Although the majority of entrepreneurs comprehend the significance of reconciliation of bank accounts on a monthly basis, it is equally crucial that you reconcile balance sheet financial records on a monthly basis. Ensure that dealings on the balance sheet are correct; consequently irrelevant items within these account balances do not hide the results provided in the cash flow statement.
  • Make sure books as well as records are safely stored. Regardless of whether your data are stored electronically or perhaps in paper manner, ensure you close each and every financial period and secure up records so past activities should not be modified.
  • Get rid of or secure up check stock. By making use of digital payment technologies, it is trickier to obliterate or conceal crucial documents. Whenever paper is utilized, ensure all checks are accounted for by administration.
Scams happen more regularly than the majority of businesses understand. By making use of bookkeeping ideal procedures, not just will you prevent a staff member from committing fraudulence; you are going to get a more lucid outlook of your businesses’ financial situation.

Thursday, 27 April 2017

5 Major Issues Faced by Real Estate Companies Lacking Accounting Processes

accounting for real estate agents

Ironically in the real estate sector, effective and suitable accounting platforms and procedures are usually viewed as a nice-to-have as opposed to a must-have. Although everyone knows that the exemplary company infrastructure will consist of a strong back office, assets time and again find themselves involved in the areas that yield revenue. Besides, there exists one issue in such logic—often areas that may not appear to be direct revenue earning areas can nevertheless have a huge influence on your net profit. 

In practice, a company that does not make use of dependable accounting for real estate agents processes can suffer from some actual pain, usually through skipped earning and pointless deficits. Listed below are certain issues normally faced by businesses that make an effort to function without the appropriate accounting services set up?

1. Deferred accounts payable

Accounts payable has to be handled meticulously to allow a business to succeed. Reputations could be affected in case your real estate company is unable to pay invoices by the due date, however, the actual risk can be found in incurring overdue fees, lower credit score, losing favored rates or dropping a dealer entirely. The more complicated the accounts payable, the more essential it is that it be handled in an organized way, paying close focus on bank account reconciliation and adding the data to the Profit and Loss.

2. Deferred accounts receivable

A company's accounting framework not just governs the outgoing expenditures. It is furthermore an important aspect in making sure that money continues to flow into the company. Attentive, systematic supervision of income and aging reports is totally crucial to ascertain a double business. Non-paying customers, slow paying clients, and neglected invoices could put a firm out of business in a single night.

3. Insufficient operational data

Productive accounting and bookkeeping for real estate agents present them with the clearest possible representation of how they are functioning, precisely what must be upgraded, and how the future is building up. All business blueprints and KPIs are eventually assessed against the balance sheet, therefore without a completely accurate depiction of existing financial overall performance, any kind of preparation is improbable to be of assistance and more bound to create obstacles.

4. Scams

Trust is an excellent thing to gain among your employees—until you all of a sudden do not have it. A 2016 research highlighted real estate companies that are devoid of internal fraud regulations like hands-on data monitoring suffered fraud two times more in comparison with their competitors that performed an active audit of their economic data. Financial statement scam was by far and away the biggest contributor to fraud on the whole. The easiest method to steer clear of this kind of loss is to assure regularity, transparency and consistent supervision in the accounting division.

5. Tax preparation

For real estate companies that fall short, just about the most typical reason behind the failure is an incapability to fulfill their tax needs. In speculation, appropriate tax management should never be an issue; however, tax liabilities at times prove to be deadly. The triggering agent is nearly often poor planning and coordination in the finance department. Profitable businesses possess a finance team that prepares for the future and takes into account tax ramifications as a part of a day-to-day regime, inclusive of making use of expert companies for a lot of tax requirements like payroll tax processing as well as quarterly filings.
Need to keep your company financially balanced? Check to see if outsourced real estate accounting services are appropriate in your case. Call Cogneesol at +1 646-688-2821 to know more.

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