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Leading The Way: The Benefits Of Civic Leadership And Community Involvement

If you missed the presentation, so sorry.  It was worth your time to hear from a panel of experienced professionals on this topic, not to mention the networking and delicious snacks as well as CLE and CPE for the attorneys and accountants in attendance.  On Monday, October 28th, Lori Molloy, Madlen Miller, and I discussed […]

If you missed the presentation, so sorry.  It was worth your time to hear from a panel of experienced professionals on this topic, not to mention the networking and delicious snacks as well as CLE and CPE for the attorneys and accountants in attendance.  On Monday, October 28th, Lori Molloy, Madlen Miller, and I discussed the importance of being involved in the community, in particular, being part of a Board of Directors for a non-profit organization. The presentation focused on Leadership by Leading the Way.  Although it was geared to emerging professionals, information was shared that benefited all professional levels in our community.  As members of society, it is our responsibility to build up our communities and see that they thrive, putting our talents to good use.  Part of this responsibility rests with volunteer work – whether giving legal advice, dishing out food at a soup kitchen, delivering meals to the elderly, or building homes.

In addition to being an attorney, Lori Molloy is the Executive Director of North Penn Legal Services.  She shared her thoughts on what she looks for when choosing a Board member.  In particular, for her organization, the person must be an attorney, so her pool of candidates is much smaller than that of a typical search where the Board would include professionals from diverse backgrounds to enhance the skills and vision of the organization.

Lori addressed such topics as Duty of Care and Duty of Loyalty – both fiduciary responsibilities of a non-profit Board of directors.  Duty of Care means that Board directors must give the same care and concern to their Board responsibilities as any prudent and ordinary person would – they must actively participate in board meetings.  Duty of Loyalty requires Board directors to place the interests of the organization ahead of their own interest at all times and not use Board service as a means for personal gain.  An annual retreat allows Board members to develop a strategic plan and goals for the future.  It also builds camaraderie among the Board members, oftentimes allowing them to get to know each other on a more personal level.

Madlen Miller is the Director of Marketing and Analytics at Morton Brown Family Wealth and has years of experience coaching new members of firms by assisting them in growing their talents and strengths.  She shared tips on how to juggle work, voluntary, and personal time.  Maddy suggested to start, you should discover your passion, so volunteering will be enjoyable as opposed to a chore.  As a stepping stone, you may want to become part of the Board, which will further enhance your appreciation of the organization.  She explained that employers must be on-board with allowing their employees to give back to the community through their time and talent on company time.  Many firms allot time for this to take place.  The benefits for both employer and employee are endless.  The community sees first-hand through the employee how the employer is involved, and that in-turn, promotes their business.

I am a Certified Public Accountant and Certified Fraud Examiner.  I shared my thoughts on the importance of the fiduciary responsibilities – paying attention in Board meetings and keeping a watchful eye on the spending of the organization to remain fiscally responsible.  All too often, we hear what happens to small non-profits because no one was watching – someone walks away with the money.  The Board must be fully involved to prevent this from happening.  Although the name, non-profit, connotates no profit, income as a result of activities is used to cover expenses and can show a positive bank balance. In fact, this income can be essential to an organization’s survival.

Our emerging professionals are the next generation of Leaders in our community.  In their professional role, they are looked to for sound advice and guidance, their voice is impactful to the community, and they are considered trusted advisors in their field.  A transition to Board Leadership is something that will round out their life experiences and help them grow as a person.  As quoted by John Quincy Adams, “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.”

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CFO

CFO Services for Hire

A growing trend in the business world today – and something to consider if you have the need – is the use of temporary CFO services. If you think CFO services are a bit high-end for temp help, think again. Let’s say on some random Monday morning the CFO comes into your office and announces […]

A growing trend in the business world today – and something to consider if you have the need – is the use of temporary CFO services. If you think CFO services are a bit high-end for temp help, think again.

Let’s say on some random Monday morning the CFO comes into your office and announces he is leaving in two weeks. You, as the CEO, know that the quarterly filing is due in a few weeks, the payroll department needs to be supervised to get the payroll processed on time, and the external auditors will be knocking at the door in a matter of months. You have to replace your CFO, but you don’t want to rush a hire before you mull over your needs: what level of expertise should you look for, do you require someone full-time or part-time, what are the plans for your company going forward, what can you afford?

There is an answer, and it may be as close as your CPA firm.

When you need someone with experience and expertise that can fill the CFO’s spot almost immediately, many CPA firms have the professional staff who can serve in a CFO capacity until the company finds the right person for their organization. In fact, Mark Zinman, a member of the PICPA, wrote in an August 2016 CPA Now blog — CFO Services (and More) for Companies That Can’t Afford One — that “smaller businesses can benefit from the entire CPA knowledge base encompassed in that firm. So, a business would not only be hiring a ‘CFO, ‘ but it would also be tapping into the company’s broad collective knowledge.”

You never know why or when an executive may leave. Employees, including CFOs, depart for any number of reasons: – a spouse’s job is relocating, the CFO has decided to return to school, or this person is moving into another type of work altogether. Departures like this may not happen frequently, but they do happen. In fact, this situation transpired for one of our clients, and our firm was ready to step in and assist with the CFO duties so the business could continue its daily operations.

This particular business is a not-for-profit, and as such, it is required to file monthly, quarterly, and annual compliance reports. Because it is a small not-for-profit, the CFO wore many hats, including human resources. Our firm-provided an “interim CFO.” and in the beginning, she spent several weeks becoming familiar with the accounting system and the reports that were due. She spent time sitting with employees to understand how they contributed to the company. She also invested time reviewing checks and balances, preparing grant requests, and providing feedback to the CEO and COO.

After some time, it was determined that one or two days a week was sufficient for the week. The CEO decided that the temporary hire would continue until the organization was able to find the right person for the job. The CEO was pleased that he had a seasoned professional to fill the position and the time to make a decision based on the needs for the organization going forward.

A temporary CFO from a CPA firm is an additional benefit because the knowledge and experience of CPAs can be invaluable assets to a business. Some potential advantages include having the CPA assist with preparing financial statements for the outside auditors, preparing quarterly and annual tax filings, dealing with regulatory agencies if the need arises, conducting management presentations, interviewing full-time replacement candidates, and making recommendations for operational changes.

If you or someone you know is in the difficult position of losing your top finance officer, interim CFO services from a trusted CPA firm can be a win-win for all involved.

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You Become a Board Member for a Nonprofit

Now What? You have been asked to sit on the Board for a small not-for-profit; perhaps your child’s soccer team or a local art organization.  You accept the invitation, attend monthly meetings, and maybe even become part of a committee to further the organization’s purpose.  Do your responsibilities stop there?  This article will cover the […]

Now What?

You have been asked to sit on the Board for a small not-for-profit; perhaps your child’s soccer team or a local art organization.  You accept the invitation, attend monthly meetings, and maybe even become part of a committee to further the organization’s purpose.  Do your responsibilities stop there?  This article will cover the financial aspects of your duties.

More and more you read in the newspaper that funds have been stolen from nonprofit organizations, especially the small town sports groups.  You wonder – who was watching over the money?  After all, the Board members are the parents of your children’s friends, neighbors, or maybe even relatives.  Isn’t everyone involved in the organization there for the betterment of the children?

As a Board member you should understand that the entire Board has a fiduciary responsibility to the organization.  This means you have an obligation to act in the best interest of that organization – a Duty of care to actively participate in planning and decision making; a Duty of loyalty to put the interests of the nonprofit before any personal or professional concerns and avoid potential conflicts of interest; and a Duty of obedience to ensure that the organization complies with all applicable federal, state, and local laws and regulations but also remains committed to its established mission.  You should be familiar with the Articles of Incorporation, Bylaws, and Mission of the organization.  Be aware of information returns that are required to be filed at the federal and state level to avoid losing the tax-exempt status of the organization.

Typically the first several months as a Board member are a learning process.  Things do not start to sink-in until mid-way through the first year. For this reason, it is practical to have officer terms longer than one year.  An organization could stagger when board members reach their term-end to ensure cohesiveness across the organization.  More seasoned members could assist the newer members in explaining the goals of the organization.  At the same time, limiting the number of terms would also ensure fresh blood and a change of duties for members.

The Board acts in a fiduciary role by maintaining oversight of the nonprofit’s finances.  Board members should be aware of the financial policies, approve annual budgets, and review monthly financial statements.  While every Board member may not be a financial wizard, you should have an understanding of the basic terminology, recognize warning signs, and pose questions to better grasp the operations future.  Active participation at Board meetings is crucial for the success of the organization.

For example, controls should be in place and designed to prevent error and fraud.  Segregation of duties is at the top of the list for effective internal controls.  The same person should not receive monies, deposit those funds, record the receipts, pay the bills, sign the checks, and reconcile the bank statements.  One person wearing all of the bookkeeping hats will leave an organization ripe for abuse.  You may be thinking, we only have a handful of folks in our organization but not enough to spread the duties, or isn’t that the treasurer’s job-why should I have to do it?  While several people may have to take on more than one role, the risk of theft and error lessens with more involvement.  Perhaps the president could receive the income and have the treasurer deposit the monies.  Checks above a set amount should have two signatures.  After the treasurer reconciles the bank statements, the president or vice-president should review the report and it should be available at monthly meetings for the entire Board.  Financial statements should be reviewed monthly with the full Board and reasons for variances from budgeted figures discussed.  An audit performed by a Certified Public Accounting firm will go a long way to provide piece of mind to the nonprofit as well as potential donors.  Note that these control mechanisms are not intended to detect fraud but rather to prevent it.

If you do suspect someone is stealing or some other type of fraud is occurring, contact the police.  You may want to get a Certified Fraud Examiner involved to determine how much money has been confiscated.  Most people do not start out with the intention of stealing but circumstances in their lives often change and they feel it is either necessary or just too easy to get away with it.

Becoming a Board member is very rewarding and a great way to give back to the community – just remember there are fiduciary duties involved as well.

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credit-card-theft

Credit Card Theft

All In A Day’s Work Credit card theft is and has been on the rise.  It is one of the most widespread types of fraud.  Common methods for credit card theft include phishing, card cloning and no-card fraud (copying credit card numbers to make online purchases).  Anyone that has had a credit card stolen knows […]

All In A Day’s Work

Credit card theft is and has been on the rise.  It is one of the most widespread types of fraud.  Common methods for credit card theft include phishing, card cloning and no-card fraud (copying credit card numbers to make online purchases).  Anyone that has had a credit card stolen knows the frustration and time involved to get the damage repaired.

One of the reasons credit card theft is growing is the use of on-line purchases – either through computers, smart phones, or tablets.  Every year, law enforcement agencies and individual victims report thousands of identity theft fraud cases to the U.S. Federal Trade Commission (FTC).  It then lists them in its annual Consumer Sentinel Network (CSN) Data Book.  The CSN report shows that the total number of credit card fraud complaints for the general population actually increased 18 percent from 49,026 in 2013 to 57,880 in 2014.(“Identity Theft Complaints,” Robert E. Holtfreter, Ph.D., CRE, CICA, CBA, Fraud Magazine, July/August 2015.)

After a recent episode involving credit card theft, we learned there are people that get up in the morning (just like you and I), go to work and do nothing all day but attempt to duplicate valid credit card numbers.  This particular theft occurred with a cash advance of under $500.  After two weeks with no rejection, the fraudsters went in for the kill and purchased airline miles and several advances of approximately $500 each from money machines at a racetrack.  Fortunately, due to an alert set up with the credit card company, we were notified that the amounts charged exceeded the threshold we set for notification.

Then the process began – the first call was made to the credit card company who cancelled the credit card and agreed theft was involved.  After a few weeks when the airline charge still appeared on the statement, a second call to the credit card company was prompted only to find out it was no longer classified fraud but a disputed charge.  We were told we would have to discuss the case with the dispute department.  A three-way conference call (credit card dispute department, the airline, and myself) was established and the airline agreed this was a case of fraud and they would handle it.  Several more weeks with no resolve and another call to the airline set the wheels in motion and the charge was reversed between the airline and the credit card company. This still did not remove the charge from our card.  A call to the credit card fraud department and a repeat of the entire incident would resolve the nightmare and the charge was finally reversed.  Two months and numerous hours spent on phone calls for just one credit card.  We were told we should be glad it was just credit card and not identity theft.  That’s an article for another day.

Be vigilant – protect your cards, check activity weekly if not daily and set alerts to notify yourself of suspicious activity.  If you are worried that your personal information – credit card or otherwise – may have been compromised, then you should contact the local law enforcement agency and file a report. Also, contact one of the major credit bureaus (Equifax, TransUnion and Experian) and request an initial 90-day fraud alert for your credit report files.  The alert grants you a free credit report from each bureau and instructs potential creditors to contact you directly before opening any new lines of credit in your name, decreasing the risk of unauthorized credit activity.  Then, if after reviewing your credit reports you discover fraudulent activity, consider taking the alert a step further and freeze your credit while you dispute the illegitimacies.  Remember – for fraudsters, it’s just another day’s work!

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