Financial Management

Combine a tough economy and opportunistic employees, and you’ve got the perfect recipe for fraud and theft in the accounting system software realm.

The Wall Street Journal addresses the latest employee “trend,” noting, “About 20% of employers polled last month said workplace theft has become a moderate to very big problem recently…Employers are hot targets for theft because workers ‘know their systems, controls and weaknesses, and they can bide their time waiting for the right opportunity’…”

Other stories reinforce the presence of increased theft in accounting services departments and elsewhere, due in part to tough economic times. An article in securitysolutions.com points out, “As many as one-third of all business failures annually can be attributed to employee theft, according to the U.S. Department of Commerce…The cost of theft and fraud to American business nationally hovers around $40 billion a year, and ‘some experts believe as much as 40 percent of the losses are internal,’ …The Commerce Department also says employee theft is on the rise, thanks to the recession…”

And, it’s not only Madoff-scale fraud that is occurring in accounting services and elsewhere. Employmentblawg.com adds, “…there are millions of smaller fraudulent transactions that go unnoticed every year…From stupid expense violations to ingenious travel scams…a serious problem that costs companies millions…”

So, what’s a company to do? Get top-notch accounting system software. Mid-market accounting solutions provide highly complex levels of security, offer sophisticated transaction auditing and tracking, and present a more daunting target to would-be internal thieves.

Among Microsoft Dynamics® accounting software protective elements, for example, is “RoleTailored” software. Microsoft describes it as, “Software that’s designed around the specific jobs people do…” One practical effect of this is to keep the types of information accessed on a need-to-know basis, limiting exposure.

Also characteristic of mid-market accounting software solutions are role-based permissions, where employees gain access to data based on their roles, locations and timing. A company can define locations, both on-site and remote, from which employees can access data, identify accessible hours and authorized computers—as well as define the scope of information based on the employee’s role in the organization.

Besides the actual protection afforded accounting services departments by this level of sophisticated security, its existence helps send a message that the company will do what is necessary to protect its data. Much like the thief who moves on to a car that appears to be “easier pickings,” so will many untrustworthy employees move on to a company accounting system software environment that offers more theft opportunity.

Just make sure that company isn’t yours.

Sung to Pete Seeger’s “Where have all the flowers gone?”

As I watch reports of Pres. Obama’s meeting with Republican leaders over the next round of bailout—excuse me, “stimulus”—money, my confusion over accounting double standards continues to soar.

Let’s see, it’s okay for the Feds to parcel out $700 billion, $800 billion, a trillion dollars or more without clearly accounting for its use. At the same time, SMBs in this country struggle mightily to comply with existing accounting services regulations—and brace for a new round of regulatory “structure” to keep corporate America in line.

Memo to these SMBs: Don’t follow the example set by the Federal Government (at least thus far), or you could wind up in jail.

Like it or not, small to medium sized businesses in this country will pay the heaviest price for the irresponsible deals struck by big businesses—sometimes in cahoots with the very regulators charged with being public watchdogs.

So, the best move for the Main Street, USA business community is to be compliant, compliant, compliant. Go above and beyond minimum accounting requirements and regulations. Show that you mean business; and know how to run one. Here are accounting system software tips to help set the stage correctly:

1. Buy software you can grow into. Entry-level accounting solutions make much of the fact that larger accounting system software products—such as Microsoft Dynamics® GP—offer a dizzying array of features, many of which are superfluous at this stage of a company’s existence.

That may be true now, but what about in a year? What about introduction of new government regulations mandating accounting services controls and reporting that go way beyond today’s standards? What happens if mom and pop USA suddenly start getting scrutinized under the same microscope as much larger companies?

Be safe now, so you don’t have to be sorry later. Besides, as we’ve all learned with such robust programs as Microsoft Office, you can pick and choose what you want to learn and use now, and leave the rest alone. Once you get accustomed to accounting system software basics, it’s easy enough to proceed without all the advanced features—until down the road, when you need them.

2. Be secure, be secure, be secure. I keep harping on this because it’s so critical, and it’s one of the most overlooked issues in the SMB marketplace. Dynamics GP has eight—count them, eight—layers of security. Most entry-level accounting solutions have one. Do you want to trust your company’s lifeblood to one “guard” able to be compromised or relatively easily taken out, or do you want an army of guards at your accounting services door?

3. Don’t wait to be up to date. Entry-level accounting software tends to bog down after accommodating just a few simultaneous users. This slows productivity and disrupts important, time-sensitive processes. Implement accounting services that virtually eliminate this problem from the get-go, so you’re not needing to reinvent or restructure your accounting software as you go.

So, I have been writing about the importance of accounting software that can ensure compliance with accepted practices and regulations. Then, along comes Bernard Madoff, who’s allegedly able to circumvent compliance controls and implement a $50 billion Ponzi scheme.

It certainly validates the question of how effective any accounting software can be in ensuring accurate and above-board practices. Of course, it also adds fuel to the regulation fire that inevitably will heighten levels of control and reporting—and consequently the need for secure and sophisticated accounting solutions.

A Dec. 23 article in the Wall Street Journal frames the debate: “Questions about compliance practices at Bernard L. Madoff Investment Securities LLC are troubling many securities industry observers, as losses related to an alleged $50-billion Ponzi scheme associated with the firm’s investment advisor arm continue to impact a widening international circle of investors. ‘How could you have this massive scandal going on in a firm that’s adopted adequate procedures? That’s what compliance is all about,’ says James A. Fanto, a professor at Brooklyn Law School in New York and author of Broker-Dealer Law and Regulation.”

So, what are some lessons to be learned from all of this in the world of accounting solutions?

One, hire honest people. No accounting software, no matter how robust or well-configured, can function flawlessly if the people operating it—or their bosses—have crooked intentions. Just because you have excellent accounting system software doesn’t mean you’re totally protected. People still matter—a lot.

Two, the importance of adequate accounting software cannot be overstated. Notes the Wall Street Journal article, “…investigators issued a subpoena to David Friehling, a New City, N.Y., accountant who audited the Madoff firm’s financial statements, and are seeking documents related to the Madoff firm going back to Jan.1, 2000. Friehling has until Dec. 29 to fulfill the request.” Do you think for a moment that this accountant wants to be caught with his figurative “accounting software pants” down? Obviously, sophisticated, up-to-date accounting system software would aid his cause.

Three, when accounting practices and reports are challenged, how many people want to spend inordinate amounts of time trying to comply? The right accounting software can be a huge time-saver in many types of situations. In some cases, it can be a potential “livelihood-saver” as well.

Though there are many similarities between Microsoft Dynamics® GP and SL accounting software, finding resources to usefully compare and contrast them can prove challenging.
In fact, Microsoft itself reinforces the somewhat muddled profile of these two mid-market accounting solutions. Its information about both solutions tends to blur the lines and distinctions………………………….Please visit our friends over at MS Dynamics World