We’re reaching out to emphasize the legal implications of the Corporate Transparency Act (CTA) and the new reporting requirements. This update serves as a reference to help you understand the potential impact on your business and to ensure you are well-informed about the initial steps and compliance obligations under the Beneficial Ownership Information Reporting requirements under the CTA. The CTA is not part of the tax code, and your legal counsel would be well versed to advise you on this new requirement.

The Corporate Transparency Act (“CTA”) was enacted January 1, 2021, as part of the National Defense Authorization Act, representing the most significant reformation of the Bank Secrecy Act and related anti–money laundering rules since the U.S. Patriot Act. The CTA is intended to address and guard against money laundering, terrorism financing, and other forms of illegal financing by mandating certain entities (primarily small and medium size businesses) to report “beneficial owner” information to the Financial Crimes Enforcement Network (“FinCEN”). 

The CTA authorizes FinCEN, a bureau of the U.S. Treasury Department, to collect, protect, and disclose this information to authorized governmental authorities and to financial institutions in certain circumstances.

Entities required to comply with the CTA (“Reporting Companies”) include corporations, limited liability companies (LLCs), and other types of companies that are created by a filing with a Secretary of State (“SOS”) or equivalent official. The CTA also applies to non-U.S. companies that register to do business in the U.S. through a filing with a SOS or equivalent official. Since the definition of a domestic entity under the CTA is extremely broad, additional entity types could be subject to CTA reporting requirements based on individual state law formation practices.

There are 23 Categories of entities that are exempt from filing a BOI report. Many of the exceptions are entities already regulated by federal or state governments and as such already disclose their beneficial ownership information to governmental authorities, including public companies, and those defined as a large operating company. 

If your company meets all the following requirements, it will be defined as a “large operating company” and exempt from the reporting requirement. 

A beneficial owner is any individual who, directly or indirectly, exercises “substantial control” or owns or controls at least 25% of the company’s ownership interests.

An individual exercises “substantial control” if the individual (i) serves as a senior officer of the company; (ii) has authority over the appointment or removal of any senior officer or a majority of the board; or (iii) directs, determines, or has substantial influence over important decisions made by the Reporting Company. Thus, senior officers and other individuals with control over the company are beneficial owners under the CTA, even if they have no equity interest in the company. 

In addition, individuals may exercise control directly or indirectly, through board representation, ownership, rights associated with financing arrangements, or control over intermediary entities that separately or collectively exercise substantial control. 

CTA regulations provide a much more expansive definition of “substantial control” than in the traditional tax sense, so many companies may need to seek legal guidance to ultimately determine who are deemed beneficial owners within their organization. 

As currently promulgated, the CTA’s reporting requirements will be phased-in in two stages:

With the CTA introducing a new and expansive reporting regime, now is the time to assess the new rules’ implications on your organization. Some questions and comments for your company to consider now, although not meant to be all inclusive, include:

o          A representation by each shareholder, member or partner, as applicable, that it will be in compliance with or exempt from the CTA; 

o          A covenant by each shareholder, member or partner, as applicable, requiring continued compliance with and disclosure under the CTA or to provide evidence of exemption from its requirements; 

o          An indemnification by each shareholder, member or partner, as applicable, to the company and its other shareholders, members or partners, as applicable, for its failure to comply with the CTA or for providing false information; and

o          A consent by each disclosing party for the company to disclose identifying information to FinCEN, to the extent required by law.

As the CTA introduces significant legal requirements outside the tax code, understanding its application and ensuring compliance is complex and necessitates legal expertise. While this communication aims to provide a foundational understanding and highlight critical considerations, it is not a substitute for legal advice. We strongly urge you to consult with legal counsel to navigate the specifics of the CTA, including assessing whether your entity is subject to reporting requirements or qualifies for exemptions, and to ensure your compliance strategy is robust and effective.

We strongly encourage you to reach out as soon as possible to legal counsel regarding any entities you are contemplating forming during 2024 to ensure you are addressing CTA compliance for those entities.  Reporting Entities formed prior to 2024 will be required to report on or before January 1, 2025, and should be analyzed early in the year in order to be completed timely.

Remember, the penalties for non-compliance can be severe, including civil penalties and criminal charges. Early engagement with legal professionals can help mitigate risks and ensure timely adherence to all requirements.

For further information and to stay updated on beneficial ownership reporting under the CTA, we recommend reviewing FinCEN’s Frequently Asked Questions document and other resources available at https://www.fincen.gov/boi-faqs. 

Contact us if you have any questions. 

Updated accounting rules for long-term leases took effect in 2019 for public companies. Now, after several deferrals by the Financial Accounting Standards Board (FASB), private companies and private not-for-profit entities must follow suit, starting in fiscal year 2022. The updated guidance requires these organizations to report — for the first time — the full magnitude of their long-term lease obligations on the balance sheet. Here are the details.

In 2019, the FASB deferred Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), to 2021 for private entities. Then, in 2020, the FASB granted another extension to the effective date of the updated leases standard for private firms, because of disruptions to normal business operations during the COVID-19 pandemic.

Currently, the changes for private entities will apply to annual reporting periods beginning after December 15, 2021, and to interim periods within fiscal years beginning after December 15, 2022. Early adoption is also permitted.

Most private organizations have welcomed these deferrals. Implementing the requisite changes to an organization’s accounting practices and systems can be time-consuming and costly, depending on its size, as well as the nature and volume of its leasing arrangements.

The accounting rules that currently apply to private entities require them to record lease obligations on their balance sheets only if the arrangements are considered financing transactions. Few arrangements are recorded, because current accounting rules give lessees leeway to arrange the agreements in a way that they can be treated as simple rentals, or operating leases, for financial reporting purposes. If an obligation isn’t recorded on a balance sheet, it makes a business look like it is less leveraged than it really is.

The updated guidance calls for major changes to current accounting practices for leases with terms of one year or longer. In a nutshell, ASU 2016-02 requires lessees to recognize on their balance sheets the assets and liabilities associated with all long-term rentals of machines, equipment, vehicles, and real estate. The updated guidance also requires additional disclosures about the amount, timing, and uncertainty of cash flows related to leases.

The new definition of a lease is expected to encompass many more types of arrangements that aren’t reported as leases under current practice. Some of these arrangements may not be readily apparent, for example, if they’re embedded in service contracts or contracts with third-party manufacturers.

You can’t afford to wait until year-end to adopt the updated guidance for long-term leases. Many public companies found that the implementation process took significantly more time and effort than they initially expected. Contact us to help evaluate which of your contracts must be reported as lease obligations under the new rules.

© 2021

Many companies are struggling as a result of shutdowns and restructurings during the COVID-19 crisis. To add insult to injury, some have also fallen victim to arson, looting or natural disasters in 2020.

Lenders and investors want to know how your business has weathered these adverse conditions and where it currently stands. While stakeholders understand that it’s been a tough year for many sectors of the economy, they may presume the worst if you’re late issuing your financial statements.

No one wants to be the bearer of bad news. Deferred financial reporting can lead lenders and investors to presume that the company isn’t going to recover from the economic downturn — and that a bankruptcy filing may be in the works.

Even if your 2020 results have fallen below historical levels or what was forecast at the beginning of the year, issuing your financial statements on time can help reassure stakeholders. They want to know that you’re on top of what’s happening and you’re taking steps to recover.

Some stakeholders may assume that your management team is hopelessly disorganized and can’t pull together the requisite data to finish the financials. Late financials are common when the accounting department is understaffed or a major accounting rule change has gone into effect. Both are very real possibilities today.

Delayed statements may also signal that management doesn’t consider financial reporting a priority. This lackadaisical mindset implies that no one is monitoring financial performance throughout the year.

An environment of uncertainty will cause investors and lenders to examine your financials closely. You don’t want to give them two reasons for doubting your financials, being late and without the assurance of a third party to the accuracy of your numbers. An audit or review adds that extra confidence that you may need to secure the loan or to sell your company. If you aren’t currently providing audited financials to your investors and lenders, you may want to consider some level of assurance service that will give your investors and lenders a third-party viewpoint on your company’s health.

A strong system of internal controls is your company’s first line of defense against fraud. A key component of strong internal controls is management review and internal audits.

If financial statements aren’t timely or prioritized by the company’s owners, unscrupulous employees may see it as a golden opportunity to steal from the company. Fraud is more difficult to hide if you insist on timely financial statements and take the time to review them.

Sometimes delays in financial reporting happen because management realizes that the company has violated its loan covenants — and they’re worried that the bank will call the loan when they review the financials. However,  in today’s unprecedented conditions many lenders are willing to temporarily waive covenant violations and even restructure debt — if the company can show a good faith effort to preserve cash flow, make timely loan payments and revise its business model, if possible.

We can help you by auditing your financial statements and presenting your final financial reports in a timely fashion — and also help you to forecast how your business will perform in the coming months. Being proactive and forthcoming can help preserve goodwill with lenders and investors. Contact us for more information.

© 2020

Collecting payment on invoices isn’t the most enjoyable part of running a business. As corporate accounting experts, however, we know that prompt customer payments are crucial for maintaining cash flow. If your business is chasing down payments every month, you aren’t alone.

Sixty-six percent of business owners agree that a delay in payment processing is the most significant problem with their cash flow. Additionally, 34% of small businesses say their cash flow issues are because customers aren’t paying at all. Here are some proven tips for getting your customers to start paying on time.

Before you start a project with a client, consider creating an engagement letter or quote. The document should clearly state the payment terms (i.e., 50/50, Net 30/Net 60, due upon receipt, etc.).

When you get to the invoicing stage, include a reference to your initial quote or engagement letter. Adding this reference helps jog the client’s memory and gets you paid faster. Engagement letters and quotes also help determine what should be billed and clarify any overages.

This tip might seem obvious. However, in our collective years of providing corporate accounting services, we’ve seen that many companies who struggle to get payments also struggle to send invoices on time.

Prompt invoicing is vital because the sooner you bill the client, the sooner they pay you. Plus, it models an expected behavior. If you show your customers that you’re punctual, they’ll be more likely to follow your lead.

Invoice as soon as a project is completed or on a regular date each month. Just be sure you still take the time to be accurate. Follow your standard protocols, and don’t rush invoices out the door before they’re complete.

Sometimes, the payment itself isn’t the issue. Instead, the method of payment is where the problem lies. Be sure to offer plenty of payment methods, including ACH, wire, credit card, checks, and more.

Include details for each payment method on every invoice. Many companies avoid credit cards or wires because of the extra fees. However, as any corporate accounting services provider will tell you, paying a small fee for timely payment is preferable over late payments or no payment at all.

Every customer has different needs. Set your accounts receivable relationship up for success by clarifying expectations upfront. Ask your contact what their requirements are for invoices. Some companies need invoices addressed to a specific person. Sometimes they need the hours worked included, or require progress invoices, employee ID numbers, or other details.

Ultimately, you want to make sure that the way you’re invoicing isn’t causing hang-ups in your customers’ accounting or backend processes.

Make sure you’re sending the invoice to the correct person. Your invoices could be going unpaid simply because you’re sending them to the wrong email address.

Establish and maintain a customer service approach. While people in A/R may get frustrated from dealing with excuses for late payment, it’s essential to treat every client with respect and focus on problem-solving rather than playing the blame game. It’s possible that a small miscommunication is all that’s standing in the way of prompt payments.

A recent experience I had with a plumber illustrates the importance of customer service. I filled out all the paperwork to fix something at my house, but the company representative had forgotten to gather my payment information. The next morning I received an angry phone call from their collections department demanding payment. At that point, I hadn’t even realized that I hadn’t paid. They treated me like I was trying to skip out on payment when their error created the problem.

In this case, a little customer service could have gone a long way. Take a friendly approach with collections. Ask your customers how you can help, and do what you can to make payment as easy as possible.

Instead of sending an invoice at project completion, consider a retainer-based or progress-based model. With a retainer model, you get cash-in-hand before you ever start working. An upfront payment ensures the client is invested in your agreement. You can also perform regular, recurring billing with retainer-based models.

With progress-based models, you can schedule payments based on upon completion of specific milestones or after reaching certain dates. In the same way, this model keeps you from doing too much work before ever getting paid.

It’s essential to lay out these terms in the agreement. It would be best if you were explicitly clear about when and how much you will invoice so your project doesn’t get hung up in the approval process.

If your past-due payments are out of control and you can’t tell what’s causing the hang-up, it could be time for professional corporate accounting services to look at your processes and make suggestions for improvement.
Haskell & White provides assurance, tax compliance and planning, and advisory services to middle-market companies. If you are looking for process improvement support, we can advise on many topics, including improving your internal controls in place for your accounting team. Contact us now to learn how we can help.

In March 2020, the Securities and Exchange Commission (SEC) voted to adopt amendments to the “accelerated filer” and “large accelerated filer” definitions. These definitions are of critical importance to public companies because they determine whether an auditor attestation of an issuer’s internal control over financial reporting is required and the amount of time an issuer gets to file its quarterly and annual reports. This post outlines the key changes to the distinction between the filers.

The amendments also increase the transition thresholds for accelerated and large accelerated filers becoming non-accelerated filers from $50 million to $60 million, and for exiting large accelerated filer status from $500 million to $560 million.

Certain provisions and requirements have remained unchanged:

It should be noted that the definition of a Smaller Reporting Company (SRC) did not change. Scaled disclosure requirements are available to SRCs, who continue to be defined as issuers with less than $250 million of public float or less than $100 million in annual revenues with public float of less than $700 million or no public float at all. More importantly, a company that meets the definition of an SCR may still be an accelerated filer under the amendments if it has over $100 million in revenues but less than $250 million in public float.

The amendments have been highly anticipated by public companies that do not generate significant revenues due to various factors (such as early infancy in its life cycle), as they will no longer be subjected to the SOX 404(b) auditor ICFR attestation requirements. The SEC estimates that a company would save approximately $210,000 a year, which the SEC viewed as a “meaningful cost savings for many of the affected issuers.” The much-needed cost-saving measures can certainly be allocated elsewhere to allow companies to focus on its core competencies to continue to grow. In addition, the cost reduction could be a positive factor that may encourage more companies to go public.

Given the many challenges that the year 2020 has brought, the SEC’s revised definitions are a welcomed development that will make public company reporting more cost-effective and more straightforward. If you would like to discuss this important topic in more detail, please reach out to a Haskell & White team member or contact us through the website.

The costs to set up cloud computing services can be significant, and many companies would prefer not to immediately expense these setup costs. Updated guidance on accounting for cloud computing costs aims to reduce differences in the accounting treatment for these arrangements. In a nutshell, the changes will spread more of the costs of implementing a cloud computing contract over the contract’s life than under existing guidance.

Accounting Standards Update (ASU) No. 2015-05, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, differentiated between agreements involving a software license and those involving a hosted service. However, it didn’t discuss how to record the associated implementation costs, which lead to differences in the accounting treatment.

Under ASU 2015-05, when a cloud computing arrangement doesn’t include a software license, the arrangement must be accounted for as a service contract. This means businesses must expense the costs as incurred.

On the other hand, when an arrangement does include such a license, the customer must account for the software license by recognizing an intangible asset. To the extent that the payments attributable to the software license are made over time, a liability is also recognized.

ASU 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, instructs companies to apply the same approach to the capitalization of implementation costs associated with the adoption of a cloud computing agreement and an on-premises software license.

When companies implement ASU 2018-15, they can capitalize and amortize certain costs associated with the application-development phase over the duration of the hosting arrangement. However, companies should expense costs incurred during the preliminary project and post-implementation phases.

Implementing the updated guidance will require the following steps:

Identify cloud computing arrangements. Each line of business, as well as the supply chain management and payables departments, should be instructed to notify the accounting department of any new cloud computing agreements.

Decide whether to capitalize or expense implementation costs. ASU 2018-15 requires that companies follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset and which to expense.

Forecast the financial implications. For each contract, model the impact on your company’s financial statements. Because the standard allows for the deferral of implementation costs vs. expensing the costs as incurred, there will be a corresponding impact on your company’s financial ratios.

Public companies must start the implementation process now to ensure compliance for annual reporting periods beginning on or after December 15, 2019. Private companies and nonprofits have an extra year to comply — or they may choose to adopt the changes early to spread more set-up costs over the duration of their contracts. If you’re unsure how to account for cloud computing arrangement, contact us.

© 2020

The proceeds from your Paycheck Protection Program (PPP) loan should be used only to cover the following items

It should be noted that segregating the funds in a different bank account is crucial (even though this is not considered as a requirement) as co-mingling the loan proceeds with other funds may prove difficult in tracking and documenting qualified usage which would be an important when it comes to calculating the forgiveness amount.

The receipt of the PPP fund is the beginning of a complex journey of calculating how much can be forgiven and how much businesses have to pay back when the payments are due, which is just 6 months away. The government wants its money back pretty quickly!

Calculating how much will be forgiven is not a straight forward matter. Our local accounting firm highlights a couple of pitfalls to keep an eye out for:

The guidance on PPP funds continues to change and gets updated. With how quick the funds are being disbursed to small businesses throughout the country, one of the major downfall in the program is its lack of clear guidance and protocols. Just as recent as this week, borrower, together with its affiliates, that received PPP loans of less than $2 million will be deemed to have made the required certification in good faith. Borrowers with loans greater than $2 million will still have to provide an adequate basis for their certification. Surprise!

Visit Haskell & White’s COVID-19 Resource Center for ongoing updates and resources available to further assist you, or contact our local accounting firm so we can discuss your particular situation.

*The situation is continually in flux, so please check back for the most up-to-date information*

On March 18, President Trump signed into law the Families First Coronavirus Response Act. While the Act contains provisions authorizing funds for relief programs, it also includes some significant provisions impacting middle-market businesses. These provisions generally apply to employers with fewer than 500 employees, but the Department of Labor is authorized to issue regulations to exempt small businesses with fewer than 50 employees.

The Bill is written as short-term relief and is set to expire on December 31, 2020. The Act leaves many unanswered questions and delegates further rule-making authority to the Labor Department and the Treasury. We anticipate continuing guidance to be published over the coming weeks.

Key points of the Act are as follows:

Provides Eligible Employees the right to take up to 12 weeks leave under FMLA. Under the Act, the first 10 days leave may be unpaid although the employee may elect to use other paid leave during those two weeks. The remaining 10 weeks must be paid by the employer at two-thirds of the employee’s usual rate of pay, capped at a maximum of $200 per day or $10,000 in total. Part-time employees are eligible for paid leave hours based on their average hours over a 6 month period or their scheduled or normal work hours over a 2 week period.

This leave is job-protected as with traditional FMLA. Eligible Employees are those employees who have been on the employer’s payroll for at least 30 days. Employees shall provide the employer with notice of such leave as is practicable. Employees may use emergency FMLA if they are unable to work or telework in order to care for a son or daughter younger than 18 if the child’s school or child care has been closed or unavailable due to a public health emergency.

Employers must provide full-time employees with 80 hours of paid sick leave if the employee is unable to work or telework because:

Paid sick time is paid at the employee’s regular rates if for their own sick time. For the care of family members or children, the sick time is paid at a minimum of 2/3 of the employee’s usual rate of compensation. Emergency Paid Sick Leave would be capped at $511 per day and $5,110 in aggregate for a worker’s own quarantine, diagnosis or care. The cap is $200 per day and $2,000 in aggregate for provision of care for another individual or child. Part-time employees are eligible for paid leave hours based on their average hours over a 6 month period or their scheduled or normal work hours over a 2 week period.

All employees may utilize this provision as there is no minimum length of employment. Note that this 10 day paid sick leave is in addition to any other paid leave programs in place prior to the enactment of this Act. Employers can’t require employees to utilize other paid leave before using paid sick leave under this Act. Employers would be prohibited from discharging or discriminating against workers for requesting paid sick leave or filing a complaint against the employer.

The following credit provisions have been included in the Act:

Additional provisions:

An efficient route to profitable growth for many businesses lies in a waste audit. As I shared in my previous article, profitable growth is achieved by eliminating waste and minimizing overspending within an organization. We covered the helpful DOWNTIME list of eight common types of waste and discussed why it’s worth pursuing both top-line and bottom-line growth to achieve long-term business health.

Below, I explore a case study of a successful waste audit and share some helpful strategies for seeing results from your company’s first one.

A waste audit sounds good in theory, but what about in practice? Working with a professional service company as their business advisors, we ran a waste audit and realized they were spending a considerable amount every year on subcontractors.

While hiring the subcontractors made the managers’ lives easier, it also cost them a fortune (this fell into the “extra processing” waste category, in case you were curious). We worked with them to help improve their operations. We found that many full-time employees were being overscheduled to ensure project completion, but at the cost of efficient time management. In this case, properly budgeting the project and scheduling resources freed up hours that could be used on other projects.

Proper utilization of the company’s existing resources decreased the need to hire subcontractors. The company initially had three subcontractors. Now, two years later, they only have one. This small change saved the company thousands of dollars annually, and therefore increased profitability.

One subtle reduction in waste created thousands of dollars in profit without having to increase revenue. That is the art of waste auditing. It’s not always about massive sweeping changes. Sometimes it’s about smaller, attainable adjustments that can make a significant impact.

When we’re conducting a waste audit with our clients, we use a waste audit tool, shown below. In essence, this involves creating a waste statement for one year. List each waste and how much you estimate it costs your company annually. If you don’t know the exact number, you can simply rank the dollar amount from low, medium, to high.

For each item you identify as potential waste, rank the “ease of removal” by considering how easy it is to eliminate that waste from a scale of -5 to +5 (+5 being the easiest). This method helps to identify two things:

We’ve been doing this a while, and we’ve found that the best approach isn’t always to handle the most expensive wastes first. Instead, start by tackling the wastes that are easier to fix. Organizational behavior changes are tough. You don’t want to demotivate your staff with a challenging, disruptive change that has a slim chance of success.

After a few successes, then tackle the larger projects. Going for the lower-hanging fruit is a fantastic way to ease into profitable growth.

Unsure how to start implementing your waste audit findings? Here’s a quick breakdown of our process:

As business advisors and CPAs, we’re experts at waste audits—as a complement to our assurance services. If you want to determine whether your company is suffering from unnecessary waste and work on increasing profit, we would love to speak with you to learn more about your business and identify areas where our business advisors could potentially offer solutions.

Given the number of stories in the news, the phishing scams delivered to our email, and the portrayal of crazy schemes in movies, I am often asked for some practical tips that a business owner might consider to safeguard their business from fraud.

Here are my top ten practical tips on protecting your business against fraud:

Factors contributing to fraud are commonly referred to as the “Fraud Triangle, which is a framework explaining how some individuals are more susceptible to commit fraud.

Individuals experiencing all three of these factors; motivations/pressures (such as a financial need), opportunity, and ability to rationalize the behavior may be more likely to commit fraud.

A small organization with limited staff may have individuals who rationalize their behavior by believing they deserve more or they work in an environment with limited internal controls that provides the opportunity. Business owners should understand these factors and evaluate their organizations and staffing against the risks of fraud.

In this tight labor market, your hiring speed has probably increased so as not to lose out on the top candidates. In your pursuit for the perfect employee, don’t shortchange your process by skipping reference and background checks. It is essential to exercise appropriate diligence in the hiring of skilled, qualified personnel.

As a business owner, you should also make sure employees handling funds and corporate accounting services are covered by an insurance bond and that you have adequate insurance coverage for employee practices liability (EPLI). Likewise, it is very important to have human resources and labor counsel available to assist you as you make decisions geared to correcting behavior or terminating employees.

Bring it into the open, conduct fraud training for your employees, so they understand what is considered fraud and how to spot it. In its 2018 Report to the Nations, the Association of Certified Fraud Examiners, reported that 30% of Fraud was exposed through a tip.

Establish, maintain and participate in a robust internal control environment by staffing roles so duties are appropriately segregated. Your key goals should include preparing accurate financial statements, tax returns and other regularity reports; complying with laws and regulations; efficient and effective operations; and, ultimately, safeguarding assets.

In smaller environments where there are limited resources, the business owner needs to make sure he/she plays a key role in internal control.

Some key things the owner should do include:

In larger environments, there may be enough employees to spread these controls around to others, but the owner should always make sure the employees know he/she is watching – do some surprise checks every now and then.

Financial and tax reporting has continued to become more complicated as rules continue to change. It is imperative that as the business owner, your understand the content of all internal management and external reports and review them regularly. Seek the assistance of your corporate accounting services team, especially if you suspect something is amiss.

Key Performance Indicators (KPIs) assist management run the day-to-day operations and, depending on the criteria, a KPI may be something reviewed on an hourly, daily, weekly or monthly basis; in any case, way more timely than a financial report. Business owners should work with their teams to identify both financial and nonfinancial metrics that can be used to monitor the business – and provide opportunities to check on anomalies timely in order to take corrective action.

Technology is a great asset for business. But with these powers come risk and responsibilities.  In today’s world, there are constant attacks and hacks out there threatening access to and exploitation of data; data which, in some cases can be used to access personal records of employees, customers, vendors, etc.; and in other cases may be data that is stolen for the value of trade secrets.

Of course, there is also the risk that a cyber-hacker may find a way to shut down your business until you pay a ransom.

These desperate times require desperate measures such as:

When you employ people that have access to key data points about your company, they often have access to key personal data points about you. To that end, consider investing in a credit monitoring service, so you are alerted if someone tries to open a new credit arrangement in your name. There have been many instances of credit cards, loans, etc. being opened with different mailing addresses allowing someone to steal from you and your company and potentially damage your personal credit along the way.

You know your business and your business advisors know their area of expertise. Legal, corporate accounting, technology, banking and insurance advisors should be considered to be part of your team to help you with these specialty areas in order to help you establish appropriate business practices and help you when you have concerns.

While noted to be a Russian proverb, this expression became famous when President Ronald Reagan used it in the context of nuclear disarmament. Personally, I have been amazed by the number of business owners that I have met, or read about in fraud news stories, that indicated they trusted their internal accountant, executive assistant, or other key employee ‘implicitly’ only to find that it was this person that stole from them because they had the proverbial keys to the cookie jar. With this final item, I am not suggesting you trust no one that you employ, but that you refer to the items above and be vigilant.