Tips To Proactively Avoid Fraud and Embezzlement in a HOA

Fraud and embezzlement are words that can really cause an Association a lot of wasted time, money and energy.  So how can the Board of Directors get out in front of any potential fraud or embezzlement?  This is really simple and easy, but is almost always overlooked.  The Board needs to understand their role in fraud prevention and the top two components to fraud: motivation and opportunity.  In almost all cases, it will take both of these factors for fraud to occur.  Motivation is a factor completely outside of the Board’s control, but that cannot be said about the opportunity factor.

To reduce or eliminate the opportunity factor, establishing simple monitoring tasks by the Board are critical, extremely simple and highly effective.  First, review and control those key individuals that have banking authority.  When there are transitions on the board or with a management company then the individuals with banking authority need to be reviewed immediately and updated. Ensure this is reviewed and monitored by the Board Treasurer and then approved by the entire board. Next, establish an approved vendor list.  Payments made to vendors that don’t exist or consultants with no credentials are very common with Associations.  The Board should periodically review the disbursements ledger (check register) and look for payments to vendors that are not on the approved vendor list.

In addition, there are a number of control measures the board should do on a regular basis to reduce the risk of fraud or embezzlement.  These can include the following:

  • Review and approve the bank statements and bank reconciliations. Establish a due date to ensure the bank reconciliations are completed timely and reviewed timely.  Typically 15 days from the close of the previous month is a best practice.
  • Review actual results versus budgeted amounts and inquire of all variances.  Avoid only focusing on variances where the actual amounts exceed the approved budgeted amounts.  Variances significantly below approved budgeted amounts can be a myriad of issues.  Remember, the devil is the details. 
  • Discuss with your management company the safeguards they have over cash receipts.  The board should have a very good understanding of how much cash is received and what activities are leading to the generation of members paying in cash. 
  • Make sure your management company is utilizing a lockbox system for assessment collections.  Encourage all of your members to pay directly to the lockbox.  This will cut down on cash receipts. 
  • Review, review, review and review the monthly financial package.  This information is key and the boards timely review is critical to the identification of any potential issues that could be caused by fraud or embezzlement.  Make sure the financial package is completed timely as well.  Establish a due date with your management company.  This should be a date that is reasonable and agreed upon.

These steps, or suggestions, tailored to fit your association can help reduce or even possibly eliminate the opportunity for fraud and/embezzlement.  Fraud will happen at the most unexpected time, make sure your Board is taking the necessary precautions to protect the financial health and stability of your Association.  To learn more click the button below to speak with a Certified Public Accountant at LBA Haynes Strand.

So You Want to Franchise Your Business?

Business owners looking for creative ways to grow and expand sometimes turn to franchising in order to accomplish their goals. Franchising occurs when the original owner of a business sells territorial rights to run independently-owned versions of the existing business. The independent business owners are franchisees. While the concept is not for everybody, there are certainly advantages to this business model.

Best practices to consider prior to franchising your business include the following:
Answering the Following Questions

Is my business even franchise-able? This is very important as not every business is. Is there even a need for my business concept in other geographic locations? Is my business model easily teachable to potential franchisees? Am I comfortable in making the transition from owner-operator to franchisor?

Consult a Franchise Attorney

The sale of franchises can be a legally complex process at both the federal and state levels. The laws are often not uniform and can vary from state to state. Prior to selling any franchises, a franchisor must file a franchise disclosure document (FDD) with the Federal Trade Commission (FTC). The FDD is discloses extensive information about the franchisor and is intended to provide the potential franchisee with information needed to make an informed decision. A franchise attorney will be a valued resource in your franchising journey. They will assist in the preparation and filing of the FDD.

Consult a Certified Public Accountant

With limited exceptions, a business looking to franchise will need to include financial statements that have been audited by an independent CPA. Audited financial statements are required to be included within the FDD prior to filing, with the failure to do so leading to costly delays and fines. Like a franchise attorney, a CPA will be a great resource as you begin your franchising process. Along with performing the required audit necessary for filing of the FDD, a CPA can also discuss the various tax benefits of the franchising concept and can serve as a trusted advisor on a range of topics including tax planning, business valuation and M&A strategies.

Now that you know the resources available to you, it’s time to begin your journey of growing your business via franchising. Contact us to learn more and to speak to a certified public accountant at LBA Haynes Strand!

Register Now: Greensboro Workshop For Trucking & Logistic Companies

Summary of Workshop:

This workshop will explore areas of risk for business executives and owners which will include interactive discussions about the challenges facing the trucking industry.  This session will create an awareness of Risk Management that should encourage every executive to assess their own business.

Objectives:

At the completion of this session, you will be able to:

  1. Identify risks
  2. Quantify the risks
  3. Mitigate the risks
  4. Evaluate your businesses on a regular basis
  5. Establish a good controls environment
  6. Identify business process and improvement opportunities
  7. Plan your exit strategy

Who Should Attend: Presidents, Owners, and Business Executives

Cost:  $75.00 for NCTA Members and $125.00 for Non-Members  

When:  May 24, 2017

Time: 9:30 AM – 11:30 AM

Location: SelecTrucks of Greensboro, 6383 Burnt Poplar Rd, Greensboro, NC 27409

Speaker: 

Dave Recchion is a Principal and leader in the Greensboro office of LBA Haynes Strand. Dave is a client serving Principal and heads up our firm’s Risk Advisory and Internal Audit practice where he is able to leverage extensive industry knowledge, relationship skills, and experience in risk based consulting within Fortune 500 environments. Dave brings 30 years of professional experience to our Firm, including 13 years with Ernst & Young where he served as Global Coordinating Services Partner. Most recently, Dave founded a highly profitable Risk Management Firm in High Point, NC known as SeeRisk Management Advisors, LLC for the past 4 years

Register Now!

Estate Planning For The Wealthy and Not-So-Wealthy

Estate planning is important for both the wealthy and not-so-wealthy.  Even if your estate is not large enough to require payment of estate taxes at your death (for 2017, the estate tax lifetime exemption amount is $5,490,000), having the proper documents in place at your death can minimize the burden placed on your loved ones.  Consider the following items when devising an estate plan:

Create A Will

This is an important first step in the estate planning process.  Wills help you make sure your wishes are carried out with respect to distribution of property, and if you have minor children, a will can be used to designate a guardian or guardians.

Avoid Probate

Documents can be put into place that will eliminate the need for the costly and time-consuming probate process.  In preparing an estate plan, all assets should be examined to determine the best way to title the property so the assets will be distributed according to your wishes and to minimize the expense of the final distribution of your assets.

Where To Start

Your attorney and wealth management advisors (brokers, bankers, CPA, etc) can assist you in the estate planning process to ensure you have a plan in place that is optimal for you.

Whether you need to devise a new estate plan or update an existing plan, having the proper documents in place is the key to providing peace of mind for you and your family. Contact us today to learn more!

The Tax Deadline Has Come and Gone – Are You Happy?

With April 18th in your rear view mirror it is time to review how your tax preparation went.  Was it a painless process for you?  Did you have constant communication with your accountant?  If you did, you should thank your accountant and start planning for next year!  If not, maybe it is time to start thinking about a change.  Over the years we (as a Firm) have noticed clients switching to CPA Firms of our size over the traditional sole practitioner.  While you may enjoy a personal relationship or believe that it would be inconvenient to make a change to a full service CPA Firm – think again….

When you make a switch to a public accounting firm, you gain resources, a team of CPAs with more robust professional backgrounds, and a one-stop shop for all your personal and business financial needs. Wouldn’t it be nice to have a full suite of services at your fingertips – other then just tax preparation? What happens if you want to outsource your accounting, or maybe buy or sell a business?    A CPA Firm handles the “here and now” AND “the here and far from now” process. With an overarching look into your personal or business situation a good CPA Firm can do so much more for you then you ever imagined.  Here’s a look into how they do it:

The Secret Behind A CPA Firm’s Success

A (good) CPA firm functions as a part of your leadership team.  That’s it – that’s the secret.  Before your anticipation dies down, allow us to ellaborate on that.

They Care About You

When you invest in a CPA Firm, they recognize the engagement as a relationship, not a contact.  CPA’s bind themselves to your business, taking a true interest in your financial past, and expressing genuine desire to improve your financial future.

Why is a passionate CPA so important to your financial future?  Because without a genuine desire to grow, your accounting department is simply going through the motions, paying no mind to long-term effects or future goal fulfillment – that doesn’t exactly increase your bottom line.

They Plan With You

Your current financial team always seems too busy with other tasks to focus on the future.  You want daily deadlines to be met, but you also want to plan for next week, next month, and next year. You know how important planning is, but your team doesn’t seem to view it with the same urgency.

Whether it’s because they lack the time, or they’re just too focused on tasks at hand, your team’s priorities are out of place in your opinion. You need a firm that takes the time (any time and every time) to consult with you, give you valuable feedback, or simply provide financial reassurance. A CPA firm sees past daily duties, making your future their main priority and taking the time to plan for a prosperous one.

They Seek Success For You

A CPA firm is going to share your goals, as well as your motivation for reaching them. Even after your organization has reached its financial goals, your CPA keeps at it – they want to see your success accumulate and reach a firm, unwavering stability. A CPA creates opportunities that lead to constant financial growth and a robust bottom line.

Your current accounting department might be deemed your financial team, but do they really function as your teammates? Are they as invested in your financial future as you are? If not, it’s time to start thinking about investing in a real team – one that cares about you, functions with you, and helps you secure a steady and successful financial future.

Ready to get proactive and reach beyond standard tax preparation?  Click below to learn how a CPA firm can provide insight beyond taxes.

IRS Announces Top Tax Scams for 2017

The IRS has announced the completion of its annual “Dirty Dozen” list of tax scams. The annual list highlights various schemes that taxpayers might encounter throughout the year, and especially during tax-filing season. “Taxpayers need to guard against ploys to steal their personal information, scam them out of money or talk them into engaging in questionable behavior with their taxes,” the IRS said.

The “Dirty Dozen” scams the IRS highlighted in 2017 are as follows:

Phishing: Taxpayers are advised to be on guard against fake emails or websites looking to steal their personal information. Specifically, they are warned to avoid opening surprise emails or clicking on web links claiming to be from the IRS, as the IRS will never initiate contact with taxpayers via email about a bill or refund.

Phone Scams: Taxpayers are warned that aggressive and threatening phone calls from criminals impersonating IRS agents remain an ongoing danger. The IRS said it has seen a surge of these phone scams in recent years, as con artists threaten taxpayers with police arrest, deportation, and revocation of their driver’s license if they fail to pay a bogus tax bill.

Identity Theft: The IRS is advising taxpayers to watch out for identity theft, especially around tax time. Taxpayers are cautioned to always use security software with firewall and anti-virus protections, to make sure the security software is always turned on and can automatically update, to encrypt sensitive files such as tax records stored on the computer, and to use strong passwords.

Return Preparer Fraud: Taxpayers are cautioned to be on the lookout for unscrupulous return preparers, and to choose carefully when hiring an individual or firm to prepare a tax return.

Fake Charities: The IRS is warning taxpayers to be wary of groups masquerading as charitable organizations to attract donations from unsuspecting contributors, and especially of charities with names similar to familiar or nationally known organizations. Taxpayers should avoid giving out financial information to individuals soliciting for charity, and should check the status of charitable organizations using the IRS website.

Inflated Refund Claims: Taxpayers are cautioned to be on the lookout for individuals promising inflated refunds. In particular, taxpayers should be wary of anyone who asks them to sign a blank return, promises a big refund before looking at their records, or charges fees based on a percentage of the refund.

Excessive Claims for Business Credits: The IRS is warning taxpayers to avoid improperly claiming the fuel tax credit, pointing out that this tax benefit is generally not available to most taxpayers, as it is usually limited to off-highway business use. Taxpayers are also cautioned to avoid claiming the research credit unless they can demonstrate that they participated in qualified research activities or satisfy the requirements related to qualified research expenses.

Falsely Padding Deductions on Returns: Taxpayers are urged to resist the temptation to falsely inflate deductions or expenses on their returns. In particular, the IRS warned taxpayers against overstating deductions such as charitable contributions and business expenses, or improperly claiming credits such as the earned income tax credit or the child tax credit.

Falsifying Income to Claim Credits: The IRS is advising taxpayers to avoid inventing income to erroneously qualify for tax credits, such as the earned income tax credit. Taxpayers are warned that individuals are sometimes talked into falsifying their income by con artists. These scams can lead to taxpayers facing large bills to pay back taxes, interest, and penalties; and may even result in criminal prosecution.

Abusive Tax Shelters: Taxpayers are cautioned against using abusive tax structures to avoid paying taxes, and are advised to be on the lookout for individuals advertising tax shelters that sound too good to be true. The IRS emphasized that it is committed to stopping complex tax avoidance schemes and the individuals who create and sell them.

Frivolous Tax Arguments: Taxpayers are warned not to use frivolous tax arguments to avoid paying tax, as the penalty for filing a frivolous tax return is $5,000. The IRS noted that there are frivolous schemes that encourage taxpayers to make unreasonable and outlandish claims, even though such claims have been repeatedly thrown out of court.

Offshore Tax Avoidance: The IRS is cautioning taxpayers against trying to hide money and income offshore, pointing to a recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them. The IRS recommended that taxpayers with unreported funds in offshore accounts catch up on their filing and tax obligations through the Offshore Voluntary Disclosure Program.

*Content provided by MHM publications*

Free Webinar: “Cracking The Code To M&A Growth”

Join us on July 12th at 1pm for a free webinar. John Bly, Principal and CEO of LBA Haynes Strand, will deliver his signature presentation: “Cracking The Code To M&A Growth.” John has delivered this speech across the globe to rave reviews and even wrote a book on the topic. He is excited to bring it to a webinar platform.

“Cracking The Code To M&A Growth” serves as a guide to effectively find good deals for entrepreneurial businesses in the $1 to $30 million range.  John provides a blueprint for how to tackle such issues as: determining whether the deal is a good fit, due diligence, structuring the deal, tax issues, and how to land the perfect catch.

John will show you ways to find potential spots for rapid growth and accomplish, on a smaller level, what the larger companies do. By breaking down the M&A process into approachable elements, you will find that your entire outlook on the topic will be transformed!

If you would like to meet with John, contact us to schedule a no-cost consultation.

Navigation Changes Made To QuickBooks Online

We all know change is hard!  With this in mind we wanted to provide a highlight of the recent changes made to the QuickBooks Online navigation.  Even though the changes may take some getting used to, this is one of the main benefits of QuickBooks Online….you constantly have access to the most up-to-date version of QBO available!  The changes include:

  • A few of the changes are strictly name changes. For example, your home page is now called the “Dashboard.” No other changes were made here and all information you previously saw on the home page is still available on your new dashboard.
  • “Banking” is now at the top of your left menu bar on every screen. This is the item you click to access the transaction import screen and is possibly the most used button in QuickBooks Online. With its new placement it will be easy to get to without hunting through the menu options.
  • “Accounting” is a new item in the left menu bar. This will be where you click to access the bank reconciliations as well as your Chart of Accounts.
  • The Reconciliation screens did see some updates as well. The changes made will make the reconciliation process more streamlined and easy to complete.

As you can see, the QuickBooks Online support team does value the feedback we give them so make sure to let them know what you like and don’t like, or what you feel could be made easier to use.  To read the full article on the updates please click here.  

LBA Haynes Strand Volunteers To Fight Hunger in Our Community

Every year LBA Haynes Strand closes it’s doors for one day while the entire firm goes out into the community to help with a worthy cause. This year we were fortunate enough to team with Out of The Garden Project in Greensboro, NC. Out of The Garden Project is a food assistance program for families primarily in Guilford County.  Their mission is to partner with parents, teachers, friends, and organizations to provide food and hope for every child!  They supply a bag of food, including two meals, for a family of four (6-7 lbs) each Friday at 60+ schools in Guilford County, one school in Forsyth County and one school in Alamance County.  Overall they reach 1,750 families each week!  In addition, Out of The Garden Project provides 700 bookbags each week for the United Way of High Point.

Did You Know: Out of Guilford County Schools’ 73,000 students, 67% receive free or reduced price lunches and breakfasts?

This is one of the highest rates in the nation.  Greensboro and High Point were ranked #1 for food insecurity in the United States until July of 2016.  The area is currently ranked #9 in the nation for food insecurity.  Studies have shown that when students don’t eat on the weekend, it can take up to Wednesday of the next week after students have eaten for two days at school to begin to learn at the same rate as their peers who had access to nutrition during the weekend.

Out of The Garden Project – LBAHS Day 2017 on Biteable.

Our team had a great time packing meal bags, sorting food, cleaning the warehouse and handling many other tasks for Out of The Garden Project.  Dave Recchion, Principal in our Greensboro office had this to say, “It was a tremendous honor to work hand in hand with our team today in making a difference in our community.  We can all feel good about the impact that was made.  We take a lot for granted, and it is in moments like this where we can feel the pain of the less fortunate.  Every box, bag, and can that we touched will ensure that some people will get a meal for a day.  Thank you to Out of The Garden Project for allowing us to volunteer and make a real difference.”

To learn more about Out of The Garden Project and how you can help, CLICK HERE!

5 Tips to Prepare for a General Contractor’s License Audit

Tip 1: Know Which Type of License you are Seeking:

The dollar amount of the project you are bidding on will likely be the determining factor of which license type is right for your company.  See the chart at the bottom of the post for the license thresholds, financial requirements and whether an audit is required to be performed by an independent CPA.

Tip 2: Possess the Necessary Working Capital:

Even though you may want a certain license type (i.e. unlimited), you may not meet the eligibility criteria for one, so be sure to review all of the eligibility requirements before submitting your application.

Tip 3: Engage an Independent CPA:

Please know that not all CPAs can perform audits.  Make sure you are working with a firm who has prior experience performing audits of general contractors.

Tip 4: Assemble all Documents Necessary for an Independent Audit:

Typical documents requested as part of an audit or review engagement include: a) access to QuickBooks or other accounting system used by the contractor; b) bank statements; c) access to source documents (checks received or paid); d) organizational documents including articles of incorporation.

Tip 5: Submit Audited Balance Sheet along with Completed License Application to your State Board of General Contractors:

Ensure that all of the necessary documents are attached to the State application form and the proper reports prepared by the independent CPA are attached.  States will not process your application without an attached audited balance sheet (if necessary).  Failure to include the audited balance sheet will result in costly delays in processing of your application.

For a quick outline of the requirements and thresholds for a GC licensure audit, CLICK HERE.

NC Tax Law Updates – NCACPA in Action

In North Carolina, the NCACPA is working to modernize and improve our state tax code. LBA Haynes Strand is proud to be a member of the NCACPA. This year they have made a few changes and have recently announced those changes. Take a look at what the NCACPA has been working on by CLICKING HERE!

If you have any questions on the law changes and how they may affect you, click the button below for a no-cost consultation.

Tax Deductions to Keep in Mind When Traveling for Charity

It’s almost that time again… Tax Season! We want to make sure that you are taking advantage of all the tax deductions that are available to you when you are traveling for charity. There are a few things that you want to make sure you are doing to make sure the deductions qualify. 

A few tips to remember are:
  • Make sure the Charity qualifies by the IRS standards
  • Ask the Charity about their status before you donate
  • Know what Out-of-Pocket Expenses are deductible
  • Recognize the travel expenses that are deductible and not deductible – some types of travel are NOT deductible

To see specific tips from the IRS on this topic, CLICK HERE. If you have any additional questions about tax deductions when traveling for charity, contact us today!