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Skjuda
Member
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Posted: Sat Jul 26th, 2008 03:32 am |
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For the record:
GAAP (generally accepted accounting principles) covers nearly all functions of a business and includes internal control. One major determination of an audit that is to be done by a CPA is to determine the risk the company has to fraud and abuse. Internal control is a major part of that determination. The higher the risk the greater the audit is suppose to encompass. There is a whole chapter of the FASB and the GASB that cover internal control and fraud detection.
GAAP is not a single statement but is made up of statements from the FASB and GASB. It dates back to 1920 or so and is available in book form or on disk. Before the big change in CPA leadership of the AICPA (group that all cpas belong to) the rules were made to detect fraud and protect the individuals who use the financial information for investment or other decision making purposes. After the big change the rules were changed to allow more flexibility in how an audit is performed and who can perform the audit. Before Auditors could not be consultants to a company they audited, after they could do both.
This created a conflict of interest and corrupted the FS. What CPA is going to admit the consulting they did was in error or needed to be changed? CPA's have become a useless profession that does nothing but take money out of a company.
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violetdragonfly
Member
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Posted: Sat Jul 26th, 2008 03:16 am |
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Well thank you, at least! I ended up going online and looking it up. I don't mind being accused of something rightly but I want to at least know what I'm being accused of! And I know there is a connection there - 47% of GCs in therapy have admitted to embezzling from employers to finance their habit (and that's just the ones who admit it...). Almost half - much higher than the general public.
But thank you anyway, for answering. 
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Disgusted
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| Joined: | Thu Sep 29th, 2005 |
| Location: | Dover |
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Posted: Sat Jul 26th, 2008 03:08 am |
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violetdragonfly wrote: What the heck is a 'SWAG'???
With sincere apologies to the moderators if offensive:
Straight Wild Assed Guess.
In the professional world, it's a term used when someone is is either incapable of rendering an accurate count of something, or is too lazy to do the math and get the right answer. It's a close cousin, if it were, of "close enough for government work."
Last edited on Sat Jul 26th, 2008 03:09 am by Disgusted
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Controversial
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| Joined: | Wed Jul 5th, 2006 |
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Posted: Thu Jul 24th, 2008 05:16 am |
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For the record....
GAAP do not provide any guidance regarding the design of internal controls. GAAP govern the presentation of the financial statements prepared for public use. The purpose of having GAAP is to allow the public readers of financials, (bankers, investors, etc.), to assume when they endeavor to judge companies that uniformity exists from one company to the next insofar ashow their financial situation is reported - as long as the statements were prepared according to GAAP. For example, GAAP dictates what part of outstanding debt should be reflected in the long-term debt portion of the financials vs. the current (short-term) section. Without GAAP different entities could all derive their own definition of long-term.
CPAs make a greater effort than any other professional to delineate in writing before commencing work what tasks are to be performed, the limitations of what can be learned from those tasks, what responsibilities remain with the client, etc. On the inital engagement letter there is a standard paragraph which states that none of the CPAs services can be relied upon to detect fraud or illegal acts. There is another standard paragraph which states that management, not the CPA, is responsible for designing and implementing adequate internal controls.
There is a widespread misconception that a clean audit is a stamp of approval, proof of lack of the existence of fraud, etc. The CPA report states that the financials are prepared according to GAAP - nothing more.
Last edited on Thu Jul 24th, 2008 05:46 am by Controversial
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violetdragonfly
Member
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Posted: Tue Jul 1st, 2008 01:52 am |
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http://www.robertperkinson.com/gambling-treatment.htm
http://www.oregon.gov/DHS/addiction/gambling/presentations/addiction-workplace.ppt#2
("*gambling addiction causes direct increase in divorce, abuse and embezzlement.")
http://www.gamblingwiththegoodlife.com/statistics.html
http://recoveryfromgamblingaddiction.blogspot.com/2008/05/embezzling-money-in-order-to-gamble.html
http://www.noslots.com/
("Increased addiction-related social and economic costs include divorce, domestic violence, child abuse, child death by abuse, rape, assault, suicide, drug abuse, psychiatric and personality disorders, physical illness, bankruptcy, work absenteeism and lost productivity, embezzlement, insurance fraud, arson, and increased police, civil justice, social services costs")
("Delaware Council on Gambling Problems addict intake calls have remained at twice pre-1996 levels. Source: Barbara Barr, DCGP, 302-655-3261. As is typical, once casinos opened in Delaware, the gambling industry broke its initial promises and demanded and got more machines, a convention center, and an on-site hotel.")
And related to the Payday loan thread:
http://www.csijeffcity.com/key_impairs.php
("New business opportunities created by a casino include pawn shops, title loans, pay day loans, bankruptcy attorneys, credit counseling, bail bonding, mental health counseling, family counseling and abuse centers, collection agencies, accounting firms (to safeguard from embezzlement), criminal defense attorneys and gamblers anonymous chapters")
There is also information on this last link about the connection between bankruptcy and compulsive gambling. I think people would be shocked to find out what bankruptcy and divorce lawyers and credit counseling services around here know about these links.
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violetdragonfly
Member
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Posted: Fri Jun 27th, 2008 02:49 am |
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| What the heck is a 'SWAG'???
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violetdragonfly
Member
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Posted: Fri Jun 27th, 2008 02:49 am |
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| I can't "prove" anything on this board and I can't name sources because GA and GamAnon are just that - anonymous. But I can tell you that there is a definite link, it's not something I dreamed up. Counselors that work with the DE Council on Gambling, the Council itself, the courts and prosecutors and Adult Probation, as well as a couple of other groups might be the ones with the actual statistics.
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Skjuda
Member
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Posted: Thu Jun 26th, 2008 12:21 pm |
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It is very sad to see so many businesses lose money to dishonest people because the CPA did not take the time to set up simple internal controls for the company. Just a few controls set up according to GAAP would deter most thefts and for those people who do steal it would ensure they get caught much faster with less money stolen.
But as we have all seen with Enron and other companies CPA's are useless and generally not worth a bottle of water in the desert. CPA's as a whole have degenerated to the point of thier only usefulness is for companies to meet the government requirements. Anyone who relies on CPA's audits or information finds themselves losing money hand over fist. The founding fathers of th CPA profession are probably turning in thier graves over how bad the industry has become and how the present CPA's have turned an honorable profession into a standing joke for even the worse comedians.
Even our State auditors office is seen as a joke. When I was first learning the accounting profession many years ago whenever a CPA was around we listened to his ideals and concerns and took action as soon as possible. The term auditor is here usually invoked a measure of concern and worry that everything was done correctly according to GAAP and once the auditor left a sigh of relief was given that everything met his approval. Today when we hear an auditor is here the jokes start and everyone has a work free day to loaf while making fun of the CPA. Any ideals he has or suggestions are laughed at then ignored unless some big wig decides to take credit for the ideal. It is a sad time for businesses who have to pay for a service that is useless.
I recommend all businesses hire an internal control specialist, one who is not associated with the CPA profession, to review and set up the companies internal controls. A internal control specialist will save companies thousands if not more money per year from dishonest workers. In todays economy people are getting creative in stealing money in more ways than ever before but for the same reasons in there minds like low pay long hours underapreciatd etc...
Just a simple internal control like separation of duties, one person does deposits another does the bank reconciliations would catch people stealing money faster and in most instances actually prevent some people from stealing. Another very useful internal control is one person enters accounts payable while another pays would prevent paying fictitous invoices. Another is to match all invoices with a receiving report for work done, none are paid unless matched up as recieved. There are plenty of internal controls that can be created to deter people from stealing, internal control is not limited to jsut the accounting office but encompasses the whole company from receiving to purchasing to payroll.
For what ever reason you believe is behind the increase in embezzlement there are ways to deter and minimise the impact these people can have on your business. ONly by having responsible owners and managers making the right decisions can safe gaurds be put in place.
If you would like to hire an internal control specialist for a free consultation please email and I will set you up with someone.
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Playing the Game
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| Joined: | Wed Jan 30th, 2008 |
| Location: | Delaware USA |
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Posted: Tue Jun 24th, 2008 08:59 pm |
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I would like to see your proof of that observation, since it is noting but a SWAG.
violetdragonfly wrote:
Much (although not all) of it can be connected to compulsive gambling. I've met with a large number of compulsive gamblers in the Kent County area and you would be shocked at the number who - otherwise good, moral, upright people - have stolen from an employer or family member to feed their addiction. In this, they are no different than any other addict, but they have intentions on paying it back when they win, then they're chasing their losses. It's pretty sad.
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Hartlyboy
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Posted: Tue Jun 24th, 2008 08:50 pm |
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| The purpose of internal controls is to both minimize the potential for loss and provide a process to audit against to ensure improvements in the existing practices. People who want to be dishonest will still take a chance but the likelihood they'll get caught in a shorter time period [minimizing losses] is much greater. We've seen cases where small amounts were taken that were out of all proportion to the risk involved but somehow the thieves never tried to reconcile risk with results. Sad.
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Rightwinger
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Posted: Tue Jun 24th, 2008 11:12 am |
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Two Cents wrote: I find it most interesting that some businesses have so few or no internal controls on money that it is possible for people to abscond with significant amounts of funds. I have had a small business, with numerous honest part-time employees who did cash and credit card transactions -- say in the $5k per day range, and I am confident that I never lost a dollar. But, I did have controls that would have made it apparent that something was happening to the money.
Don't you think the banks have "controls"? They have cameras as well and this
still doesn't stop some individuals. The only difference is that they usually find
the discrepanies and the guilty party a little faster.
I've known of several businesses who had very little cash transactions in their
type of work and still had thousands of dollars embezzled. Misuse of company
credit cards seems to be the number one favorite. " Piggybacking "is another.
Your monthly payments on company vehicle loans for an example. If you have
a fleet of vehicles all with GMAC loans for example, and the employee also has
a GMAC loan, they can be cutting checks for THEIR loan along with yours.
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painter
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Posted: Tue Jun 24th, 2008 04:34 am |
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| som may be get tha mony caus i got a haf galon ov jm beam to mr b warhose toda at rooot 8 and he char $25.999 for it. use to was $22.9 las wek. wha this means& thans be, to y ou.
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Two Cents
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Posted: Tue Jun 24th, 2008 03:28 am |
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| I find it most interesting that some businesses have so few or no internal controls on money that it is possible for people to abscond with significant amounts of funds. I have had a small business, with numerous honest part-time employees who did cash and credit card transactions -- say in the $5k per day range, and I am confident that I never lost a dollar. But, I did have controls that would have made it apparent that something was happening to the money.
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Allan
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Posted: Tue Jun 24th, 2008 01:10 am |
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Hmmmm, You write, "Much (although not all) of it can be connected to compulsive gambling." How do you know this and or what is your source of information? And what percentage is "much"?
Last edited on Tue Jun 24th, 2008 01:12 am by Allan
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violetdragonfly
Member
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Posted: Mon Jun 23rd, 2008 09:48 pm |
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| Much (although not all) of it can be connected to compulsive gambling. I've met with a large number of compulsive gamblers in the Kent County area and you would be shocked at the number who - otherwise good, moral, upright people - have stolen from an employer or family member to feed their addiction. In this, they are no different than any other addict, but they have intentions on paying it back when they win, then they're chasing their losses. It's pretty sad.
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Rightwinger
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Posted: Sun Jun 22nd, 2008 12:44 pm |
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I am amazed and saddened by the number of businesses who have fallen victim
to dishonest employees. All types, law firms, medical practices, auto body shops,
general contractors, mobile home sales, non- profits, small towns, beauty salons,
supermarkets, truck dealerships, banks and yes, even the State of Delaware.
Some make the newspapers, but the majority do not! The businesses simply do
not want the public embarrassment. Those who are prosecuted and found
guilty, serve little or no jail time because this is " a white collar crime".
As prices continue to climb and the average family is having difficulty making ends
meet, I am certain that more and more businesses will find themselves with
an accounting nightmare on their hands. These people can be very creative
in manipulating the accounting records in order to cover their tracks. It can be
very "messy" if they manipulate payroll, for instance. Once the theft is discovered,
the auditing process can be time consuming and costly.
In order to stop this epidemic, I urge businesses to report these thefts to the
police and prosecute! If you just fire the individual, then they go on to the next
job and possibly victimize another business.
Small business owners should ask their accountants about safeguards and
measures they can take to prevent such thefts.
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