Accounting fraud on the rise

The logo of KPMG.

Smaller finance teams, more stressed companies and complex reporting rules are leading to more mistakes in mid-size and small company financial records, raising the risk of fraud going undetected, says an auditor.

A bi-annual survey of fraud in Australia and NZ by KPMG, released on Thursday, shows the level of fraud by individuals of more than $1 million rose 82 per cent between 2010 and 2012, while fraud by internal staff rose to 75 per cent of the total from 65 per cent.

via Warning on accounting fraud as pressures rise.

Accounting future looks positive in UAE

ABU DHABI, UNITED ARAB EMIRATES - NOVEMBER 25:...

SHARJAH

The future of accounting profession looks very positive in the UAE and the Middle East, according to industry experts.

The profession is quite important across the world and it will continue to grow in the country and GCC as well, they said at an accounting and auditing event held in Sharjah on Saturday.

Organised by the UAE-based ‘OpenThinking’, it was an open forum of accounting and auditing ethics from basic management to business process improvements and intricate decision-making policies.

The big picture is that the future of accounting profession should be very positive as all of the regional economies experiencing growth, Association of Chartered Certified Accountants (ACCA) Middle East head Stuart Dunlop told Khaleej Times on the sidelines of the event.

“We need to see Gulf nationals coming into the profession,” Dunlop said. “We live in Arab world, so we need to see more boys and girls in this profession from this part of the world,” he added.

via Business – Accounting future looks positive in UAE: Experts.

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Big chance for small business

Small Businesses Girvan still has many small i...

BizLaunch was unveiled yesterday in Johannesburg by Clive Pintusewitz, Standard Banks director of small enterprise development.

The new package, aimed at businesses within their first year, will enable small businesses to keep track of their cash, pay suppliers, deposit funds into a business bank account and get basic advice – all for just R90 a month.

Businesses that have been operating informally can also get BizLaunch, even if they have been in existence for over a year.

Other impediments that lead to closure include access to funding and markets, and cash flow management.

“We know that there is a big issue with small businesses and we want to see them grow. What we have done is to look at the needs of those businesses and packaged a solution that brings a lot of support to those businesses,” Pintusewitz said.BizLaunch offers unlimited transactional banking. They are targeting 80000 businesses in the current financial year.

“We have partnered with Softline Pastel, who are the leading accounting software to offer MyBusiness Online, which is a solution built specially for start-up businesses. What we have seen is that one of the reasons businesses fail is because they cannot track their finances and cannot manage invoices and payments,” he said.

“In our interaction with our clients we have learnt that small businesses fail because they do not get revenue. The second is managing your cost and stock. Also, when they have ordered the stock and the customers take time to pay, it creates a cash-flow problem.”

BizLaunch will be available at all Standard Bank branches.

Pintusewitz said for those who do not have access to a computer there was a mobile version if they have a smartphone, and soon an offline version will be available.

via Big chance for small business – Sowetan LIVE.

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Positive thinking: Inner accounting

DNA

One of the leading causes of depression and loss of energy is inner accounting. It is a continual feeling of being owed something. Trivial things like feeling grieved that someone didn’t greet one, or not take one’s phone calls, can make one unnecessarily feel neglected.

This amounts to keeping an account internally with the feeling of not being given one’s due, whether it is wanting that others should treat us better or being resentful of one’s talents not being appreciated. It causes a lot of negative thinking where one keeps repeating these thoughts, inviting depression and weakness of character. This weakness manifests much more when the chips are down and others do not sympathise with us.

via Positive thinking: Inner accounting – Analysis – DNA

Good accounting improves business competitiveness

Salford Business School

Image by University of Salford via Flickr

BY PHILLIP CHICHONI

The managing director of Swiss bank, UBS,  is in trouble. The board wants to fire him for allowing over US$2 billion to be lost through the hands of  rogue trader Kweku Abodoli. One of the largest financial institutions in the world, UBS’s financial control systems failed to detect fraudulent activities and suffered a huge loss as a result.

I asked a number of small business owners if they knew how much money they were making each year. Frighteningly, the majority did not know exactly. As long as there was cash in the bank, they did not bother themselves with much else as regards the financials of the company. So if an employee finds a way of defrauding them, they would have no way of detecting it.

Lack of accounting and financial control systems is a big problem among SMEs. They cannot measure their success, growth and efficiency. With no budgets and cash flow management systems, business decisions are made in the dark and on an ad-hoc basis. An accounting system helps in managing finances, maximising returns on investments while improving the competitiveness of businesses.

Your accounting system should provide an accurate picture of your business and how it is performing. Setting up a good accounting system and understanding the numbers produced can make a major difference in how your business fares in the long run. The financial statements produced from your accounting system will help you in several ways.

HOW TO KNOW IF YOU ARE REALLY MAKING MONEY

A good accounting system should tell you how much money you are making in terms of total sales, the cost of the goods sold, expenses and net profit. Success in business is measured in financial terms. The financial results at the end of a period will reflect how successful the business was in the given period. Comparing the financial results over time will show if the company is growing and improving in efficiency.

via SME Chat:Good accounting improves business competitiveness.

Accounting

Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in selecting the information that is relevant to the user and is reliable. The principles of accountancy are applied to business entities in three divisions of practical art, named accounting, bookkeeping, and auditing.

Accountancy is defined by the Oxford English Dictionary (OED) as “the profession or duties of an accountant”.

Accounting is defined by the American Institute of Certified Public Accountants (AICPA) as “the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof.”

Accounting is thousands of years old; the earliest accounting records, which date back more than 7,000 years, were found in Mesopotamia (Assyrians). The people of that time relied on primitive accounting methods to record the growth of crops and herds. Accounting evolved, improving over the years and advancing as business advanced.

Early accounts served mainly to assist the memory of the businessperson and the audience for the account was the proprietor or record keeper alone. Cruder forms of accounting were inadequate for the problems created by a business entity involving multiple investors, so double-entry bookkeeping first emerged in northern Italy in the 14th century, where trading ventures began to require more capital than a single individual was able to invest. The development of joint stock companies created wider audiences for accounts, as investors without firsthand knowledge of their operations relied on accounts to provide the requisite information. This development resulted in a split of accounting systems for internal (i.e. management accounting) and external (i.e. financial accounting) purposes, and subsequently also in accounting and disclosure regulations and a growing need for independent attestation of external accounts by auditors.

Today, accounting is called “the language of business” because it is the vehicle for reporting financial information about a business entity to many different groups of people. Accounting that concentrates on reporting to people inside the business entity is called management accounting and is used to provide information to employees, managers, owner-managers and auditors. Management accounting is concerned primarily with providing a basis for making management or operating decisions. Accounting that provides information to people outside the business entity is called financial accounting and provides information to present and potential shareholders, creditors such as banks or vendors, financial analysts, economists, and government agencies. Because these users have different needs, the presentation of financial accounts is very structured and subject to many more rules than management accounting. The body of rules that governs financial accounting in a given jurisdiction is called Generally Accepted Accounting Principles, or GAAP. Other rules include International Financial Reporting Standards, or IFRS, or US GAAP.

via Accountancy – Wikipedia, the free encyclopedia

Accounting Crucial for Survival

It is, for example, entirely possible for a company to be profitable but fail anyway because it does not have enough cash coming in to pay its bills.

“It’s like a racecar that goes too fast and runs out of gas,” said Doug Tatum, a serial entrepreneur who is a visiting professor of entrepreneurship at Middle Tennessee State University in Murfreesboro. Business owners do not necessarily need to know how to prepare a balance sheet, but they do have to know which gauges to watch.

One obvious step is to work with a bookkeeper or accountant, someone who can help navigate arcane accounting and tax rules and organize your affairs. But owners should understand that accounting is not just about paying taxes or reporting results.

“Small-business owners tend to hate accounting because it’s boring,” said Brian Hamilton, chief executive of Sageworks, a company in Raleigh, N.C., that tracks financial data for privately held businesses. “The mistake they make is not thinking about how they can use certain numbers as tools to better manage where their business is headed tomorrow.”

via A Few Accounting Essentials Are Crucial for Survival – NYTimes.com