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.

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5 Biggest Challenges Facing Your Small Business

Small Business Summit 2011 Pre Event Photo 1

Starting a business is a big achievement for many entrepreneurs, but maintaining one is the larger challenge. There are many standard challenges that face every business whether they are large or small. These include things like hiring the right people, building a brand and so on. However, there are some that are unique to small businesses – ones most large companies have grown out of long ago. We’ll look at the 5 biggest challenges in this article.

Client Dependence

If a single client makes up more than half of your income, you are more of an independent contractor than a business owner. Diversifying the client base is vital to growing a business, but it can be difficult – especially when the client in question pays well and on time. For many small businesses, having a client willing to pay on time for a product or service is a godsend.

Unfortunately, this can result in a longer term handicap because, even if you have employees and so on, you may be still acting as a sub-contractor for a larger business. This arrangement allows the client to avoid the risks of adding payroll in an area where the work may dry up at any time. All of that risk is transferred from the company to you and your employees. This can work out fine provided that your main clients have a consistent need for your product or service. However, it is generally better for a business to have a diversified client base to pick up the slack when any single client quits paying.

Money Management

Having enough cash to cover the bills is a must for any business, but it is also a must for every individual. Whether it is your business or your life, one will likely emerge as a capital drain that puts pressure on the other. In order to head off this problem, small businesses owners must either be heavily capitalized or be able to pick up extra income to shore up cash reserves when needed. This is why many small businesses start out with the founders working a job and building a business simultaneously. While this split focus can make it difficult to grow a business, running out of cash makes growing a business impossible.

Money management becomes even more important when cash is flowing into the business and to the owner. Although handling business accounting and taxes may be within the capabilities of most business owners, professional help is usually a good idea. The complexity of a business’ books go up with each client and employee, so getting an assist on the book keeping can prevent it from becoming a reason not to expand.

Fatigue

The hours, the work and the constant pressure to perform wears on even the most passionate individuals. Many business owners, even successful ones, get stuck working much longer hours than their employees. Moreover, they fear that their business will stall in their absence, so they avoid taking any long breaks away from work to recharge. When fatigue sets in, the weariness with the hours and the results can lead to rash decisions about the business, including the desire to abandon it completely. Finding a pace that keeps the business humming without grinding down the owner is a challenge that comes early (and often) in the evolution of a small business.

Founder Dependence

If you get hit by a car, is your business still producing income the next day? A business that can’t operate without its founder is a business with a deadline. Many businesses suffer from founder dependence, and this dependence is often caused by the founder being unable to let go of certain decisions and responsibilities as the business grows. Meeting this challenge is easy in theory – a business owner merely has to give over more control to their employees or partners. In practice, however, this is a big stumbling block for founders because it usually involves compromising (at least initially) on the quality of work being done until the person doing the work learns the ropes.

Balancing Quality and Growth

Even when a business is not founder dependent, there comes a time when the issues from growth seems to match or even outweigh the benefits. Whether a service or a product, at some point a business must sacrifice in order to scale – this may mean not being able to personally manage every client relationship or not inspecting every widget.

Unfortunately, it is usually that level of personal engagement and that attention to detail that makes a business semi-successful. Therefore, many small business owners often find themselves tied to these habits to the detriment of the company’s growth. There is a large middle ground between shoddy work and an unhealthy obsession with quality, so it is up to the business owner to navigate the company’s processes towards a compromise that allows scale without hurting the brand.

The Bottom Line

These are challenges, but not death sentences. One of the worst things a would-be-business owner can do is to go into a small business without considering the challenges ahead. We’ve looked at some things that can help make these challenges easier, but there is no avoiding them. An important step in overcoming a challenge is knowing the size of that challenge. Besides, a competitive drive is often one of the reasons people start their own business and every challenge represents another opportunity to compete.

via 5 Biggest Challenges Facing Your Small Business.

School-leavers would gain more employment if SA labour law was amended

Labour law concerns the inequality of bargaini...

Businesses have long been calling for amendments to the labour legislation to assist in the recruitment and dismissal of workers. According to Johan Botes, Director in Employment at Cliffe Dekker Hofmeyr business law firm, a critical re-think of South African employment law might  assist in motivating especially small businesses to reconsider their reluctance in employing inexperienced job applicants.“Presently, employees who are incapable of performing can only be dismissed from employment after the employer had determined that 1 the employee failed to meet the required work standard, 2 the employee was aware of the standard, 3 the employee was afforded sufficient opportunity to meet the standard and 4 dismissal is the appropriate sanction. This process is not always clearly understood by employers frustrated by an employee that is clearly not able to do the work,” Botes explains.According to a labour survey conducted by the Institute of Race Relations, fifty-one percent of South Africans between 15 and 24 are unemployed.The legislature brought some relief to employers in 2002 when introducing a lower threshold against which employers are tested should they dismiss a probationary employee for poor performance Schedule 8, Item 8 to the Labour Relations Act 66 of 1995.Botes notes that if the intention is truly to get businesses to act as institutions of learning, where on-the-job training is provided to workers fresh from school, university or colleges, a relaxation of the strict rules against dismissal for poor performance for first-time job seekers may be the way to go.“Employers are often reluctant to grow their business where such growth requires the hiring of new staff. One of the reasons for this is that it is difficult for the average employer to dismiss staff who is thought to be capable of doing the work required, but could then not come to grips with the work once employed.“If employers are able to readily terminate the service of new recruits who lack the necessary experience, they may be more inclined to give such youngsters a chance in the first place.Botes thinks that employers and needy job seekers may both be pleasantly surprised by the results.“If an employer knows that it can terminate the services of a new job-seeker at will or whilst being tested against for reasons that are automatically unfair only, the employer may decide to provide employment to a larger group of staff than those actually required, knowing that it can retain the best of them after a short trial period.“While the rest of the workers who were not the best at the tasks may then fail to remain employed with the same employer, they would have gained invaluable experience which may assist them greatly in obtaining further employment. The difficulty in getting that into the employment market presents a huge obstacle to our goals of meaningfully reducing unemployment.”He adds, “The current high hurdles laying in the path of employers before being able to dismiss employees for incapacity due to poor performance has not incentivised employers to become institutions of on-the-job training. A different approach is needed if business is expected to actively assist in addressing our skills shortage.”

via School-leavers would gain more employment if SA labour law was amended –  | Political Analysis South Africa.

Company Registration Specialist Offers Accounting Solution

Outsourcing accounting tasks to specialists is part of the solution to counter the challenge of talent crunch for accounting and finance professionals,” says Satish Bakhda of http://www.rikvin.com, a company registration and accounting services provider based in Singapore.

The comment was made in response to a recent survey finding which revealed that Singapore employers, looking to hire finance professionals, are finding it increasingly difficult to find suitably qualified talent. Rikvin Consultancy renders full suite of accounting services to companies in Singapore. Satish Bakhda adds, “Outsourcing accounting function will bring multiple benefits by reducing the burden on resources and because it is being managed by experts in the area it will meet the highest standards and relieve the management to focus on core tasks at hand.”

Financial leaders surveyed for the fifth annual Robert Half Global Financial Employment Monitor reported difficulties finding skilled staff and growing concern about their ability to hold on to their best employees. Singapore was also covered in the survey. Rise in demand for high quality talent, with well rounded skill set and tighter regulations were suggested as some of the challenges.

via Singapore Company Registration Specialist Offers Accounting Solution to Beat Talent Crunch.

SA heading for more job losses

Unemployment could grow to 12m in the next five years.

JOHANNESBURG – Recruitment giant Adcorp says restrictive labour laws are the major obstacle in the creation of jobs in South Africa with unions making unrealistic demands and pushing up entry-level wages for first time job seekers. While this might not be new, Adcorp CEO Richard Pike says should the current trend continue, the number of unemployed could grow to a staggering 12m in the next five years.

Pike says the overwhelming majority of unemployed are black and under the age of 24. He says research has shown that while wages have increased, productivity has decreased significantly, prompting many companies to opt for automation instead of employing a workforce which is largely unreliable, often due to industrial action.

Pike says while the official unemployment rate has been set at 25%, the unofficial level is more realistically fixed at 37% amounting to between 6 and 8m South Africans being without work. He says some companies have ceded to exorbitant wage demands, only to ultimately be forced to retrench workers to make up for the financial shortfall. He says labour intensity fell by 8.1% in 2009, meaning it took 36% fewer workers to produce a given level of production.

via SA heading for more job losses – Moneyweb

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