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Internal Controls ToReduce The Risk of FraudMay 20, 2015Personalized Service By Business and Accounting Experts

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Personalized Service By Business and Accounting Experts2Internal Controls ToReduce The Risk of FraudMay 20, 2015Personalized Service By Business and Accounting Experts

3Todays PresenterPersonalized Service By Business and Accounting ExpertsJeremy BistlineCougar Mountain Software

JeremyBistline@cougarmtn.com

4How to interact todayPersonalized Service By Business and Accounting Experts

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5AGENDAIntroductionsTodays Topics:Separate critical job activities of Denali usersWatching your cash account(s)Reviewing your active numbers - expensesReviewing vendors that might take advantage of your businessReviewing employee time and working Payroll for fraudQ & A Wrap-upPersonalized Service By Business and Accounting ExpertsValue of Reports series:

Reducing Fraud (today) 5/20Financial reporting 5/27Reporting: Using CMS vs. Excel 6/10

6Reduce the Risk Of FraudSo you care about Fraud?

Personalized Service By Business and Accounting ExpertsEvery year in the US businesses lose millions of dollars to fraudulent activity. Sometimes the employee or partner(s) are unknown to the business and uses experience knowledge to extract funds,

In many cases the fraud is committed by a staff member who is operating right under the owners nose. Often the fraud occurs over a long period of time before it is detected, if it is detected at all. IE an employee here in Boise Id at a construction company took almost $750m in funds over 23 years.

The good news is that you dont need to hire an expensive accounting team to go through your books and audit every transaction. Here at Cougar Mountain Software we can provided you with Front Line preventative help.

7Reduce the Risk Of Fraud: Non Profit Also.

Personalized Service By Business and Accounting ExpertsEvery two years, the Association of Certified Fraud Examiners (ACFE) releases a study on fraud at businesses and nonprofit organizations. The 2014 report included responses from 1,483 Certified Fraud Examiners and it contains some important lessons that can help nonprofit organizations reduce their risk of becoming victims of fraud.

Dont Depend on an AuditAudits are an essential tool and useful for finding the extent of the damage after fraud is uncovered, but they rarely detect fraud. According to the ACFE report, only 3% of fraud is detected first by an outside audit. Unless the fraud is extremely blatant, the auditor needs a place to start and must know what to look for.

Small businesses and nonprofits of less than 100 employees were the most likely to be victimized and lack adequate fraud controls. They were also the least likely to recover losses

8Reduce the Risk Of FraudIt starts with Prevention!

Personalized Service By Business and Accounting ExpertsReports revealed that the fraudulent activities studied lasted an average of 18 months before being detected. Imagine the type of loss your company could suffer with an employee committing fraud for a year and a half. Luckily, there are ways you can minimize fraud occurrences by implementing different procedures and controls.

At Cougar Mountain Software we understand this and implement many different ways of trying to stop this. Five things we will discuss that CMS gives you to prevent any type of loss that might take place.

Separating critical job activities of employees. Watching your cash accounts easily.Reviewing your active numbers. Reviewing your time cards and working Payroll for fraud.Reviewing vendors that might take advantage of your business.

9Reduce the Risk Of Fraud

SecurityPersonalized Service By Business and Accounting ExpertsSecurity

Some of the more important setup aspects of your system are the users and security. You can establish a variety of security settings for the different users of the system. Use the security settings available in Denali to allow specific users, or groups of users, access to specific modules and specific functions within the system.

Setting User Rights

By default, a new user has no access rights. When you assign a user to a group, they will have access to everything the group has access to. Keep in mind that if the users individual settings allow access to areas that the groups settings do not, they will still have access to these areas. If access to a module is completely restricted from a user, it could affect access in other modules. For example, if a user does not have access to the General Ledger module and they attempt to create a Terms Code in Accounts Receivable, that user will not be able to save the code because permission to view General Ledger accounts is required to save a Terms Code.

10Reduce the Risk Of FraudOne Stop balancing your cash.

Personalized Service By Business and Accounting ExpertsYoud be forgiven for feeling confused by this topic before we get started. Many accountants use the word reconcile often and it can mean different things under different circumstances.

This is the process of matching one set of General Ledger records to another (Bank Reconciliation) and making sure you Balance Daily! Lets assume your bookkeeper tells you he/she has reconciled the bank account. To some bookkeepers this means theyve correctly allocated bank statement items into the ledger. But is this enough? Certainly not.

A vital control in any business is to understand any variances between your bank statement and profit & loss statement and balance sheet in General Ledger. Surprisingly, many businesses and software do not run such reports. They may have been put off by the administration time involved in its preparation. Not anymore! You can check this in Cougar Mountain Software daily.

In our Bank Reconciliation Module:

Current Balance This field shows the current balance to date of the bank account. Enter this amount when you create the bank account. Once you save the account, the amount cannot be edited unless you post a transaction.

Current GL Balance This field is informational only and shows the current balance of the GL account associated with the selected bank account. The GL account appears in the Bank Account field on the GL Accounts tab.

11Reduce the Risk Of FraudMany different check and balances.

Personalized Service By Business and Accounting ExpertsAP Aging Report window

The AP Aging Report provides a list of vendors to whom the company owes money and provides information about the aging of the amounts owed. You can use this report to reconcile Accounts Payable to General Ledger.

AP Control Report windowThe AP Control Report provides you with a tool to control your payables. You can also use it to ensure that your data files are in balance and to balance your AP Code liabilities to your liability accounts in General Ledger.

AP Codes windowAP Codes direct the posting of invoices, payments, and adjustments to the correct General Ledger accounts. If Accounts Payable is not integrated to General Ledger, and you don't want to group your vendors, you only need one AP Code. If Accounts Payable is integrated to General Ledger, you need one AP Code for each liability account that you use.

We recommend to do the balances monthly and you can see this in our Month-End Webinar.

12Reduce the Risk Of FraudMany different check and balances.

Personalized Service By Business and Accounting ExpertsReviewing your profit & loss and balance sheet on a regular basis might seem like such a high-level approach that its unlikely to help you identify issues. Not so!

In Cougar, we have the ability to not only see a P/L report but what made the dollars in the expenses your business paid out. Here we see an expense for a month that we think the Legaland Accounting might be too high. 13Reduce the Risk Of FraudMany different check and balances.

Personalized Service By Business and Accounting ExpertsChecking the reports from what we saw we can go to our Module AP and see what the total is and who did we pay for the Expense line. Notice the report shows the entire amount broken down, and balances to the P/L.

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Personalized Service By Business and Accounting ExpertsSupplier invoices should be approved by a Supervisor / Key person who is familiar with your operations and understands what was ordered. In a Purchase order module you can add inventory without billing. The staffs receives the goods but another staff member compares the quantities and prices to pay the bills.

With Accounts Payable / Purchase Order accounting modules, approvals can be carried out on the run without needing to go to the office. User security that we talked about first in this webinar makes profiles that can restrict access to invoice and bill approval only.

Transaction Type This field is only available if you have Purchase Order integrated with Accounts Payable. If this is a paid-out transaction, this field reads Receive Only and is disabled. Use this drop-down list to select the type of transaction you want to complete. Your options are as follows: Receive and Invoice: select this option to receive all items in the purchase order into inventory and invoice some or all of the items. Receive Only: select this option to only receive items into inventory without invoicing any of them. Invoice Only: select this option to only invoice previously received items.

Enter Bills:

Use the AP Enter Bills window to record information on bills as they are received. You can also use this window for immediate payments.

Pay Bills: Use this window to pay individual bills or make adjustments to payments you entered individually or the system automatically generated. You can also use this window to void checks, enter credit memos, and adjust the balances of vendor accounts. The window fields change depending on the Transaction Type you choose.

15Reduce the Risk Of FraudCheck and Monitor Your Vendors!

Personalized Service By Business and Accounting ExpertsPO Vendor Performance Report window

Use this report to view the variance between the information for estimated cost, expected date, and quantity entered on a purchase order and the actual cost, date received, and quantity received of your stock items. Direct expense items are excluded from this report. This report is only available if you have Accounts Payable installed.

16Reduce the Risk Of FraudMany different check and balances.

Personalized Service By Business and Accounting ExpertsGenerally Accepted Accounting Principles, also called GAAP or US GAAP, are the generally accepted accounting principles adopted by the U.S. Securities and Exchange Commission (SEC).

Posting: Posting is permanent and can not be erased. What that means to you is, once you / staff posted an entry it directly goes to the Audit Trail. This is where it can be reviewed, even though the integration comes from another module.

***** There are many different accounting software's out there, that integrate but are NOT GAAP compliant. What this means is someone could go back and erase an entry. *******17Reduce the Risk of Fraud Personalized Service By Business and Accounting Experts

The Audit Trail Report provides a complete, detailed listing of the transactions that have taken place in each account for a specified time period. It lists the date and the module from which the transaction was posted. This report also includes the user ID and batch number information for each transaction for tracking purposes. You can run the Audit Trail Report for a specified range of GL Account numbers and dates to get exactly the information you need.

Last Posting Number The Last Posting Number label displays the number that was applied to the last transaction in the last posted batch.

Last Batch Number The Last Batch Number label is only visible if the multi-batch mode option is selected, and is the six-character identifier of the last batch that was posted.

18Reduce the Risk Of FraudTime Fraud!

Personalized Service By Business and Accounting ExpertsIts common to think about theft in terms of something tangible like cash, stock or a fixed asset. A trickier fraud concept for some business owners is theft of time by employees in Payroll.

Time and attendance apps such as T-Sheets integrate nicely with Cougar Mountain Software. They capture a picture of staff at clock off and on times and ensure that only logged time integrates to the payroll section of the accounting system. This can be reviewed daily, at the same time added to our Payroll.

TSheets is a time and attendance tracking program that integrates with Payroll. Your employees clock in and out through TSheets and when you want to run payroll, you import the hours into Denali. You can integrate Denali and TSheets by selecting the Enable TSheets Integration check box in the PR Module Preferences window.

If you have employees set up in TSheets, you can import the employee records into Denali, or, if you have employees set up in Denali and not TSheets, you can export employee records to TSheets. When you save employee records in Denali, the corresponding fields will automatically update in TSheets.

19Reduce the Risk Of FraudCougar Mountain Software 1-800-388-3038

Personalized Service By Business and Accounting ExpertsOccupational fraud can result in huge financial loss, legal costs, and ruined reputations that can ultimately lead to the downfall of an organization. Having the proper plans in place can significantly reduce fraudulent activities from occurring or cut losses if a fraud already occurred. If you feel that you might want to get your Organization on track with a software that is always improving on preventing Fraud, give us a call here at Cougar Mountain Software. (1-800388-3038. 20Upcoming Webinars

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http://www.cougarmtn.com/monthly-webinar-series/21Questions or Comments?Cougar Mountain Customer Support

800-388-3038

Sales@cougarmtn.comPersonalized Service By Business and Accounting ExpertsThe 22Personalized Service By Business and Accounting ExpertsTHANK YOU!

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