Need to fabricate an excuse to bail on your meeting? There’s an app for that. Image courtesy of Adobe Stock.
I am continually amazed at the creativity of cheaters. A few examples in the news recently:
Restaurant offering receipts with menu items relabeled as office supplies
Generate disruptions to get out of a zoom meeting
Fake Covid test results
I mentioned these for the laughter value and more importantly for the educational value.
The stories are amusing. If you work in the finance area or are leading an organization, having an awareness of these schemes might help you recognize one if presented to you.
Your entertainment and anti-fraud training for the day:
Update #91 newsletter from the California Board of Accountancy, dated Fall 2020, lists 33 disciplinary actions. The effective dates run from May 2020 through August 2020. Yeah, I’m just getting around to writing about the newsletter that arrived last November.
A few general observations before diving into a summary of the causes and levels of discipline.
Of the 10 stayed revocations for attestation failures, all but one had an attestation ban. General pattern is an audit failure will lead to a ban on attest services. The summary of the case does not give an indication why one CPA didn’t draw a ban.
Usually these are bans from performing any audits, reviews, compilations, or attestation engagements. Some of them were just bans from audits. Pattern seems to be the ban is for the duration of probation and then after that a firm may request permission to again perform attest work.
Imagine if you will, that attest work is a significant portion of your work and you cannot perform any of those for three years.
One big firm listed in this edition is PriceWaterhouseCoopers, who drew a stayed suspension with 18 months probation because of discipline by the SEC. They also earned a $300,000 fine and up to $26,000 reimbursement of costs for investigation and monitoring. An additional consequence is distributing a copy of the order to every employee who is in the state of California.
Of the seven disciplinary actions because of enforcement actions by federal agencies, six are from the SEC and one from PCAOB.
The attestation failures usually include three or four or more specific violations. For example, the actions may because there was not appropriate documentation, the opinion was not supported by workpapers, and there were violations of GAAS and violations of GAAP. Those are overlapping issues but a major audit failure will likely cause a violation in all of those areas. Of grim note for two of the attest failures is one of the listed charges includes creating documentation after release of the audit report. You can make your guess as to what an allegation of that nature includes but could have been creating documentation after workpapers had been called in for review.
Finding data on prior year contribution trends early enough in the year to have analytical value in a review or audit has long been a challenge. Usable data for 2020 is now available in March. This is current enough to allow leaders in churches and ministries analyze the 2020 financial results in time for it to be actionable.
Throughout the pandemic the Evangelical Council for Financial Accountability (ECFA) has been conducting quarterly surveys of its members. Lots of data has been gathered and processed.
On 3/4/21, ECFA published the results of their survey of full year 2020 revenue and expense trends compared to 2019. They have graciously made the results of the survey available for free. You can find it on this page of Feature Surveys. Click on the “Free Download” button beneath the Remarkable Resilience survey report dated March 2021.
The survey is based on responses from 559 churches and 730 religious nonprofits. That is a total of 1,289 responses. ECFA has lots of subsectors for its membership. For those sectors with 20 or more responses, the survey aggregates and reports results.
Who would benefit from looking at this survey? Two groups.
First, finance teams and senior leadership of churches and religious nonprofits to see financial results for 2020 of a large group of their peers. This provides an incredible opportunity to see how other organizations are doing.
Second, CPAs performing reviews or audits of churches religious not-for-profit organizations can easily find industrywide information to use as a benchmark. As mentioned earlier, financial information is usually published long after most of the reviews and audits have been released. It is rare I can find anything that is actually usable.
High-level results from the ECFA survey are summarized into three broad categories:
The number of people with continuing claims for unemployment in the regular state programs and Pandemic Emergency Unemployment compensation programs is volatile, showing large swings from week to week. However, the total does not seem to dropping very fast.
Since the week of 9/19/20, I have been pulling that data off the weekly press release from the Department of Labor. Current weekly report is: Unemployment insurance weekly claims.
The weekly data since then, excluding one week I missed, is:
The number of new claims for unemployment for week ending 2/13/21 increased 13,000 after 36,000 increase the prior week. (Previous week numbers were revised upward by 55,000.)
This follows a two-week decline of 153K (1/16 and 1/23). Prior week of 1/9 saw a 181K increase.
New claims in state programs for the last three weeks:
The number of new claims for unemployment for week ending 1/9/21 increased to 965,000, a deterioration of 181,000 from the prior week. That is the highest number of new state claims since 8/22/20.
Since 8/29/20, the new weekly claims have been in the 700Ks or 800Ks.
Keep in mind that before the shutdown of the economy the new claims averaged about 220K per week, so we are now running more than four times the previous norm.
The number of continuing claims for unemployment has been slowly dropping but increased for the week ending 1/2/21.
News report
Article at Wall Street Journal on 1/14/21 reports US Unemployment Claims Rise as Pandemic Weighs on Economy. Article link indicates the consensus is the increasing virus count combined with increasing restrictions on businesses caused the jump in new unemployment claims.
Article says there are other economic indicators suggesting the economy is slowing down again. Stats such as small business optimism, new home sales, existing home sales, household income, and household spending point towards a slowdown.
Following graphs show the devastation from the economic shutdown.
New claims
New claims for unemployment by week since the start of 2020:
The number of new claims for unemployment for week ending 12/26/20 declined for a secone weeks in a row. New claims are 787K, a 19K drop for the week.
This two week drop follows two weeks of increases, which totaled 176K.
Since 8/9/20, the new weekly claims have been in the 700Ks or 800Ks.
For contrast, remember that before the government induced shutdown of the economy the new claims averaged about 220K per week so we are still running three or four times the previous norm.
The number of continuing claims for unemployment is continuing to drop. Large part of the drop is people going back to work. Some portion, likely a lot, of the drop in state-level continuing claims has been offset by rising number of people on the federal program.
When a person exhausts the state level coverage, they become eligible for the extended federal benefits, called the Pandemic Emergency Unemployment Compensation program.
Article at Wall Street Journal on 12/31/20 reports US Unemployment Claims Fell Modestly Last Week. Article explains the new claims for state programs is a proxy for layoffs. Good observation.
Note: This discussion is cross posted from my other blog, Nonprofit Update because it provides a live-action illustration of rationalization. Auditors study the concept of rationalization because that is a factor we consider when thinking through fraud risk assessment during an audit. Part 1 of this series is cross posted here. Exercise for CPAs is to read these two posts, then identify multiple points where the rationalization thought process transforms inappropriate actions into acceptable behavior.
At least one person on the constantly growing list of flaming hypocrites in public leadership has a sense of shame. Or, at least enough shame to realize she should retire. Eventually. Someday.
After two days of publicity about her non-Thanksgiving non-celebration trip to spend the Thanksgiving weekend with family she doesn’t live with, Dr. Deborah Birx made the announcement.
After two full days of controversy, Dr. Birx announced she will retire shortly after assisting in the transition to a new administration. Presumably, that means sometime in late January or early February. Or maybe March. Or maybe June.
Recall from yesterday the day after Thanksgiving she traveled from her home in D.C. to one of her vacation homes in Delaware for a 50 hour stay with her daughter, son-in-law, and two grandchildren, all of whom live in a different home she owns in Potomac.
When challenged about whether traveling to another state with people from a different household during the Thanksgiving weekend was appropriate given her very public advice not to travel at all over the weekend and not to be with anyone from a different household, she provided a splendiferous rationalization.
Rationalization can blind our views and limit perspective. Image courtesy of Adobe Stock.
Note: This discussion is cross posted from my other blog, Nonprofit Update because it provides a live-action illustration of rationalization. Auditors study the concept of rationalization because that is a factor we consider when thinking through fraud risk assessment during an audit. Part 2 of this series is cross posted here. Exercise for CPAs is to read these two posts, then identify multiple points where the rationalization thought process transforms inappropriate actions into acceptable behavior.
It is taking more and more time to keep up with the political and public health leaders who don’t bother to comply with the recommendations they give us.
This time it is Dr. Deborah Birx who blew off the travel restrictions and gathering size limits at Thanksgiving. Oh, pardon me. It doesn’t count as a Thanksgiving trip since she traveled to her destination the day after Thanksgiving.
Saddest part of this example of hypocrisy is it took place after a large volume of other supposed leaders drew massive criticism for ignoring the rules. It isn’t as if every political and public health leader hasn’t been given notice their behavior is being observed.
Scariest part is her rationalization that there was absolutely nothing wrong with the trip.
Last point in this discussion is the wish that every American had the same freedom she has exercised. Specifically, the freedom to make our own decisions on what is best for our family given our circumstances.
12/20/20 – Associated Press – Birx travels, family visits highlight pandemic safety perils – The day after Thanksgiving, Dr Deborah Birx, coordinator for the official White House coronavirus response team, traveled from her D.C. home to her vacation home in Delaware. Joining her in Delaware were her husband, daughter, son-in-law, and two grandchildren. While in Delaware they ate meals together for two days.
The IRS has published the reference amounts for mileage rates for 2021. The rates:
Beginning on January 1, 2021, the standard mileage rates for the use of a vehicle will be:
56.0 cents per mile driven for business use, down 1.5 cents from the rate for 2020,
16 cents per mile driven for medical or moving purposes, down 1 cent from the rate for 2020, and
14 cents per mile driven in service of charitable organizations.
The business mileage rate decreased one and a half cents for business travel driven and one cent for medical and certain moving expense from the rates for 2020. The charitable rate is set by statute and remains unchanged.
The business rate is down from 57.5 cents in 2020 and 58.0 cents in 2019, which in turn was up from 54.5 in 2018.
The standard rate for business is based on their analysis of the fixed and variable costs of operating a vehicle. The medical & moving rate is based on variable costs of operation.
Rates were published in Notice 2021-02: 2021 Standard Mileage Rates.
Casting my CPA eye on the 1946 probate document for my grandfather’s estate led to a series of posts on my other blog describing what we can learn about farming in the 1940s from a legal filing. Those posts have been combined into one section of my newest book: An Ulvog Journey.
The book also provides recollections of growing up on a South Dakota farm in the 1930s and 1940s, written by my dad and his seven siblings.
One of my uncles, Carl Ulvog, was a captivating storyteller. His autobiographic tale of experiences in the South Pacific during World War II are also included.
