“F” is for Fraud: How to Develop a Fraud Specialty

March 15th 2012 by Dan Ramey

So you’ve been watching CSI and Law & Order? Do you think developing a forensic accounting practice is an interesting way to bring in additional business? As you are probably aware, fraud cases are not solved neatly in one hour. Billings in a forensics practice would be very limited if this were the case! A forensics practice does not materialize overnight, but can be rewarding if you dedicate the time and resources to building a solid practice.

Who Will Lead the Practice?

Before you do anything, you must determine who will lead or champion the practice. This individual has to have a passion for unique engagements and have a tremendous amount of analytical skills. He or she will need to be able to create enthusiasm for potential clients and bring in the necessary staff to support the practice. Public speaking and testifying in court are a routine part of a forensics practice. The leader has to have the confidence required to be a “public” figure and be willing to testify in court under what are sometimes very stressful conditions. The leader must also be willing to network with new groups of potential clients and reach out to individuals who have not traditionally been part of your marketing and networking efforts.

The next point of building your credible practice is based on education and certification. There are many opportunities for education, from free webcasts to annual conferences, produced by the Association of Certified Fraud Examiners and the American Institute of CPAs. Both the AICPA and the ACFE websites have a tremendous amount of reference materials to support their members. The AICPA offers the Certified in Financial Forensics (CFF) credential and the ACFE has the very well recognized Certified Fraud Examiner (CFE) exam and certification. The CFF program requires you to be a CPA, while the CFE program does not.

Where Do You Find Clients?

Fraud is everywhere. ACFE studies indicate that between 5-7% of top-line revenue is being lost annually by organizations to internal fraud. There is fraud going on from the largest markets to small towns. Our experience includes an investigation of fraud involving $750,000+ for a company located in a town of 3,500 people, which begs the question, where do you find clients who need your services? The source of most forensic accounting leads is an attorney. It is critical that you have great relationships with the attorneys who need forensic services to support their clients and cases. There are a variety of ways to develop these types of relationships.

What is Your Area of Specialization?

Based on your current firm proficiencies, you will want to determine which areas make the most sense for a forensics specialization. For example, if your firm has strong healthcare experience, you might focus your efforts on healthcare or medical practice fraud. If you have strong experience in financial institutions, you may want to focus your efforts around bank related fraud.

Building Awareness

A few specific ways that have been successful for firms building their practices have been to give presentations to business or industry groups, promote internal control/fraud risk assessment reviews to client and prospects, and schedule brown-bag lunch sessions with attorneys. You would update them on fraud activities and showcase your capabilities for forensic work such as damage claims, business valuations and white-collar crime investigations. For example, we developed a slide presentation for business and industry groups to create an awareness of the potential for fraud in their businesses and to give them insight into recent investigations and findings. This is a great way to make business leaders more aware of the ever-present opportunity for fraud.

Be an active participant in the social media world; LinkedIn, Facebook and Twitter all can help promote your practice. By posting on these various social media sites, you have the opportunity to bring attention to your practice, and showcase your knowledge and capabilities to your readers. Post articles and links regarding activities your areas of specialization. This may include stories on fraud in your areas of specialty, or the enactment of laws and regulations that could impact your clients or potential clients. It is key to stay in front of your clients and referral sources.

Source: http://blog.accountant.intuit.com/from-the-experts/f-is-for-fraud-how-to-develop-a-fraud-specialty/
The Unique Nature of a Fraud Engagement

Every fraud engagement is going to be different and there are no “Fraud in a Box” programs for these projects. Every investigation begins with a clean sheet of paper for an engagement plan. There are obviously standards to follow and legal aspects to respect, but the fun of a forensics practice is that every client and engagement is unique, and a good challenge for professionals to execute and complete. The goal on every engagement is to leave the client in a better position than when we started. If a fraud has been perpetrated by an employee, we want to help the client document the scheme and loss for insurance and prosecution purposes, but we also want to help them strengthen their internal control environment so as to prevent this from happening again.

Establishing a forensics practice is interesting, rewarding work that meets the marketplace need for addressing the potential losses to fraud. It takes a dedicated team, solid referral relationships, marketplace awareness and a desire to make a difference for your clients. The forensics practice can be the key your firm needs to get in with a prospect you have been salivating over. When you can provide solutions for these kinds of issues for your clients, you are not soon forgotten.

The BYOD Trend and the CFO

Employees want to work with their own devices. And as long as they can be secured, CFOs increasingly are saying, “Why not?”

David Rosenbaum

Pandora is a rapidly growing Internet radio service that allows people to create their own radio stations on their mobile devices, delivering music chosen by algorithms that predict the user’s musical tastes. The company allows its employees to buy and use their own devices — smart phones, tablets, laptops, and desktops — and pays for their data usage, making no distinction between personal and work use.

While embracing the Bring-Your-Own-Device (BYOD) trend obviously lowers Pandora’s spending for capital equipment, Pandora CFO Steve Cakebread maintains that capitalization is “insignificant” compared with the productivity gains he sees by allowing employees to use technology they know and like, not to mention the money his company saves by not having to invest in training people on unfamiliar devices and systems.

“Technology is changing so fast,” says Cakebread, formerly CFO of Salesforce.com, “that controlling the hardware and software environment” is not worth the trouble. “Control benefits the IT department, but as a CFO you have to decide who you want to benefit: IT or the rest of your organization?”

The BYOD Trend and the CFO
“When you bring up the topic of mobility, it becomes very personal,” says Fernando Alvarez, mobile solutions practice leader for technology consulting firm Capgemini. “How many times have you gone out to dinner and everybody puts their phone on the table like a gun in a cowboy movie? The phone has become an essential part of you.” This intimate connection between person and device is the fruit of what’s often called the consumerization of IT.

A recent Harris Interactive poll for security firm ESET found that more than 80% of employed adults use their own devices for work. And according to a 2011 Forrester survey of 361 North American IT decision makers commissioned by security firm IronKey, 79% believe the “increasing diversity of our end-user devices” will have a significant-to-moderate impact on IT-services spending, and 60% say they’ve already seen savings in that area.

“CFOs love [BYOD],” asserts PricewaterhouseCoopers principal David Edelheit. “In the past, the company paid for the device and paid for usage, which was a high and unpredictable cost. Now, with BYOD, they can say, ‘I’ll allocate $100 for you to buy the device. You want to buy a $500 device? Go ahead. We have discounts with these four vendors. All great deals. It’s your choice. And I’ll pay $50 a month for business usage. If you go over, that’s your problem.’ All this gives CFOs a much more fixed cost and a lower cost with less variability.”

As IronKey CFO Mark Schulte says, “According to Forrester, 23% of an enterprise’s hardware spend is on end-point devices. That’s huge. If I’m a P&L owner, I’m saying, ‘Wow, I could find better uses for that money than giving people boxes, especially as the technology changes so quickly.’”

Jim Buckley, CFO of mobile-device management firm MobileIron, points out other savings: “In a BYOD program, end users take more responsibility for their devices, taking the initiative to fix them themselves rather than involving support, and, because it’s their personal device, they take better care of them.” Another cost benefit Buckley identifies is that “companies no longer have to deal with the device life cycle. Smart phones and tablets generally change every 18 months. That’s a lot of new technology the enterprise no longer has to keep up with.”

There’s a lot about BYOD for CFOs to love and, as Edelheit points out, employees love it “because they can choose their own device and download six million apps.”

Of course, all those apps (some bearing malware and inviting data breaches) raise the questions of risk and who owns the data on all those devices. The employee may own the device, but the corporate data on the device doesn’t belong to the employee and, indeed, its mere existence on employee-owned devices may present an auditing risk. Governing that dichotomy is a tricky dance to which the steps are still being learned.

Security and BYOD
“The definition of what’s sensitive data is expanding,” says Todd Thiemann, senior director for product marketing at Vormetric, an enterprise encryption, key management, and data security firm. “It used to be compliance data — HIPAA, PCI compliance — but today it could be an e-mail list.”

And, Thiemann says, as the number of devices bearing sensitive data “in the wild” increases, and as they all attempt to access enterprise data, risks increase. It’s a numbers game, and although there hasn’t yet been a significant data breach involving mobile devices, Thiemann says “it just a matter of time.” That conclusion was given weight by a recent IDG survey in which three-quarters of the respondents said their companies allowed them access to corporate data on their personal devices while less than half said their companies had a “well-defined” corporate access policy.

But, notes Schulte, trying to stop people from bringing their own devices to work is futile. And Alvarez points out that exceptions have a way of growing up around policies, rendering them ineffective. “You see a lot of people with laptops and secure IDs and passwords,” he says, “and then some top executive wants a corporate report on the iPad his wife bought him for Christmas, and who’s going to say no? There’s no consistency.”

And as CFOs and their companies increasingly look to leverage the cost savings of cloud computing, those ill-defined policies are further complicated by the involvement of a third-party: cloud providers hosting the enterprise’s data and applications.

The way around that problem, some security people advocate, is to forget the end-point and secure the network all those devices are attempting to access. IronKey’s Trusted Access product creates, in effect, a cloud-based virtual environment. When the user attempts to access corporate data, his request goes not to the corporate database but to IronKey, which vets the request and then routes the data through its own network. In effect, IronKey sits between the enterprise and the BYOD user, with the end user none the wiser.

Pandora, which has most of its information systems and data in the cloud, uses Okta, a software-as-a-service identity and access-management tool, to secure its application portfolio. With one call, says CFO Cakebread, “we can take anyone off the whole system. We just decommission the password and login.”

Right now, Cakebread says he’s looking at technologies for protecting and tracking mobile devices that go missing. But he considers all the risks the BYOD trend presents as minor compared with all the problems it solves.

Above all, says Cakebread, “What we want is for our employees to be productive.”

As the BYOD trend accelerates, the ability of companies to support their employees’ productivity while attempting to control all those devices will be sorely tested. PwC’s Edelheit suggests that CFOs leverage BYOD while proceeding with caution. “Take a phased approach,” he advises. “Pilot with power users. Find out what works, what doesn’t, what you can allow, what you can’t.

“Keep your eyes wide open.”


Source: http://www3.cfo.com/article/2012/3/it-value_byod-savings-risks?currpage=0

Bookkeeping Express Videos

Here is the latest from Bookkeeping Express:


Revolutionizing Bookkeeping – http://youtu.be/ixduFDkUt6U

Why BKE? – http://youtu.be/Q7eqVvY9vDg

Three Reasons – http://youtu.be/y8akRVr_k6E


Banks: The New Safe Haven?

Banks: The New Safe Haven?

Written By Jeff Reeves

Published March 13, 2012


Are bank stocks back? Maybe. Just looking at recent performance from some of the financial sector’s biggest names, it’s hard to argue that banks aren’t on the rebound.

The Financial Select Sector SPDR ETF (XLF: 15.40, +0.56, +3.74%) is up 14% since Jan. 1. JPMorgan Chase (JPM: 43.54, +3.00, +7.40%) is up 22%. Citigroup (C: 36.55, +2.26, +6.59%) is up 30%. Bank of America (BAC: 8.46, +0.46, +5.82%) is up 43%.

What’s more: On Thursday, March 15, the Federal Reserve will announce the results of its latest “stress tests” on banks — and decide which major financial institutions are in good enough shape to increase their dividends. Considering that JPMorgan already boasts a healthy 2.4% dividend yield, this could make some financial stocks serious players among income investors once more.

But as the old saying goes, past performance is no guarantee of future returns. So before investors go jumping into bank stocks, they should take a hard look at the risks and rewards of the financial sector.

In fact, the question isn’t whether banks are safe stocks, since all equities pose a substantial level of risk right now. A better question is whether banks are safe enough for your specific investment strategy. After all, persistently high unemployment, debt woes in Europe and Washington and fears of a slowdown in China are just a few macroeconomic challenges that could take the wind out of any sector — and financials are no different.

Only you can decide whether the risks outweigh the rewards. But to help you make that decision, here are the five biggest problems and the five biggest opportunities facing big financial stocks right now:

Risks to Big Bank Stocks

New Capital Requirements Limit Banks: At the core of most uncertainty is the recent regulatory push. Global banking safeguards regarding higher levels of capital reserves (so-called “Basel 2″ and “Basel 3″ rules) force financial institutions to hold a larger amount of cash on the balance sheet — preventing them from actively using that money to grow profits via lending or investing. It also has to be “high-quality” capital, not just paper and IOUs, in the event that another economic shock forces banks to tap into that cash. Whether this is a needed move for global banking stability or an overreach of regulators is academic — when these safeguards roll out in the years ahead with a full implementation deadline of 2015, you can understand how they will create a drag on earnings.

Volcker Rule: Equally troublesome for banks is a ban on proprietary trading (the so-called “Volcker Rule”) so companies can’t play the market with house money. Consider that in Q2 of 2009, Bank of America raked in a cool $6.7 billion in just three months from its trading operations. Under strict interpretation of the proposed ban on trading, not a penny of those profits would have existed. When you back out billions in trading revenue from bank earnings — especially while consumer and business lending remains anemic — it creates rather unimpressive numbers for major financial stocks.

Mortgage and Sovereign Debt Losses: Bad debt from eurozone debt and troubled American mortgages remains a weight on earnings. U.S. banks’ direct exposure to European sovereigns is around $100 billion, according to reports. Then there’s the tens of billions of dollars that banks are taking to settle foreclosure lawsuits and write down foreclosures and bad debt that lingers on the books. Many banks have delayed writedowns to their loan portfolios, and still are listing some debts at full value — which is willfully naïve. Once they formally record the losses, investors might be in for an ugly surprise. Bank-owned homes are a similar problem, since the market value of these homes is sure to be vastly different than what the folks in accounting are valuing the properties at.

Interbank Faith and Confidence: Back to the European debt woes. Things have improved recently on hopes of a restructuring that will help Greece avoid default, but we aren’t out of the woods. A shock to the system could freeze up the credit markets and threaten to sink troubled banks without much cushion on their balance sheets. All the talk about “contagion” is based on the idea that once banks suffer a crisis of confidence, the panic quickly spreads worldwide. If Greek banks can’t get loans and fail, so does the Greek economy. If the Greek economy fails, other banks will suffer in kind. Then they can’t get loans, and the cycle continues. Lehman Brothers went down because of such a global credit freeze, and we should be wary of similar events occurring again. No matter what share prices have done recently, some major U.S. banks likely would be in dire straits if their interbank loans disappeared unexpectedly.

Populist Backlash: Not for decades have we seen such hatred of the biggest bankers. Consider the recent rise of credit unions and loss of customers at major financial institutions as people get fed up with hidden fees and remain angry about the “too big to fail” bailouts of a few years ago. Occupy Wall Street is hardly a substantive political movement, but it echoes the frustrations of a nation that thinks bankers are part of the problem and not part of the solution. That makes it difficult for lenders to grow their business and make the pitch for looser regulations that allow them access to greater profits.

Opportunities in Big Bank Stocks

Now that we have the ugliness out of the way, we can take an honest look at the possibilities that big banking stocks hold. The financial sector really is no different than any other in that investors must be smart about their money to minimize risk and maximize potential for profits.

So with all those risks fully disclosed, here are factors favoring financial stocks right now:

Prospect of Income: Back to the upcoming Thursday reports: A number of financial companies have petitioned the Federal Reserve for substantive increases to their dividends. And if granted, that would be a huge plus for investors. Take Wells Fargo(WFC: 33.16, +1.65, +5.24%), which pays just 12 cents — half the 24 cents per quarter it paid in 2005, even though share prices are higher than they were seven years ago. Granted, a lot has changed. But there are reasons to be hopeful that some stocks could see a significant increase to their payouts this week, which would make these picks more attractive.

Passing the Test: Furthermore, if the Fed signs off on higher dividend increases, then you can assume the companies granted this approval have proven their stability. It’s silly to think this means banks are a good buy based on this endorsement alone — but it’s encouraging to know regulators see signs of improvement in the big financial stocks. Conspiracy theorists would argue that these moves mean nothing, but an equally cynical point to counter that is the fact that sentiment drives stocks more than fact. If most folks believe the stocks are safe, shares will rise — and investors will profit regardless. Of course, any bank that fails the “stress test” is going to be in for it …

Broader Economic Recovery: Warren Buffett famously said, in the depths of recession, that “It’s never paid to bet against America. We come through things, but its not always a smooth ride.” Why else do you think the Oracle of Omaha has invested heavily in banking stocks over the last few years — from WFC to preferred shares of Bank of America? Because he believes the economy eventually will turn around, and banks naturally will prosper from increased lending to businesses and consumers. Whether that rebound will be a clear surge or a slow trickle remains to be seen, and whether the recovery is happening now or will be delayed a year or two or is up for debate. But if you believe America’s economy eventually will be up and running in world-class fashion, it behooves you to buy bank stocks before that recovery takes shape.

The Smart Money Is Buying: Think Buffett is alone in his support of banks? Well, Dick Bove, an acclaimed financial sector analyst at Rochdale Sector, has been banging the table on bank stocks for months. In December, Bove said that “2012 has every indication for being a gangbuster year in terms of earnings, market share, loan growth, deposit inflows, liquidity, capital growth,” and that investors should dive into the sector even if they have to “hold their nose” while they do it. Whitney Tilson, founder of money management firm T2 Partners, said a similar thing a few weeks before Bove. In short, the “smart money” already has started hunting around the financial sector. If you don’t want to be late to this trend, it’s time you did too.

Not All Banks are Equal: It’s important to remember that being bullish on a bank stock or two doesn’t mean you believe every single financial stock will thrive. Some are undoubtedly better than others. Maybe you have a small, regional bank that you’ve been watching that has outperformed. Or maybe it’s a midsized bank like Capital One (COF: 50.88, +1.90, +3.88%), which had the resources to pull off a bargain buyout of ING Direct for roughly $9 billion that will juice its growth potential in the years ahead. Phillip van Doorn picked COF as his Best Stock for 2012 in our InvestorPlace.com stock-picking contest, and he’s sitting on almost 20% gains since Jan. 1!

The point is: Do your own research and think critically about individual banks. The sector has moved in lockstep for a while, but very soon the good banks will be able to move independently of the bad. Make sure you are in the right investments to profit in 2012.

Read more: http://www.foxbusiness.com/investing/2012/03/13/banks-new-safe-havens/#ixzz1p1px4pOi

Bookkeeping Express, a National Franchise


BookKeeping Express, a national franchise based in Vienna, is booking solid revenue through bookkeeping services

Premium content from Washington Business Journal by Missy Frederick, Staff Reporter

Date: Friday, March 2, 2012, 6:00am EST

Greg Jones, Bookkeeping Express
Photo by Joanne S. Lawton

The routine bookkeeping operations of small businesses may be “loss leaders” for the big accounting firms, but for Greg Jones and Bookkeeping Express they are a profit center. “What turned me on was the growth scenario,” he says.

Staff Reporter - Washington Business Journal
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For the Big Four accounting firms or other major financial services players, straightforward bookkeeping for small companies might not seem professionally rewarding or worth the trouble — and Greg Jones is perfectly fine with that.

“The CPA community sees it as a lower type of service, not as skilled as other things,” says Jones, CEO of Vienna-based BookKeeping Express    . “They see it as a loss leader.”

Jones sees it as an open door to national prominence in the financial services industry.

He bought the then-23-year-old California company in 2007 with two other partners,Bob Stocker and Merritt Green, converted it into a franchise model in mid-2008 and has now transformed it into a million-dollar business with 36 franchisees.

Accounting is admittedly a bit of a leap for Jones, who got his start in the telecommunications industry and then moved into the entrepreneurial world, buying and selling companies.

He had focused on franchise sales at Alexandria’s Fransmart Franchise Development Co., which grooms restaurant brands such as Five Guys    and Elevation Burger. Jones and his partners were looking for an investment opportunity when they stumbled on one of the local licensees of BookKeeping Express.

“What turned me on was the growth scenario for the business,” Jones says. “It’s such a disjointed industry with thousands of these solos and independents running around, some of whom are skilled and a lot whom are not as skilled. And it’s not a business that ebbs and flows with the economy — it doesn’t go away.”

It’s also a business that can draw clients from just about any industry in the country. Indeed, BookKeeping Express doesn’t focus on any particular segment of the economy, but tends to serve companies with $200,000 to $5 million in revenue, Jones said.

Besides leading BookKeeping Express, Jones owns multiple Florida-based locations of Five Guys and continues to open new sites in that area.

Financial services franchises have much lower startup costs than restaurants do, he says. A BookKeeping Express location costs anywhere from $45,000 to $75,000, while restaurant franchises average several hundred thousand dollars.

Even such a traditional task like bookkeeping has had to evolve and adapt with new technologies.

BookKeeping Express is making the bean counting process more efficient for its clients by encouraging them, for example, to institute online banking or use cloud computing to better organize their data.

In the past, most people who signed up for a BookKeeping Express franchise came with a CPA or chief financial officer background, but Jones says that is becoming less of a given as well.

“We’re starting to see more of a well-rounded candidate,” he says. “Someone who’s run a business, or hired and fired people, and knows how to put a business development structure together.”

Despite the fact that bookkeeping is hardly the flashiest of businesses, the effort to turn it into a franchise option is drawing attention from the national business community.

Entrepreneur magazine named BookKeeping Express one of the fastest-growing franchises in its 2012 Franchise 500 list.

And Jones hopes the company’s growth intensifies with new partnerships he has inked, including one he arranged with Universal Accounting Center, a Salt Lake City-based financial training company, to help bulk up a franchisee’s tax and accounting skills.

In the next 24 months, Jones plans to team up with a tax filing group to provide that service directly to clients. BookKeeping Express, which has operations in 24 states, also intends to expand to Canada starting this summer.


Source: http://www.bizjournals.com/washington/print-edition/2012/03/02/bookkeeping-express-a-national.html?page=all


Risk of Promoting without Giving Raises

The Risks of Promoting Without Giving Raises


Cash is king, especially during difficult economic times. More and more business owners are thinking out of the box when it comes to trying to keep morale up in the workplace.

Promotions are an obvious way to try to boost morale, especially among key employees who generally are happy to have increased duties and status.

But how can you afford to do so when there is no extra money to provide raises? What if your revenues are way down, yet you cannot afford to lose your key people to the competition?


About the Author

Paul O. Lopez is a director with Tripp Scott, a Fort Lauderdale, Fla., law firm serving entrepreneurs. He also chairs the firm’s litigation department.

One of the ways some business owners are tackling this dilemma is to promote key employees, but not give them raises connected to their promotions.

There is certainly nothing illegal or inappropriate about this practice. It seems to be growing during these uncertain economic times.

Only 48% of small-business owners said they increased employee compensation during the previous 12 months, in a recent online poll of 450 members of the National Small Business Association. That’s the highest it’s been since August 2008, when the figure was 51%.

If this is the first time you have implemented this practice of so-called “title-only” promotions, there are a few issues to consider.

First, it makes sense review the demographics of the prior employees in recent years who were promoted with raises, then compare them to the employees you’re considering promoting without a raise.

Suppose, for instance, that two years ago a white male employee was elevated from being an hourly worker to a salaried manager and received a raise. Now, this year an African-American female employee is going to be similarly promoted with no raise. You better be prepared to explain the business rationale for this decision.

If the business environment has gotten worse, that perhaps can explain the different treatment. But if your business is simply stagnant with no growth, a creative plaintiff’s lawyer might make a case for discrimination. That case could be made based on the fact that since nothing has changed, the African-American female employee should be treated the same as white male employees was a few years back.

Of course, there may be legitimate non-discriminatory business reasons for the different treatment. But the point is that you should be prepared to articulate those reasons to avoid being unnecessarily exposed to these arguments.

Getty Images

What’s more, it is important for you to communicate why no raises are forthcoming even though your employees are promoted—whether that’s because your industry overall is down, or whether because there are specific issues in your company that have caused a slowdown, such as losing a key contract or customer, or because a big client hasn’t paid its bills.

This will not only make the employees feel as if they are truly a part of your team but, importantly, if and when the employees are asked about the salary freeze they will be in a position to tell anyone asking—including a plaintiff’s lawyer– the legitimate reasons why.

That’s certainly better than the employee being in the dark and perhaps suspicious of the reasons, and then voicing those suspicions to inquiring minds.

You should also put a time frame on the freeze, creating a clear timeline for when you will reevaluate your position. Whether in three months, six months or even a year. Your employee should know where he or she stands relative to potentially being rewarded for increased responsibilities.

The last thing you want is to have an employee who was promoted to start feeling as if though they have been taken advantage of, because morale then goes down

Finally, remember that you also need to be wary of overtime considerations under the Fair Labor Standards Act when promoting employees and not providing raises.

Often times, when a business owner promotes an hourly employee into a “management” position and converts the employee’s pay structure hourly to salary, he or she presumes that the employee is not entitled to overtime compensation. This is not necessarily so.

To Be Continued? Five steps you can take to make sure your company survives catastrophe.

Say this much for disasters: they’re educational. Some, like Y2K, may offer useful lessons in overreaction. Others, like 9/11, may remain largely incomprehensible. But most, from Hurricane Andrew to the crisis surrounding Japan’s Fukushima nuclear plant, have pushed companies to develop better response plans. In the aggregate, all of these events have advanced the discipline of business continuity, and the pace of that progress has quickened in recent years.

And not a moment too soon. Last July, reinsurer Munich Re said that 2011 had already become the most costly year on record for economic losses, due to the number of severe natural catastrophes in the first six months.

The lessons learned in the aftermath of so much tumult — along with technological changes and the increasingly interdependent nature of global business — have forced a rapid evolution in business-continuity planning. The old approach to preparedness focused almost exclusively on restoring a company’s IT capabilities. That view is now seen as far too limited. “The marker was 9/11,” says Roberta Witty, a research vice president for technology consultancy Gartner. “Until then I think most people were looking at IT disaster recovery and had never experienced an outage where the workforce itself would be so severely impacted.”

As process owners and compliance executives, CFOs can’t ignore business-continuity risks. Finance chiefs in heavily regulated sectors such as finance and health care have even more incentive to keep up with new developments in disaster planning. Here, then, are five ways that corporate planners are changing their approach to preparing for the worst.

1. The Really Big Picture
The scope of business-continuity management has expanded dramatically since 9/11. Today’s leading companies are integrating people, processes, data, and physical infrastructure into a holistic approach to business continuity (sometimes referred to as business resilience).

An international survey of 391 senior executives conducted in June 2011 by the Economist Intelligence Unit on behalf of IBM found that while only 37% of respondents had implemented an organizationwide business-resilience strategy, 42% were likely to do so within the next three years. Almost two-thirds (64%) said they had a business-continuity plan of some sort.

John Odermatt, who was first deputy commissioner of New York City’s Office of Emergency Management during the terrorist strikes and was later appointed commissioner by Mayor Michael Bloomberg, has brought what he learned in the aftermath of 9/11 to his current position as head of Citi’s Office of Business Continuity: namely, that people and communications are everything in a crisis.

He’s had plenty of chances to test that conclusion, one of the most dramatic coming after the Haiti earthquake in 2010. When the 7.0 magnitude quake struck at 4:53 p.m. on Tuesday, January 12, Citi’s Haiti employees were closing transactions for the day. Suddenly, the company’s three-story headquarters collapsed around them.

Workers who weren’t buried in the rubble struggled to make sense of what was going on. One of them was able to contact Citi’s regional crisis-management team in Mexico before telecommunications went down. Immediately, the Citi crisis-management team activated its command structure, coordinating the company’s response. Citi security helicoptered in security personnel to help rescue employees and transport the injured to the Dominican Republic. Within a week the team was delivering humanitarian supplies to the area, eventually providing 15 tons of aid, including satellite phones.

Tragically, 5 of Citi’s 4,000-plus Haiti employees were killed in the earthquake. But the company’s response was deemed critical in providing care for other workers and getting the business back up and running quickly.

Transactions from the day of the quake were cleared abroad, and when banking in Haiti resumed 11 days later, employees were ready to operate at a shared site. “From a people, humanitarian, and business perspective, everything and anything that was asked for was coordinated through our central team,” says Odermatt. “I think that’s the secret to any successful recovery.”

Of course, military-style logistics like that don’t happen on the fly. Citi’s arrangements were well established and practiced before the Haiti earthquake. In the chaos of the tragedy, the preparations allowed employees to understand where to go and how communications should flow.

Throughout the world, every line of business at Citi is involved in continuity planning. Rigorous testing and crisis planning involve everyone from the CEO down and occur at every level of the organization. “In addition, there is joint industry testing where the markets make themselves available so we can test our technology on nonproduction days,” says Odermatt. “I think such testing is one of the things that set the financial industry above other industries.”

2. Public-Private Collaboration
A decade on, one legacy of the 9/11 attacks has been to highlight the interdependence of the public and private sectors. “Governments realize that a large portion of public services is provided by private enterprise, so government is very dependent on business,” says Gartner’s Witty. “And private enterprise is starting to recognize that without first responders — the police, road crews, and government — you can’t do anything.”

The Federal Emergency Management Agency (FEMA) created an entire division devoted to public-private partnerships in 2007. The division nurtures engagement with businesses and provides helpful tools, such as downloadable tabletop exercise materials and a free online course in public-private relationships (see “Some Help from the Big Boys,” Topline, September 2011).

At the local level, liaisons in all 10 of FEMA’s regions are developing relationships with community businesses to facilitate resource and information exchange. In an emergency, FEMA and local emergency officials have developed procedures for determining the status of utilities, communications, medical facilities, and food and supplies, for instance. They can then feed that information back to local businesses, letting them know about critical developments such as when power will be restored. In turn, businesses may have resources to share, such as disaster hygiene kits or parking lots that can be used for emergency operation centers.

The public-private collaboration “has taken off like wildfire,” says Dan Stoneking, director of FEMA’s private-sector division. One of the large companies that is working with FEMA is Verizon Wireless. The partnership aims to provide communications aid to disaster-hit areas. As part of ongoing preparations, a Verizon Wireless technician participated as a temporary FEMA private-sector employee for three months, giving the company firsthand insight into what goes on inside the agency. “It also gives us a gut check on how we do our job,” says Stoneking.

The telecom giant also teams up with state and local governments and nonprofit entities that support emergency responders. More than 45 Verizon Wireless crisis- management teams are dispersed across the country to respond to local needs, while a central team and hotline coordinate requests for emergency wireless voice and data products or wireless network support.

Requests may come from, say, the American Red Cross for 20 loaner mobile phones, or from officials in remote locations needing what Verizon Wireless refers to as a “cell on wheels.” “We have these mobile assets that we can deploy to help agencies set up mobile command centers without which they really could not operate as effectively,” says Gabe Esposito, Verizon Wireless’s director of corporate security, business continuity, and disaster recovery.

3. Shoring Up Supply Chains
Hurricane Katrina in 2005, the 2010–2011 floods in Australia, and particularly the earthquake and tsunami in Japan last year have all emphasized the vulnerability of international supply chains. “While companies were able to recover their operations [following the disasters], they may not have been able to get the components they needed to restore manufacturing,” says Greg Bell, a partner at KPMG. “People have been thinking about everything from, ‘Do I need more supplier diversity for my key parts?’ to, ‘How do I get visibility into my suppliers’ business-continuity plans?’”

Goodyear, for one, has been examining those questions extensively. When the Sendai earthquake struck last March, the tire maker’s operations in Japan escaped relatively unscathed. But many second- and third-tier suppliers to the auto industry were affected. That’s when Goodyear’s provisions for alternate sources and intraplant transfers kicked in. “Through a robust supply chain, there’s a possibility you could have necessary materials in another location,” explains Mike Janko, Goodyear’s manager of global business continuity. “It may cost a premium to ship it, but the end goal is to make sure we’re meeting the needs of our customers.”

A vendor partnership program that Goodyear began before the quake now seems all the more prescient. The company estimates that 15% of all the crises it deals with are related to product-supply disruptions. With that in mind, business-continuity managers joined with the purchasing department to determine which of the company’s hundreds of global suppliers would have the biggest negative impact if something went wrong. They pinpointed about two dozen raw-material suppliers in the first round, and the continuity team is now working with them to beef up resiliency planning.

For many companies, however, it’s not just raw materials that are in question. Outsourced services from managed data centers or technology providers raise concerns. The financial industry, for instance, deals with clearinghouses throughout the life cycle of transactions. “Many companies, including Citi, outsource their services and do enormous amounts of offshoring,” says Citi’s Odermatt. “There’s more-intense focus now on what those suppliers’ supply chains are, what their business-continuity plans are, and whether they’re being tested.”

4. Virtually Bulletproof
In the data center, virtualization has been lauded as a boon for business-continuity planning. In this technology, multiple virtual machines — consisting entirely of software, each using a different operating system and running a different application — can run independently on one server. That means fewer hardware boxes are needed to run the same number of applications, and those boxes are each more efficient. While regular servers normally run at only 5% to 15% capacity, a server running virtual machines can operate at 60% to 80% capacity.

Because virtual machines are independent of the hardware they run on, they can be easily moved around a firm’s network or to any other server deemed necessary. Copies can be saved offsite for disaster-recovery purposes.

The Texas Association of School Boards had those benefits in mind when it rebuilt its data center three years ago using virtual machines. The agency, which provides insurance, workers’ compensation, and a purchasing cooperative to more than 1,300 school boards, needs 24/7 IT service. When it began the virtualization process, only 8 of its 100 applications could be recovered from a mirror site after a disaster. Now, 94 can be brought back up within 15 minutes.

For system administrator Toni Fowlie, however, the project generated new problems. When wildfires swept the central Texas area last summer, her concerns about the heat outside were minor compared with what was going on in the data center. “I didn’t worry so much about the fires, but I do worry about power,” says Fowlie.

The reason is the blade servers that run the Texas agency’s virtual machines. Although the thin, stripped-down servers are more energy-efficient than their predecessors, more units now fit into the same space, which strains the data-center infrastructure. “Power-to-performance is greater, but you’re performing more and you’re condensing more,” says Mark Vanston, director of business continuity and recovery services for HP Enterprise Services. “In the past, [data centers] were designed to handle a certain power load per square foot. Years ago that was probably 80 kilowatts. Now you need about 150.”

Cloud computing, while still in its infancy, could alleviate some of these headaches, but will likely also raise new ones for disaster-recovery managers. Not only will they need to worry about the viability of their cloud suppliers, they will also have to create contingency plans regarding Internet connectivity to those suppliers.

5. All Together Now
For crisis communications, a new, democratic order is at hand. Social media has changed things forever. “Social media is not just a new way to broadcast information,” says John Orlando, a social-media consultant. “It reverses the direction of communications.”

Researchers from the universities of Colorado and California at Irvine found that during the Southern California fires of October 2007, residents turned away from mass media and official sources of information and looked to peer-to-peer resources such as blogs, community forums, e-mails, text messages, and Twitter to find out whether a fire was headed down their street. These outlets provided better, more-timely information, as well as the means to disseminate it. In many instances, the participation of community members helped keep rumors in check and validate information from reliable sources. Respected community sites like rimoftheworld.net collaborated with fire departments to post up-to-date news, which was then reposted on other local forums and discussion boards.

“Emergency managers have to understand that the public is going to self-manage the disaster with or without them,” says Orlando. “So the challenge is to develop a collaborative model where the old assumption that the public is a problem to be managed is replaced with the assumption that the public or your employees are a resource to be harnessed.”

The private sector has been slower on the uptake, but it is beginning to use social media to converse with customers during emergencies. TD Bank used its existing Twitter program to monitor consumers’ concerns during Hurricane Irene. When questions about available ATMs and branch closings cropped up, the 10-person Twitter team responded with updates and links to mobile apps showing available facilities.

Still, corporate social-media programs to communicate with employees during emergencies are but a future vision for most companies. Orlando suggests that corporate Facebook pages could be used by employees of companies that have been shut down by a crisis. “Instead of just communicating information outward, it can be a way for people to coordinate their needs with one another,” he explains. “They can ask, ‘Can someone pick up my daughter from school?’ or, ‘Could someone pick up groceries for me?’ And by [providing] a place where they can form a community and call on one another, you’ll make it much more likely that they’ll be there for you when it’s time to start up business again.”

Good Workers Gone Bad: How to Spot Employee Theft

In today’s economic climate, sometimes even the most steadfast employees who would never think of committing fraud against their employers are more willing to take unlawful risks in order to have some extra money in their pockets.

A 2009 survey conducted by the Association of Certified Fraud Examiners, found that U.S. organizations lose 7 percent of their annual revenue to fraud. Based on the 2008 GDP, this is approximately $994 billion in fraud losses. And employees accounted for 48 percent of those cases.

The majority of these cases happened in companies with fewer than 100 employees with median losses of $200,000. The most common of these small business fraud schemes were check tampering and fraudulent billing. Another alarming statistic comes from the U.S. Chamber of Commerce. It estimates that 75 percent of all employees steal at least once, and that half of these individuals steal repeatedly.

Here are procedures small businesses can implement to curb employee theft and fraud:

Division of labor: Never allow the same employee to have the ability to write checks and manage the books. Engage two employees in this task or outsource the bookkeeping element.

Job rotation: Have employees change jobs periodically; and don’t announce the rotations ahead of time. This will create a culture of self-policing by rotation of duties and will enhance employee satisfaction.

An increase in outstanding receivables could be a red flag: Look for an increase in the age of receivables as well as an increase in bad debt. Institute a weekly or bi-monthly aging meeting with supervisors and managers to discuss collections and their status.

Require monthly journal entry reports: Managers should do this to understand the fiscal health of their business, but also to question expenditures or journal entries that look out of line or unfamiliar.

Use preprinted checks: Require immediate reconciliation of bank statements and accounting for each check number.

Have credit card and bank statements sent to home address: This is a simple control. The business owner could then institute a routine of initialing each entry he/she approves and recognizes before discussing them with the bookkeeper.

Check signing meeting: All outgoing checks should be discussed, with accompanying documentation, as they are being signed. The check preparer and signer are the only attendees in this meeting. This is a great opportunity to catch fraud if it is taking place while at the same time going over expenses and payments being made to vendors.

Credit report evaluation: Just as you evaluate and track your personal credit reports, make sure it’s being done for your business. Look specifically for credit cards that may have been taken out in the company’s name.

Spot checks and audits: Develop a culture that understands that an audit of back office operations can be done at any time. Too often, owners look at the bottom line and disregard the system that is reporting that bottom line. As a security and accuracy measure, consider outsourcing some part of your internal systems (bookkeeping, payroll or both) to a third party. This allows for red flags to be raised without the offender’s ability to manipulate the system. The added benefit is a regular and naturally occurring audit system.

But remember, there is no “cookie-cutter” system that will completely combat theft and fraud. However, implementing processes and procedures that provide oversight and accountability will help deter the temptation that certain employees will have to steal from their employer.

Greg Jones is the CEO of Vienna, Va.-based BookKeeping Express,an international bookkeeping business that supports small to mid-sized companies.

How Franchises Work: Become Your Own Boss

Franchise directories are generally divided into franchise categories so if you know the type of franchise you would like to buy into simply find the category and start searching for one which suits you. There are two options for those who are unaware of a suitable franchise

  1. simply browse and find the suitable one
  2. Seek the help of franchise directory’s professional franchise advisers or consultants to find the most suitable franchise.


With franchise portals all over the world and full global franchise support you can even enjoy a new kind of life and business in another country.

It doesn’t matter if you are interested in packing up and opening a franchise in Australia, Saudi Arabia or the USA you will still reap the benefits of global franchise support, with advice and assistance every step of the way. They are always happy to help you when you need a little encouragement or some really sound advice..

It is highly recommended to bear in mind some points before buying a franchise like desired outcome,cost and most important thing is type of franchise which is ideal to your expertise and knowledge, don’t fail to remember they will training and opportunity to attend seminars to boost your confidence level and business skills and your local franchise portal will always be there to offer global franchise support.

One key factor when considering a franchise is your product.

You will require to be marketing something that is in demand, preferred and sought after.It’s well worth doing a little research and again can rely on the global franchise support of your franchise portal to guide you in the right direction. Opt for a product that you know is in demand in your sales area and consider all the different promotional options for really getting your product out there and noticed.

It is not a good idea to buy a franchise that sells an item which can be obtained inexpensively and easily in virtually every high street store,you want your product to be different but is in demand, popular and sought after.

One other consideration when considering franchising is that the franchise will not be yours.

You will be buying into the company and paying to use their branding and logos, but it will be up to you whether the business succeeds or fails so you have to be dedicated. Take advantage of the global franchise support offered and go through all the pros and cons of running a franchise before taking the leap.

Other than global franchise support your franchise directory portal will also supply some great information on funding and finance, training, seminars and exhibitions and you will be fortunate to read real life franchise success stories, business advice articles and lots of valuable tips which will all make it easier to build up a clearer picture of exactly how the franchising business functions and which niche would be best suited to you.

As a general rule, Franchises are set for a fixed term, some considerably longer than others, if you are a newbie in franchising it is advisable to choose a franchise with a shorter fixed term. Make sure you use the global franchise support available to you and take heed of the sound advice offered, especially if you are a newcomer to the franchising industry, because these guys have years of experience behind them and when it comes to franchises they really know what their talking about.

Franchiseek are an international franchise opportunities directory. They boast portals in 40 countries throughout the world and offer over 14,000 pages of franchise businesses covering each and every niche from advertising and coffee sales to greeting cards and entertainment.

For Rent: Chief Financial Officer …

Raymond Flandez, The Wall Street Journal, wrote an interesting article September 22, 2009 titled “For Rent: Chief Financial Officer.

I believe that this is the future for small and medium businesses.  The article starts …

“This past year, Al Lovata, chief executive of Be Our Guest Inc., cut expenses for his party-equipment rental business by laying off staff and reducing workers’ salaries. He credits an “outsourced” chief financial officer with helping him prepare for the worst of the economic downturn.

The Boston-based company had sales growth in the double digits for the past few years, when revenue fell flat last fall. Now, thanks to the part-time CFO’s guidance, the company is stable with revenue down 20% to 30%, but profitability higher than in the previous months, he says.

If we hadn’t had this service, “we would still be struggling,” Mr. Lovata says. … ”

For the complete article, Click Here