TFOG - Financial Updates from 7/30 + 7/31
Consisting of:
CFTC Final Rule on Swaps, EBSA/DOL Pension Meeting ERISA Advisory Committeee meeting in DC on Aug 28-30, DOT / NACI - Insurance Commission Meeting in DC Aug 1, NCUA - Prop Rule "Troubled Condition" and Comments Request on Liquidity .
CFTC SWAPS - FINAL Rule
EBSA / DOL - Pension Benefit Meeting (ERISA advisory Cmtte) in DC Aug 28-30
DOTreas - meeting on Insurance / FACI Monday Aug 6th
NCUA - Prop Rule "Troubled Condition"
NCUA - Request for Comment FCU Liquidity
DCarsonCPA
for Financial Decision Makers in Government, Industry, Non Profit and individual roles working with broad ranging Financial Research of relevance to Financial Decision Makers to support your needs on Accounting, Taxes, Advisory, Financials, Compliance, Analysis and Research. Learn more at wwww.dcarsoncpa.com or e-mail info@dcarsoncpa.com .
Tuesday, July 31, 2012
Wednesday, July 25, 2012
TFOG 7/25/12 - SEC Final Rule Security Based Swaps
TFOG 7/25/12 - SEC Final Rule
As corrected by the SEC Review of Security Based Swaps....
2012-17985
DCarsonCPA.com for Financial Decision Makers in Government, Industry, Non Profit and Individual roles. Following the lines of updates to meet Clients with needs on corresponding services for Accounting, Taxes, Advisory, Compliance, Research, Analysis and more.
Learn more at www.dcarsoncpa.com or inquire at info@dcarsoncpa.com .
As corrected by the SEC Review of Security Based Swaps....
2012-17985
DCarsonCPA.com for Financial Decision Makers in Government, Industry, Non Profit and Individual roles. Following the lines of updates to meet Clients with needs on corresponding services for Accounting, Taxes, Advisory, Compliance, Research, Analysis and more.
Learn more at www.dcarsoncpa.com or inquire at info@dcarsoncpa.com .
TFOG 7/24/12 - Senate Bill on Securities Penalties - SEC Fines
TFOG 7/24/12:
In the Congress at the Senate:
BILLS-112s3416is
DCarsonCPA.com your weblink to the practice of Dean T. Carson II, CPA following the lines of Decision Making with relevance to Government, Industry, Non Profit and Individual Financials to meet Clients on Services Opportunities and considering the importance of your connection as a Decision Maker to the process and rules of Governance and Compliance.
Learn more at www.dcarsoncpa.com or e-mail info@dcarsoncpa.com .
In the Congress at the Senate:
S. 3416. A bill to enhance civil penalties under the Federal securities laws, and for other purposes; to the Committee on Banking, Housing, and Urban Affairs.
S. 3416 the ‘‘Stronger Enforcement of Civil Penalties Act of 2012’’. Includes in Section 2 Updated Civil Money Penalties for Violations of Securities Laws.
Scope includes SEC Acts 33, 34 & 40 Penalties.
DCarsonCPA.com your weblink to the practice of Dean T. Carson II, CPA following the lines of Decision Making with relevance to Government, Industry, Non Profit and Individual Financials to meet Clients on Services Opportunities and considering the importance of your connection as a Decision Maker to the process and rules of Governance and Compliance.
Learn more at www.dcarsoncpa.com or e-mail info@dcarsoncpa.com .
Monday, July 23, 2012
TFOG Monday 7/23/12 CFTC Public Meeting on Tech + SEC Rule
TFOG 7/23/12 CFTC Meeting and SEC Rule:
CFTC: Meeting notice Technology Advisory Committee 7/26/12 - Public Meeting on Tech
SEC: Commission Guidance Regarding Definitions of Mortgage Related Security and Small Business Related Security - Interp and Comments.
1. CFTC:
[Federal Register Volume 77, Number 141 (Monday, July 23, 2012)]
[Notices]
[Page 43064]
[FR Doc No: 2012-17856]
=======================================================================
-----------------------------------------------------------------------
COMMODITY FUTURES TRADING COMMISSION
Meeting; Technology Advisory Committee
AGENCY: Commodity Futures Trading Commission (CFTC).
ACTION: Notice of emergency meeting of technology advisory committee.
-----------------------------------------------------------------------
SUMMARY: The CFTC announces that on Thursday, July 26, 2012, the CFTC's
Technology Advisory Committee (``TAC'') will hold an emergency public
meeting at the CFTC's Washington, DC headquarters, from 10:00 a.m. to
4:00 p.m. The TAC will focus on possible technology solutions to, among
other things, enable futures commission merchant customers, self-
regulatory organizations and the CFTC to verify in near real-time the
accuracy of the amount of funds held in customer segregated accounts.
DATES: The meeting will be held on July 26, 2012, from 10:00 a.m. to
4:00 p.m. Members of the public who wish to submit written statements
in connection with the meeting should submit them by July 19, 2012.
ADDRESSES: The meeting will take place in the Conference Center at the
CFTC's headquarters, Three Lafayette Centre, 1155 21st Street NW.,
Washington, DC 20581. Written statements should be submitted to:
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st
Street NW., Washington, DC 20581, attention: Office of the Secretary.
Please use the title ``Technology Advisory Committee'' in any written
statement you may submit. Any statements submitted in connection with
the committee meeting will be made available to the public.
FOR FURTHER INFORMATION CONTACT: Laura Gardy, Commodity Futures Trading
Commission, Three Lafayette Centre, 1155 21st Street NW., Washington,
DC 20581, (202) 418-5354.
SUPPLEMENTARY INFORMATION: This emergency meeting of the TAC is being
held in response to the Commission's July 10, 2012 complaint against
Peregrine Financial Group Inc. (PFG), a registered futures commission
merchant (FCM), and its owner, Russell R. Wasendorf, Sr., alleging
fraud by misappropriating customer funds, violations of customer fund
segregation laws, and making false statements in financial statements
filed with the Commission. The filing of the complaint was triggered by
a National Futures Association (NFA) audit conducted earlier this month
which revealed that despite PFG's representations that it held in
excess of $220 million of customer funds, in fact, PFG held
approximately $5.1 million.
This meeting will focus on technological solutions to providing the
CFTC, self-regulatory organizations, and futures commission merchant
customers direct access to customer segregated account information in
order to help eliminate the possibility of theft and misappropriation
of customer funds. The TAC will explore related technological and legal
issues through panel presentations and open discussion. The meeting
will be open to the public with seating on a first-come, first-served
basis. Members of the public who wish to listen to the meeting by
telephone may do so by calling a toll-free telephone line to contact to
a live, listen-only audio feed. Call-in participants should be prepared
to provide their first name, last name and affiliation. Additionally, a
video recording of the meeting will be published through a link on the
CFTC's Web site.
All written submissions provided to the CFTC in any form will also
be published on the Web site of the CFTC.
Domestic Toll Free: 1-866-844-9416.
International Toll: Under Related Documents to be posted on
www.cftc.gov.
Conference ID: 8311506.
Call Leader Name: Michael Jones.
Pass Code/Pin Code: CFTC.
Authority: 5 U.S.C. app. 2 Sec. 10(a)(2)
By the Commodity Futures Trading Commission.
Dated: July 17, 2012.
Sauntia S. Warfield,
Assistant Secretary of the Commission.
[FR Doc. 2012-17856 Filed 7-20-12; 8:45 am]
SEC: 2012-17763
DCarsonCPA.com is your weblink to the practice of Dean T. Carson II, CPA at work to support Financial Decision Makers across the lines of Government, Industry, Non Profit and Individual roles. Working with insight for Accounting, Taxes, Compliance, Advisory, Financials and Related Research.
Learn more at www.dcarsoncpa.com or e-mail info@dcarsoncpa.com .
CFTC: Meeting notice Technology Advisory Committee 7/26/12 - Public Meeting on Tech
SEC: Commission Guidance Regarding Definitions of Mortgage Related Security and Small Business Related Security - Interp and Comments.
1. CFTC:
[Federal Register Volume 77, Number 141 (Monday, July 23, 2012)]
[Notices]
[Page 43064]
[FR Doc No: 2012-17856]
=======================================================================
-----------------------------------------------------------------------
COMMODITY FUTURES TRADING COMMISSION
Meeting; Technology Advisory Committee
AGENCY: Commodity Futures Trading Commission (CFTC).
ACTION: Notice of emergency meeting of technology advisory committee.
-----------------------------------------------------------------------
SUMMARY: The CFTC announces that on Thursday, July 26, 2012, the CFTC's
Technology Advisory Committee (``TAC'') will hold an emergency public
meeting at the CFTC's Washington, DC headquarters, from 10:00 a.m. to
4:00 p.m. The TAC will focus on possible technology solutions to, among
other things, enable futures commission merchant customers, self-
regulatory organizations and the CFTC to verify in near real-time the
accuracy of the amount of funds held in customer segregated accounts.
DATES: The meeting will be held on July 26, 2012, from 10:00 a.m. to
4:00 p.m. Members of the public who wish to submit written statements
in connection with the meeting should submit them by July 19, 2012.
ADDRESSES: The meeting will take place in the Conference Center at the
CFTC's headquarters, Three Lafayette Centre, 1155 21st Street NW.,
Washington, DC 20581. Written statements should be submitted to:
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st
Street NW., Washington, DC 20581, attention: Office of the Secretary.
Please use the title ``Technology Advisory Committee'' in any written
statement you may submit. Any statements submitted in connection with
the committee meeting will be made available to the public.
FOR FURTHER INFORMATION CONTACT: Laura Gardy, Commodity Futures Trading
Commission, Three Lafayette Centre, 1155 21st Street NW., Washington,
DC 20581, (202) 418-5354.
SUPPLEMENTARY INFORMATION: This emergency meeting of the TAC is being
held in response to the Commission's July 10, 2012 complaint against
Peregrine Financial Group Inc. (PFG), a registered futures commission
merchant (FCM), and its owner, Russell R. Wasendorf, Sr., alleging
fraud by misappropriating customer funds, violations of customer fund
segregation laws, and making false statements in financial statements
filed with the Commission. The filing of the complaint was triggered by
a National Futures Association (NFA) audit conducted earlier this month
which revealed that despite PFG's representations that it held in
excess of $220 million of customer funds, in fact, PFG held
approximately $5.1 million.
This meeting will focus on technological solutions to providing the
CFTC, self-regulatory organizations, and futures commission merchant
customers direct access to customer segregated account information in
order to help eliminate the possibility of theft and misappropriation
of customer funds. The TAC will explore related technological and legal
issues through panel presentations and open discussion. The meeting
will be open to the public with seating on a first-come, first-served
basis. Members of the public who wish to listen to the meeting by
telephone may do so by calling a toll-free telephone line to contact to
a live, listen-only audio feed. Call-in participants should be prepared
to provide their first name, last name and affiliation. Additionally, a
video recording of the meeting will be published through a link on the
CFTC's Web site.
All written submissions provided to the CFTC in any form will also
be published on the Web site of the CFTC.
Domestic Toll Free: 1-866-844-9416.
International Toll: Under Related Documents to be posted on
www.cftc.gov.
Conference ID: 8311506.
Call Leader Name: Michael Jones.
Pass Code/Pin Code: CFTC.
Authority: 5 U.S.C. app. 2 Sec. 10(a)(2)
By the Commodity Futures Trading Commission.
Dated: July 17, 2012.
Sauntia S. Warfield,
Assistant Secretary of the Commission.
[FR Doc. 2012-17856 Filed 7-20-12; 8:45 am]
SEC: 2012-17763
DCarsonCPA.com is your weblink to the practice of Dean T. Carson II, CPA at work to support Financial Decision Makers across the lines of Government, Industry, Non Profit and Individual roles. Working with insight for Accounting, Taxes, Compliance, Advisory, Financials and Related Research.
Learn more at www.dcarsoncpa.com or e-mail info@dcarsoncpa.com .
Friday, July 20, 2012
Some Things you should know about Insurance
This is still in Draft form but has been published for cross relevance to another post...will be back to update soon...
Bakground:
The Insurance product is an Investment Decision in your Financials, made as part of your Risk Management Strategy. Insurance products are complex and regulated by the Individual States.
Analysis in overview:
Insurance is a very important element of Business Risk Management and Insurance is classified as a type of Security for Market Regulation purposes. Insurance is Regulated at the State Level. We are not insurance brokers and do not sell Insurance. All notes here are solely an Illustration to educate and inform interested Financial Decision Makers of some relevant points for additional awareness as dealing with Insurance.
In purchasing Insurance you would need to work with a State Licensed Insurance Broker. Insurance Brokers are licensed to improve the quality of customer service and protection in the Industry and are knowledgeable in the coverages and financial aspects of Insurance.
From the pure Financial perspective:
The element of Risk Management, Insuring and portecting your Business is an important element of Managing your Business and for that reason knowledge helps.
Insurance which is again a Securities Product from the level of Regulation is driven by written Contracts. The Contracts have various terms and agreements that are laid out in the body of the Policy itself and the attached "endorsements" or addendums which add coverages. There may also be limitations or disclaimers / exclusions so you need to carefully read Insurance Policies to understand them and should always inquire to be clear on coverages and exclusions
One Attribute to an Insurance Policy regards the Claims aspects of Insurance and concerns the manner in which claims are relevant to a policy.
Claims Made vs. Per Occurrence :
Below is an sample reference chart to in the general sense illustrate the concept of Claims Made vs. Per Occurrence Insurance Policies. There is no intent for these to be "exact terms" with policy basis rather they are just for explanatory Purposes.
Claims-Made vs Occurence Coverage (as Illustrative exanple only).
| |
The Difference Between Claims-Made and Occurrence Coverage
Illustration of Coverage Types - Claims Made vs Per Occurrence - NOT for RELIANCE
DCarsonCPA at work with knowledge, hands on experience, research and teamwork. Where the opportunity is to support Financial Decision Makers in broad roles of Financial Decision Making in Government, Industry, Non Profit and Individual capacities as decision makers.
Here for Clients on Services and to work together on the points through Analysis where Financial Skills may also potentially help on the Economic and Public Finance challenges at the Local, State and National levels. The skills of Accounting, Fianncial Analysis, understanding of Taxation and Government at the various levels is a strong place to start with ideas to help. The rest comes from connecting to and analyzing the broad needs of Financial Decision Makers and how we all connect through Financials and Governance.
Learn more at http://www.dcarsoncpa.com/ or e-mail info@dcarsoncpa.com .
| |
The Dewey Bankruptcy and Insurance ( 1 of 2)
Backgrounders:
Some observations from news updates today on the Dewey Bankruptcy via Reuters :
http://newsandinsight.thomsonreuters.com/Legal/News/2012/07_-_July/A_surprise_$50_mln_insurance_policy_surfaces_in_Dewey_talks/
Placing us back on track for an Earlier look we took at the Lehman Bankruptcy:
http://dcarsoncpa.blogspot.com/2011/09/tri-point-nature-of-bankruptcy-reaching.html
Bankruptcy and Insurance:
Unfortunately in this Economy for the past several years the dimension of Bankruptcies has been an important element due to business failures and stretched finances. Bankruptcy courts are where extremely challenged Financial Entities seek remedy through Restructuring of Debt or through Cancellation of Debt under the various provisions of the US Bankruptcy Laws. At some other point we can recap on those mechanics but at this point our interest was captured by the Insurance element of the Dewey Bankruptcy case above as it had prompted an idea to better communicate with you on the lines of Insurance overall.
We had previously touched upon Bankruptcy in the Lehman case and reaching out to the Three Parties of the Estate with respect to the Assets. They never officially acknowledge or replied to our offer, but I was able to confirm that they took action on the insight we shared. The channels of communication we used would have been sure to have connected with parties that pursued the opportunity. I don't mind because at the end of the day we have built out so many avenues to connect and support Financial Decision Makers that this was just a small dimension of opportunities we see continually. For purposes of this analysis we are focusing on Insurance and then will go back to the Dewey Case. Read on for the element of Insurance:
Focusing on Insurance:
Whether or not it is directly relevant to this specific case one of the key activities in your Entity Accounting Operations work with is Accounts Payable. Through Accounts Payable, the Balance Sheet and Risk Management Accounting for Purchased Insurance Policies then rolling through the Profit and Loss statement as expenses (subsequent to entry in the Accounting Software). It is an important task at Accounts Payable to make sure Invoices are coded correctly. If they are not there is a cross check on expenses at the month's end where through various methods like vendor checks and accounts analysis the expenses are reviewed. Through these two steps and hopefully not subsequent steps of Internal or External Audit the Insurance Expenses will be correctly Accounted for, properly classified and appropriately picked up on an Insurance schedule.
Controls:
This is a key process with Insurance that helps to confirm that your Insurance Policies are in place and in force so that they are serving as value added viable elements of Risk Management. If this is not happening you run the risk of having issues like lapsed coverage or cases where you have missed coverage, If you have missed coverage you paid the invoice and have coverage but it get's lost in financials and your management may not even know there is a coverage policy when losses are incurred. It is not a common case but it is a real and present danger in Risk Management to have either lapsed coverage or missed coverage that get misclassified may be immaterial to overall accounts and then gets mixed with other class expenses and therefore not seen later. This is a key point where well trained and knowledgeable Accounts Payable and Staff Accountants can make a difference. Responsible parties booking entries need to be aware of ALL vendors and expenses and be appropriately trained to code expenses.
Risks:
As a business becomes larger the risk grows and so do chances for things to be potentially misclassified and overlooked, In Practice there are more control steps as you grow - a Formal Risk Manager, a CCO or COO and others along with the key accounting team that help but cannot guarantee that 100% of the entries will be correctly classed. There will always be some element of risk, but the idea is that through materiality and through awareness and the use of control checklists and compensating duties that all areas will be covered in your financials.
In the outlier of occurrences consider the risk that an expense gets miscoded in AP, missses the cross check at months end and then is misclassified and not material enough to be found. It's a risk that can happen and is prevented by compensating controls through risk management and check lists, Insurance Schedules and other compensating controls including that if you have a good Insurance Broker they would be watching out for you. But there is always the risk and this can happen where controls or procedures are lax. The outlier chance is that when the policy is miscoded and misses the cross checks, Management may not be aware and may miss that a coverage may be dropped or may have been paid and is misssed in reporting.
Add this circumstance to a business loss and you have a missed opportunity for Risk Management with payout consequences or you may have worse the expense, be covered and then not file the claim. There are many types of Insurance policy and if the related policy happens to read "Claims Made" - see the related post " Some Things you should know about Insurance" in our blog there is a risk that if the Claim is not made within the terms of the policy as "in force" that you will lose the coverage.
The consequence of not being insurred through errors in accounting, misclassifications, miscoding or droped coverages gives rise to the risk of Real Financial Losses and missed opporunities to mitigate the various losses that can occur across the lines of Insurable events. The summary of the matter has real financial consequence and potential to deliver sizeable losses that place your earnings, assets and very business continuity at risk through Financial Exposure. It makes sense to be diligent in Financial Coverages, Risk Management, Accounting Practices and Controls designed to verify that your coverages and Risk Management strategy has been fully deployed across your your Entity. We can help.
Conclusions:
The element of capturing, understanding and verifying your Insurance Coverages is Essential to your business (whether or not quantified here it is a self evident truth of Risk Management). We can help.
The role of your Accounts Payable staff is much more important then you would anticipate. Coding is all about pathways into Financials and if you take the wrong turn you can lose valuable decision making information, potentially this can lead to a succession of issues as momentum builds in errors of misclassification or ommission. You key Controls on Accounting are important at this step, as is staff training and awareness of specialized Vendors and their Expenses. We can help.
The key role of Risk Management and Insurance is to make sure you are covered on Risks to diminish high risk / high impact exposures at a minimum to protect your Financial Entity, Make sure that your Risk Management strategy as designed has been fully implemented across your Business or Other Entity. We can help (*).
(*) We will work with your Insurance Brokers and Risk Management Strategy to confirm matching Accounting Policies and Practices are in place and that you are finding the coverage you need at a price that makes sense from a Compliance Analysis and Financial perspetive. Insurance may also have Tax implications that we can help you to assess as needed.
One of the key roles of Controls in addition to preventing bad actors on financials is also to provide a neccessary system of checks and balances on the path to management, financial, tax and regulatory reporting. We can help.
We are here to assist you improve your practices on Accounting and Controls with the consideration of Four Critical and Concurrent Streams of Financial Reporting that we will cover for you in an article soon to follow. Our Business is about hands on skills, those skills include hands on ownership of Accoutning, Operations and Financials from Journals to Receivables and Payables to Financials to Financial Analysis and Output Reporting including Subsequent Audits and follow ups.The hands on skills with the entry and the experience of Business Analysis to not only consider the input and output data sets, but to also consider and connect with the underlying Data Tables, Calculations, export and import avenues are all good skills sets to work from. Connect that to the larger picture of Government Rules, Industry Standards, Sector needs on Financials, Tax Rules, Analysis, Strategy and more and we can be of significant assistance on your Consulting needs. Find us at http://www.dcarsoncpa.com/ or e-mail info@dcarsoncpa.com .
Outro:
Back on track as I read the Dewey Article it came to my mind that potentially this was one of those outlier cases where someone found an Insurance Policy for $50 Million that was overlooked, fortunately on further read it appears not to be the case. Never the less generically speaking when there are Financial issues like the collapse in this case of a Major Law Firm there are more risks that part of the problem was in the Financials and Reporting Practices.
This is 1 of 2 Entries on this focusing on the first thought on Insurance the next article will focus on the fascinating and unusual financial case of the collapse of a Major Law Firm from what we can see in the Public Record.
DCarsonCPA,com is your web link to the practice of Dean T. Carson II, CPA following the line of Financials that connect Government, Industry, Non Profit and Individual Financial Decision Making we see the many opportunities for services through knowledge, experience, research and teamwork. The skills of discovery and the analytics are tools we use on a regular basis in many diverse ways to solve problems for Clients on Services . The points of discussion exist to share ideas and points of where we may be able to help on Services or Research or otherwise find interest in the topic matter. Learn more at http://www.dcarsoncpa.com/ or inquire at info@dcarsoncpa.com .
Some observations from news updates today on the Dewey Bankruptcy via Reuters :
http://newsandinsight.thomsonreuters.com/Legal/News/2012/07_-_July/A_surprise_$50_mln_insurance_policy_surfaces_in_Dewey_talks/
Placing us back on track for an Earlier look we took at the Lehman Bankruptcy:
http://dcarsoncpa.blogspot.com/2011/09/tri-point-nature-of-bankruptcy-reaching.html
Bankruptcy and Insurance:
Unfortunately in this Economy for the past several years the dimension of Bankruptcies has been an important element due to business failures and stretched finances. Bankruptcy courts are where extremely challenged Financial Entities seek remedy through Restructuring of Debt or through Cancellation of Debt under the various provisions of the US Bankruptcy Laws. At some other point we can recap on those mechanics but at this point our interest was captured by the Insurance element of the Dewey Bankruptcy case above as it had prompted an idea to better communicate with you on the lines of Insurance overall.
We had previously touched upon Bankruptcy in the Lehman case and reaching out to the Three Parties of the Estate with respect to the Assets. They never officially acknowledge or replied to our offer, but I was able to confirm that they took action on the insight we shared. The channels of communication we used would have been sure to have connected with parties that pursued the opportunity. I don't mind because at the end of the day we have built out so many avenues to connect and support Financial Decision Makers that this was just a small dimension of opportunities we see continually. For purposes of this analysis we are focusing on Insurance and then will go back to the Dewey Case. Read on for the element of Insurance:
Focusing on Insurance:
Whether or not it is directly relevant to this specific case one of the key activities in your Entity Accounting Operations work with is Accounts Payable. Through Accounts Payable, the Balance Sheet and Risk Management Accounting for Purchased Insurance Policies then rolling through the Profit and Loss statement as expenses (subsequent to entry in the Accounting Software). It is an important task at Accounts Payable to make sure Invoices are coded correctly. If they are not there is a cross check on expenses at the month's end where through various methods like vendor checks and accounts analysis the expenses are reviewed. Through these two steps and hopefully not subsequent steps of Internal or External Audit the Insurance Expenses will be correctly Accounted for, properly classified and appropriately picked up on an Insurance schedule.
Controls:
This is a key process with Insurance that helps to confirm that your Insurance Policies are in place and in force so that they are serving as value added viable elements of Risk Management. If this is not happening you run the risk of having issues like lapsed coverage or cases where you have missed coverage, If you have missed coverage you paid the invoice and have coverage but it get's lost in financials and your management may not even know there is a coverage policy when losses are incurred. It is not a common case but it is a real and present danger in Risk Management to have either lapsed coverage or missed coverage that get misclassified may be immaterial to overall accounts and then gets mixed with other class expenses and therefore not seen later. This is a key point where well trained and knowledgeable Accounts Payable and Staff Accountants can make a difference. Responsible parties booking entries need to be aware of ALL vendors and expenses and be appropriately trained to code expenses.
Risks:
As a business becomes larger the risk grows and so do chances for things to be potentially misclassified and overlooked, In Practice there are more control steps as you grow - a Formal Risk Manager, a CCO or COO and others along with the key accounting team that help but cannot guarantee that 100% of the entries will be correctly classed. There will always be some element of risk, but the idea is that through materiality and through awareness and the use of control checklists and compensating duties that all areas will be covered in your financials.
In the outlier of occurrences consider the risk that an expense gets miscoded in AP, missses the cross check at months end and then is misclassified and not material enough to be found. It's a risk that can happen and is prevented by compensating controls through risk management and check lists, Insurance Schedules and other compensating controls including that if you have a good Insurance Broker they would be watching out for you. But there is always the risk and this can happen where controls or procedures are lax. The outlier chance is that when the policy is miscoded and misses the cross checks, Management may not be aware and may miss that a coverage may be dropped or may have been paid and is misssed in reporting.
Add this circumstance to a business loss and you have a missed opportunity for Risk Management with payout consequences or you may have worse the expense, be covered and then not file the claim. There are many types of Insurance policy and if the related policy happens to read "Claims Made" - see the related post " Some Things you should know about Insurance" in our blog there is a risk that if the Claim is not made within the terms of the policy as "in force" that you will lose the coverage.
The consequence of not being insurred through errors in accounting, misclassifications, miscoding or droped coverages gives rise to the risk of Real Financial Losses and missed opporunities to mitigate the various losses that can occur across the lines of Insurable events. The summary of the matter has real financial consequence and potential to deliver sizeable losses that place your earnings, assets and very business continuity at risk through Financial Exposure. It makes sense to be diligent in Financial Coverages, Risk Management, Accounting Practices and Controls designed to verify that your coverages and Risk Management strategy has been fully deployed across your your Entity. We can help.
Conclusions:
The element of capturing, understanding and verifying your Insurance Coverages is Essential to your business (whether or not quantified here it is a self evident truth of Risk Management). We can help.
The role of your Accounts Payable staff is much more important then you would anticipate. Coding is all about pathways into Financials and if you take the wrong turn you can lose valuable decision making information, potentially this can lead to a succession of issues as momentum builds in errors of misclassification or ommission. You key Controls on Accounting are important at this step, as is staff training and awareness of specialized Vendors and their Expenses. We can help.
The key role of Risk Management and Insurance is to make sure you are covered on Risks to diminish high risk / high impact exposures at a minimum to protect your Financial Entity, Make sure that your Risk Management strategy as designed has been fully implemented across your Business or Other Entity. We can help (*).
(*) We will work with your Insurance Brokers and Risk Management Strategy to confirm matching Accounting Policies and Practices are in place and that you are finding the coverage you need at a price that makes sense from a Compliance Analysis and Financial perspetive. Insurance may also have Tax implications that we can help you to assess as needed.
One of the key roles of Controls in addition to preventing bad actors on financials is also to provide a neccessary system of checks and balances on the path to management, financial, tax and regulatory reporting. We can help.
We are here to assist you improve your practices on Accounting and Controls with the consideration of Four Critical and Concurrent Streams of Financial Reporting that we will cover for you in an article soon to follow. Our Business is about hands on skills, those skills include hands on ownership of Accoutning, Operations and Financials from Journals to Receivables and Payables to Financials to Financial Analysis and Output Reporting including Subsequent Audits and follow ups.The hands on skills with the entry and the experience of Business Analysis to not only consider the input and output data sets, but to also consider and connect with the underlying Data Tables, Calculations, export and import avenues are all good skills sets to work from. Connect that to the larger picture of Government Rules, Industry Standards, Sector needs on Financials, Tax Rules, Analysis, Strategy and more and we can be of significant assistance on your Consulting needs. Find us at http://www.dcarsoncpa.com/ or e-mail info@dcarsoncpa.com .
Outro:
Back on track as I read the Dewey Article it came to my mind that potentially this was one of those outlier cases where someone found an Insurance Policy for $50 Million that was overlooked, fortunately on further read it appears not to be the case. Never the less generically speaking when there are Financial issues like the collapse in this case of a Major Law Firm there are more risks that part of the problem was in the Financials and Reporting Practices.
This is 1 of 2 Entries on this focusing on the first thought on Insurance the next article will focus on the fascinating and unusual financial case of the collapse of a Major Law Firm from what we can see in the Public Record.
DCarsonCPA,com is your web link to the practice of Dean T. Carson II, CPA following the line of Financials that connect Government, Industry, Non Profit and Individual Financial Decision Making we see the many opportunities for services through knowledge, experience, research and teamwork. The skills of discovery and the analytics are tools we use on a regular basis in many diverse ways to solve problems for Clients on Services . The points of discussion exist to share ideas and points of where we may be able to help on Services or Research or otherwise find interest in the topic matter. Learn more at http://www.dcarsoncpa.com/ or inquire at info@dcarsoncpa.com .
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