Blog

Government Audit

A Government Audit Puts Pentagon in Hot Water Over Serious Non-Compliance Issues

A full financial audit of the Pentagon was conducted and the results showed a failing grade. Auditors requested that various financial irregularities be addressed.

Since the release of the audit results in November 2018, the press has been buzzing about the U.S. military’s assets, which are valued at $2.7 trillion. Over 600 locations were visited to conduct this audit, which involved the work of 1,200 accountants.

Auditors discovered that many back-office functions are not tracked sufficiently, making it very difficult to monitor the flow of cash in and out of the organization. The effort cost more than $400 million, and the Pentagon is being criticized for conducting such a costly audit that would undoubtedly be flawed.

In spite of the results, the amount of financial irregularities and compliance issues discovered during the audit were mostly viewed as unsurprising, and a few agencies did pass the audit: the U.S. Army Corps of Engineers, Civil Works; the Military Retirement Fund; the Defense Health Agency — contract resources management; the Defense Contract Audit Agency; and the Defense Finance and Accounting Service.

Specific instances of fraud were not called out in the report, but the report did specify “significant information technology systems security issues.” The audit also identified 20 “material weaknesses” in the department’s internal controls. The audit further specified that not all transactions are being properly recorded, which makes it very difficult to detect errors in financial statements. Historical cost data is also not being tracked sufficiently.

Rep Adam Smith (D-Wash.) said in a statement that “it is essential that we get the Defense Department to a position where Congress, taxpayers, and DOD itself can track and account for the money that is being used.”

Compliance is important and Flexi knows that

The recent Pentagon audit is a cautionary tale. Don’t let your business receive a failing grade on your next audit. Work with Flexi to ensure your accounting is always in line for your next audit by utilizing accounting compliance software.

Flexible posting and open architecture, with rules-driven engines, enable you to manage your accounting processes in a cost-effective and highly efficient manner. Analyze financial statements and track performance of your lines of business, profit centers, and locations today.

Learn why 20,000 users and counting across dozens of industries rely on Flexi’s accounting software. Contact Flexi today to learn more.

 

AI Automation Accounting

How AI & Automation Are Making Their Way to Accounting

Artificial intelligence (AI) and automation are making their way to accounting, just as they are permeating all other industries. AI is getting stronger and smarter as technology evolves, becoming not just an automator but also a smart technology that can learn and draw conclusions in real time.

As AI continues to advance, many fear it. While the perceived threat of job extinction looms, AI and automation can actually be extremely beneficial for accountants and finance professionals. By remaining adept and relevant in the industry, you are likely not to be replaced by robots anytime in the near future.

Working with AI and automation, not against it

Embracing advances in technology is key to remaining relevant in the industry.

AI and automation largely take the guesswork and possibility of manual error out of everyday processing. A large chunk of accounting tasks were at one time reliant on manual data entry, which meant manual mistakes. Automated, cloud-based software provides a level of security and data integrity previously unknown to accountants. These are all good things.

With increased accuracy and decreased time spent creating and running reports, accountants are left with time left in their day to devote to other, more strategic tasks. In fact an entire component of modern accounting relies on strategic and advisory services, and if your firm or organization has the time to devote to providing such services, you have an immediate edge over your competitors in the field.

While AI and automation reduces or eliminates many of the tasks historically known to the accounting role, AI and automation free up time for accountants to become subject matter experts on the various technologies and systems available today, providing a new level of value to clients.

Additionally, there are many elements in the financial industry that remain impermeable to AI and automation. A study cited by Business.com notes that 68 percent of clients surveyed prefer having access to a financial advisor over a technology offered as a replacement. This statistic makes it very clear that plenty of folks prefer the personal, human element when it comes to strategizing and problem solving. And fortunately, machines can’t replace that.

Flexi helps you embrace the future

Flexi provides software that automates many aspects of the accounting process, freeing up your time and making sure you can close the books and provide reports in a timely manner to boot. Flexi won’t replace you; Flexi will work with you.

Learn more about partnering with Flexi today. Call 800-353-9492.

Cannabis Accounting

How CPAs are Entering the Fast Growing Cannabis Space

As the highly regulated cannabis industry grows, a call for strong, skilled, and experienced financial professionals is growing with it. But, many big accounting firms are still shying away from the industry as it presents unfamiliarity and risk. For the right professional, the cannabis space is booming with opportunity.

What’s complicated about cannabis

Compliance is of utmost importance for companies in the cannabis space due to differing state and federal legislation. This means that while artificial intelligence (AI) and automation are changing accounting jobs (and in some case, eliminating accounting jobs), jobs in niche industries like the cannabis industry are popping up.

Not long ago, legal cannabis products were relegated to medicinal use in a small handful of states. Legislature in recent years has opened up medicinal cannabis to a wide array of states, and recreational cannabis in a growing number of states as well. While cannabis is legal in multiple states, it is still federally recognized as an illegal and illicit substance. Therefore, remaining compliant is of critical importance to companies in the industry. A failure to comply with the various complex regulations can lead to hefty fines–or worse, shutdown.

As such, CPAs are in especially high demand in this fast-growing niche. By 2021, the U.S. cannabis market is projected to reach $70 billion. This could be a significant source of new revenue for accountants who have recently felt the threat of AI and automation changing the landscape of the accounting field and opportunities within it.

How to tap into the industry

CPAs interested in entering the cannabis space should focus on these three steps: education, networking, and building a strong and substantial team.

Educate yourself

There is much to learn about the various, complex regulations of the cannabis industry. Immerse yourself and commit to learning as much as you can about all facets of the cannabis industry, including farming, food, and retail. The AICPA website is an excellent resource.

Network with executives

Networking is arguably the most powerful method of building your business. In an age of social media, networking is easier than ever before. Join, follow, subscribe, and engage with Facebook, LinkedIn, and Twitter wherever and whenever cannabis and legal (and soon-to-be-legal) markets exist.

Build a team

You’ve educated yourself and networked–now you need to build a skilled team. Offer a complete package including bookkeeping, tax planning, and more. The demand is high in this industry–but so is the competition. Provide something truly different to prospects.

Flexi

No matter the industry you serve, Flexi can serve your accounting software needs. Learn more about partnering with Flexi today. Call 800-353-9492.

accounting bots

Are Bots Infiltrating the Accounting Space?

Bots are a tool that makes it easy to engage with clients, leverage your brand, and quickly address client concerns at speeds and quantities that would be impossible for humans alone. Some bots–chatbots–communicate with users through an instant messaging platform, but bots can perform a number of functions, including robotic bookkeeping.

Bots are yet another example of automation. Just like all emerging technologies, there are both advantages and disadvantages of utilizing bots for your business needs.

The landscape

Some bots are replacing the apps that we use on our mobile devices. And there are good reasons for this: bots are cheaper, bots are faster, and bots can mimic the human touch better than apps can. Today’s bots can: take orders, provide information, provide personalized advice, provide real-time updates, and lead customers through purchases, among other functions.

Bots are also known for: buying concert seats, playing games and farming for resources in massively multiplayer online role-playing games (MMORPG), increasing YouTube views, and increasing traffic for analytics reporting. And bots are starting to make their way to the accounting space as well, by retrieving accounting data on request, providing robotic bookkeeping services, offering an automated receipt data entry tool, and more.

Know the pros and cons

There are many positives that come with the use of bots. At the core, bots bring automation to the table, and automation can speed up the rate of business while also reducing the cost of labor. Bots are exceptional at performing simple, repetitive tasks, which means your labor force can focus on other, more strategic tasks. And some bots, like search engine spiders, are inherently “good.”

With bots can come some challenges, though. The popular anti-bot CAPTCHA program can prevent bots from doing their job, for instance. And when human users interact with bots, aggravation can take place when their needs could better be addressed by human interaction.

But even worse, the technology often falls into the wrong hands. Spambots are prevalent and they harvest email addresses from contact forms, and even worse, such bots can lead to viruses, DDoS attacks, and other security risks.

Read the fine print

Bots can be extraordinarily useful in today’s business landscape. Accountants and finance professionals should embrace this technology–but be smart about it. One of the inherent risks of bots is that they will scrape valuable information. When entering into a business agreement with bot technology, be sure to read the user agreement. Information about how the bot might use data is often buried in the licensing agreement.

Flexi

Technology is ever changing, but there’s one name you can trust to keep your business on track. Learn more about Flexi today to see how Flexi can help your business succeed. Call 800-353-9492.

 

 

 

Compliant Insurance Accounting Software

5 Features You Should Seek For Secure, Compliant Accounting Software in the Insurance Industry

The insurance industry is a heavily regulated industry that requires assurance and compliance that only the best accounting software companies can provide. If you work in the insurance industry, you should be well-versed in the unique struggles you face–and you should seek insurance accounting software that helps you do your job better.

Here are five features you should seek and expect from your accounting software if you work within the highly regulated insurance industry:

  1. Additional automation. This will provide better security, more internal controls, and less risk of human error.
  2. Stronger reporting. This should include the ability to facilitate the creation of statutory reports.
  3. Flexibility. This should include the ability to quickly adapt to the ever-changing compliance requirements.
  4. Simplified, multi-book accounting. This enables users to track GAAP, statutory, and adjust simultaneously.
  5. Better security. This will provide more internal controls, less manual intervention, and stronger reporting for maintaining compliance requirements.

Flexi for your insurance company

Flexi understands the heavily regulated insurance industry and can guide you through the implementation process to ensure that the security, compliance, and performance mandates you need most are met.

When you choose Flexi as your accounting software provider, you gain the expertise of 25+ years serving insurance customers. Additionally, you gain the expertise of the government entities that rely on Flexi to efficiently manage claim processing needs associated with healthcare programs and disaster relief assistance.

With a seamless integration into policy, billing, and claims systems, Flexi creates superior efficiency and accuracy for insurance companies that cannot be replicated by ordinary accounting software. Feature highlights include:

  • Multi-company, multi-books (GAAP, STAT)
  • Premiums recognition
  • Workflow automation
  • Claim payments
  • Built-in compliance and audit
  • Powerful allocations
  • Global currency conversion
  • Reporting and analytics

Flexi’s comprehensive financial management software simplifies and automates the entire accounting workflow process, without compromising security. Flexi’s open architecture meets even the most stringent security requirements yet allows data to flow seamlessly with any system, whenever and wherever business needs dictate.

Flexi delivers all the rich features you’d expect in a top tier accounting solution, but without the high cost. With quick implementation that can be deployed on-premises, in the cloud or in a hybrid environment, Flexi will not only simplify your accounting processes today, but also will have you ready to adapt quickly to market or business changes in your future.

Learn more about Flexi today. Call 800-353-9492.

Financially-Compliant

SOC 2 Compliance and Why it’s Important in the Financial Space

Service Organization Control (SOC) compliance has been a buzzword in the finance space since SOC reports were first introduced in 2011. There are currently three types of SOC reports: SOC 1, SOC 2, and SOC 3.

SOC 1 reports deal with financial transactions.

SOC 2 reports deal with technology and cloud computing entities, and will be our focus today.

SOC 3 reports are public documents that summarize SOC 2 reports without divulging protected information.

SOC 2 compliance

SOC Compliance

For cloud software companies, SOC 2 compliance is the most relevant of the three in 2018. The five criteria of such a report are: Security, Availability, Processing Integrity, Confidentiality, and Privacy.

  • Security
    This deals with protection against unauthorized access.
  • Availability
    This deals with accessibility of the system.
  • Processing Integrity
    This deals with whether or not the system meets its requirements (like delivering data according to set stipulations).
  • Confidentiality
    This deals with security and confidentiality of data transmission.
  • Privacy
    This deals with the system’s use and retention of personal information.

It is important to note that SOC 2 reports are unique; providers review requirements, make a determination on which of the requirements are relevant to their business, and then write the controls to satisfy those requirements. As such, an audit of an SOC 2 report is completely subjective. An audit provides an auditor’s opinion of how well the company is fitting the requirements. For this reason, the auditor’s reputation is extremely important to provide a sound and fair audit.

Why is SOC 2 so important?

SOC 2 compliance is so relevant in today’s market because the public is so interested in whether or not data providers can be trusted with confidential information. When a company receives a clean SOC 2 report, the company is trusted as a secure and compliant host.

For organizations that are looking to outsource finance information or data storage, being SOC 2 compliant is especially important. And as a consumer, if you seek a vendor who is unwilling to provide their SOC 2 reports, you may want to consider partnering with someone else. An unwillingness to provide this report to customers can be viewed as a red flag.

Flexi

Flexi is interested in helping your organization remain compliant to help propel your business forward. Learn more about joining forces with Flexi today to see how Flexi can help your business succeed. Call 800-353-9492.

general ledger software

Why a Strong General Ledger Software is Important in the Banking Industry

A general ledger (GL) is a master document that provides a record of your business’s financial transactions. A strong GL is important in the banking industry, but all too often it is not prioritized and is thus left as an afterthought.

Your GL is the backbone of your accounting processes. Ideally, your GL should integrate with any other software you use, providing easy snapshots of your full financial picture whenever you should need them.

Pros of a strong GL

There are many reasons for implementing a strong GL at your bank. Here are just a few.

Your GL:

  • Provides an accurate record of all transactions
  • Helps balance your books
  • Stores all expenses and income in one place, making filing taxes a breeze
  • Reports real revenue to help you keep on top of spending
  • Helps you spot unusual transactions
  • Helps you nip fraud in the bud
  • Aids in compiling comprehensive financial statements

As a banking institution, financial health is your bread and butter. So why wouldn’t you prioritize the financial health of your institution the same way you prize financial health for your customers? Incorporating a strong GL is imperative for your bank’s business.

Flexi knows bank accounting software

Flexi’s enterprise accounting platform works with your bank’s accounting system to make it better, with features like a world-class GL and financial reporting system.

Flexi’s 25+ year history is rooted in serving financial institutions around the world, including banks and credit unions. Flexi has built a  platform around the unique needs of this industry, which requires superior security, speed, and performance.

With Flexi’s bank accounting software, you’ll enjoy:

With Flexi’s open architecture, you are enabled to choose the software that is right for your bank. Flexi can integrate stand-alone modules like the GL software into your existing banking accounting system. Or you can gain the ultimate speed and power with Flexi’s entire financial management software platform, which is uniquely designed to allow financial data within the core general ledger to flow securely wherever it is needed in real time.

Many financial institutions feel stuck with software that’s not ideal for accounting. Whatever level of pain you’re experiencing with your accounting system, Flexi can alleviate with flexible banking accounting software.

Learn more about partnering with Flexi today. Call 800-353-9492.

Quarterly Reporting or Semiannual

Quarterly Reporting or Semiannual? The Debate Goes On

A debate about the frequency in which public companies should be legally responsible for providing financial reports has been sparked by a recent tweet made by President Donald Trump.

In mid-August, the president tweeted a proposal to reduce the frequency that public companies must provide financial reports. Currently these reports are legally required quarterly, a precedent set by the Securities and Exchange Commission (SEC) in the 1930s. The proposed shift would move to a semiannual system.

Proponents of a reduction in frequency of reporting

Trump’s tweet, prompted by conversations with top business leaders such as Indra Nooyi, CEO of PepsiCo, has received some praise in the business world. By reducing the frequency of financial reporting to semiannually, many believe public companies will have greater flexibility, leading to money saved and focuses shifting from short term gains to long term business strategy. Critics of the quarterly reporting system believe that quarterly reporting pulls public companies away from long term investments.

Proponents of quarterly reporting

Others believe that maintaining the quarterly reporting tradition is integral to the health and ethics of U.S. business. Proponents of quarterly reporting view the system as setting a precedent for transparency by providing checks and balances while also reducing the chance of unethical business practices.

The U.K.: a case study

Across the pond, the U.K. has changed their reporting requirements twice in the last decade–once moving from semiannual to quarterly reporting in 2007, and then later moving from quarterly back to semiannual reporting in 2013. No significant effects were reported related to the shifts. Instead, other factors are likely at play beyond the frequency of the reporting itself.

The past and the future

Established in the 1930s during the Great Depression, the SEC has required public companies to report on their finances every three months. The intention was to give investors confidence in the businesses they were investing in. However, the SEC has considered moving away from the quarterly reporting requirement as recently as 2016. Following the president’s tweet, SEC chairman Jay Clayton stated that the SEC “continues to study” the rules and requirements.

The future reporting requirements remain uncertain while the debate rages on.

Flexi

One thing’s for certain: financial reporting is important for your business, regardless of the frequency in which you use it. Flexi can help you refine your financial reports. Learn more about partnering with Flexi today. Call 800-353-9492.

Accounting and Robots

Are Robots Posed to Take Accounting Jobs?

Are robots posed to take accounting jobs? No, not exactly. But kind of.

Science fiction would have you believe that the human race is on track to be replaced by robots in the near future, but while advances in technology are increasing artificial intelligence (AI) and automation, the likelihood of robotic replacement is slim.

There are plenty of instances where a human touch is preferred. Not everything can be outsourced to machines. A study cited by Business.com found that 68 percent of clients surveyed prefer having access to a human financial advisor rather than a simple technology solution.

That’s a relief for accountants, but it’s important to note that this is also dependent on the task being performed. As a common example, many of us use software that is widely available (and sometimes free) to file our taxes over visiting a tax consultant, so your mileage may vary when it comes to what you’re willing to leave to the machines.

It is true that much of the manual work traditionally completed by accountants can now be automated. This means that accounting firms can save money by employing fewer people, increase accuracy by eliminating opportunities for manual error, and shift their focus to providing strategic and advisory services, which is in increasingly high demand.

But as for technical accountants who work in niche industries or delve deep into regulations and compliance? Robots aren’t likely to replace them.

Relevancy is key

Being irrelevant in your field is the kiss of death. If the threat of AI and automation is looming, focus on expanding your skillset and breadth of knowledge. By embracing technology, you can provide advisory services to clients to help them choose the software that’s right for them. If you’re not neck-deep in a spreadsheet hunting for the one equation that is causing your error, then you have lots of time back on the clock to truly refine your skills and become a subject matter expert in your field. This provides value to your clients and gives you a competitive edge.

AI is getting smarter–not just automating anymore, but learning and drawing conclusions. Your best bet is to embrace it for the tool it is. Let it do its job while you focus on yours.

Flexi

Implementing cloud-based accounting software is your first step to embracing AI, automation, and the robots of the future.Learn more about partnering with Flexi today. Call 800-353-9492.