Posts Tagged ‘newsletter’

Don’t take the summer off

We have nearly reached the halfway point of the year, a time when many organization leaders may be feeling a bit frazzled. We urge you not to “take the summer off” when it comes to financial planning! Now that taxes are filed, this is a prime time to examine your operations year-to-date and see how they compare to your budgets. Focus on your financial management to reap a comfortable future for the rest of 2016.

New look!

You may have noticed this month’s newsletter looks slightly different. We’ve switched over to a “responsive design” format so this message will scale to various formats. Try reading us on the go on your smartphone or tablet!

Employee Spotlight: Angela Rowlett

Angela_Rowlett_smallSince joining Sponsel CPA Group in August of last year, Angela Rowlett has become a familiar face and reassuring presence for both our staff and clients. As the Tax Administrative Assistant, she assists the Tax Services staff in a variety of ways, from scheduling appointments, assembling tax returns to assisting with client communication. She enables our tax department to function more efficiently.

A native Hoosier, Angela studied probation and parole services at Indiana Tech. She and her husband have three children, two sons and a daughter, who are all very active in sports. In her spare time she enjoys reading, gardening and spending time with her family, and also volunteers with Manna Mission in Martinsville delivering meals to needy families.

Fraud 301: Why do perpetrators commit occupational fraud?

 (Final in a 3-part series)

Jason Thompson thumbIn the first part of our series, we dealt with popular occupational fraud schemes. In Fraud 201 we discussed who commits occupational fraud. This article delves into why employees may commit fraud and offers some suggestions on what you can do to keep it from happening.

Dr. Donald R. Cressey, a criminologist whose research focused on embezzlers, developed the following hypothesis:

“Trusted persons become trust violators when they conceive of themselves as having a financial problem which is non-sharable, are aware this problem can be secretly resolved by violation of the position of financial trust, and are able to apply their own conduct in that situation, verbalizations which enable them to adjust their conceptions of themselves as trusted persons with their conceptions of themselves as users of the entrusted funds or property.”

This hypothesis is the foundation for Cressey’s “Fraud Triangle,” a model for explaining the factors that cause someone to commit occupational fraud. The factors are Pressure, Opportunity and Rationalization. The existence of these three factors together can lead to fraudulent behavior.

Pressure is an incentive or reason for doing something. Pressure can be internal or external to the company. Internal pressures include perceived lack of appreciation, the perception of being under-compensated, being mistreated by a supervisor/boss/owner, etc. External pressures include addictions, unexpected financial difficulty, health concerns, family financial pressures, etc. In the context of occupational fraud, the pressure ultimately causes a financial problem for the employee. Thus they are forced to look for ways to solve their personal financial issue.

Identifying pressures is often a difficult task and one that may not provide a benefit in excess of the cost when trying to deter fraud. Keep in mind, however, that many convicted perpetrators were living beyond their means. So having knowledge about your employees’ activities outside of you business can prove to be a valuable fraud prevention technique.

Opportunity is any chance for advancement. Opportunities exist for employees when they have both access to an asset and access to the company records regarding that asset. For instance, when an employee has both the ability to authorize and record a cash disbursement.

Opportunities can be minimized with well-designed internal controls. Therefore, a review of your company’s processes, combined with periodic oversight and inquiry, will help in identifying opportunities and ways to eliminate them. Segregation of duties and authorization, along with avoiding conflicts of interest, are also strong preventive tools.

Rationalization is often considered the trigger for fraud to occur. Rationalization is the justification of the fraud as the solution to the pressure. In general, most people are good and want to do good things. Therefore rationalization is necessary in order for the good person to allow the pressure to coerce them into doing a bad thing.

The existence of all three fraud triangle factors in a particular instance causes the chances of fraud to skyrocket. Don’t get caught holding the triangle — know your critical employees, design and implement effective internal controls and watch for changes in employees attitudes, habits and activities.

If you are concerned about occupational fraud in your organization, call Jason Thompson at (317) 608-6694 or email we would be happy to discuss how we could be of assistance and ideas for prevention that you can take advantage of.

Client Profile: Zone Solutions


The average consumer isn’t particularly knowledgeable about what Foreign Trade Zones (FTZ) are – mention the topic, and most people think of the duty-free shops where they can pick up international goodies at a discount. But FTZs are actually an essential part of the U.S. economy, accounting for about one-fifth of the value of imports entering the country.

BMW’s plant in Spartanburg, S.C., manufactures more than 1,000 vehicles per day inside a foreign trade zone, employing American workers while exporting approximately 85% of their goods. President Obama’s 2010 National Export Initiative sought to double U.S. exports by 2014; so far, Foreign Trade Zones are the only slice of the import-export pie to achieve that goal.

Zone Solutions, headquartered in Indianapolis but doing business coast to coast, acts as the middle man between clients and governmental regulatory agencies. Under this managed services business model, they ensure compliance with customs laws and report all receipt and removal activity on behalf of the FTZ Operators.

Zone Solutions also assists businesses with cost-benefit analysis, FTZ application review, development, submission to the Foreign Trade Zones Board, and FTZ site activation. Their personnel utilize proprietary software to help manage the flow of information about goods moving through FTZs.

“A large portion of the program is accountability for merchandise, and systems play a very large role in that accountability. We ensure our customers’ inventory systems remain in sync with Foreign Trade Zone systems,” said Eva Tomlinson, Zone Solutions President & CEO.

Essentially, they help clients monitor the information and trade activity being communicated to US Customs and other regulatory agencies.

Founded in 2003, Zone Solutions started with a very select group of clientele, and has experienced tremendous growth – doubling revenues virtually every year. They’ve gone from two employees to 17, with plans to hire three more this year.

Tomlinson envisions continued growth in the coming years, but says their primary emphasis is on maintaining their high level of compliance in on-going operations, which helps Zone Solutions stand out from the crowd.

“We have experienced a great percentage of growth since we started. But given the nature of our business and the clients we work with, we have a philosophy of controlled growth. It is so important that the projects are implemented in a compliant manner, and that we have the checks and balances in place so they stay compliant,” she said.

“Our commitment is to excellence; that’s what we strive for. We build our policies and procedures around them.”

Their record speaks for itself: no Zone Solutions client has ever received a negative audit from regulatory agencies.

Tomlinson said Sponsel CPA Group has been instrumental in developing a long-term valuation strategy for the company. Their counsel has helped determine how to structure the business to realize the most advantage tax position possible. They also give guidance and advice on a variety of subjects to help them keep growing in the way they want.

“Sponsel CPA Group provides consulting as it relates to company structure, strategy from a tax perspective, and they also handle the corporate tax reporting on an annual basis,” she said.

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