Digital Fraud, the Other Pandemic in America

 

The pandemic caused by COVID-19 has not only been synonymous with precariousness in different basic services worldwide, it has also been synonymous with changes in different aspects of our lives, especially personal and professional. The latter, went from being face-to-face to being remote from our homes, so we had to adapt our lives to continue complying with work demands and to be able to keep our jobs and / or companies.

However, being focused on meeting work objectives has caused us to also neglect other aspects such as being exposed to corporate fraud. Fraud experts from Studler Doyle say that all fraud arises from a combination of three elements: pressure, opportunity, and rationalization.

Advancing Equality – Hispanic Representation in Accounting

 

The need for diversity and inclusion in accounting has long been recognized and, while the profession has made great strides toward inclusive practices, certain challenges remain. The underrepresentation of Hispanic people in finance is one area with room for improvement.

As a longtime advocate of diverse hiring and multilingual offices, SDC CPAs follows the research and discussion surrounding the structural and social barriers preventing minorities from pursuing careers in accountancy.

 

Overcoming Obstacles

In an interview with CPA Journal, the chief ethics and diversity officer of the National Association of State Boards of Accountancy (NASBA), Alfonzo Alexander detailed the issues contributing to the underrepresentation of minorities in accounting.

 

The pipeline into the profession for minorities, particularly African Americans and Hispanics, is limited. There are not enough minority people starting the path because African Americans and Hispanics are traditionally not familiar with the profession. Studies show the profession is a generational profession. Most current CPAs have a family member who is or was a CPA, and that is where the original exposure came from.

 

In the minority communities, where few have close family members in the profession, most of the exposure to the profession comes from outside of the family. As an example, though my own academic background is in business with an MBA, I did not understand upon graduation what a CPA was. Many folks make career decisions in life having heard about accountants as bookkeepers, but not about CPAs. This is the situation with many in the inner city, where so many minorities live, which is why becoming a CPA is seldom considered.

Beyond this exposure gap described by Alexander, lie structural obstacles in the CPA track. The CPA track comes with significant expenses including a bachelor’s degree, postgraduate education, CPA education hour requirements, CPA exam prep courses, and the cost of the exam itself. These costs, with limited funding support, act as a major deterrent for minority students to become CPAs.

Most Hispanic students who graduate with an accounting degree opt to go straight into their careers, rather than take on the expenses of the CPA track. Even if these students go on to pursue the CPA designation later in their careers, it is well documented that individuals with significant gaps between their education and their CPA exam are less likely to pass the exam.

The situation described by Alexander, in which minority populations have little to no exposure to CPAs and careers in finance, illustrates the obstacle that overshadows many others. Structural changes to the CPA track may be important measures to expand opportunities to underrepresented populations, but the impact of those changes would be minimal without initial outreach and exposure to the profession.

Community outreach can be an effective way for accounting firms to begin addressing this issue in their communities. This can include presence at high school career days and local chapters of industry advocacy organizations such as ALPFA. Firm leadership can also work toward addressing representation issues by mentoring junior employees and providing incentives for employees who pursue additional certifications. SDC CPA uses these in-house practices alongside diverse, multilingual hiring to create opportunities and bolster employees’ careers.

 

The Necessity of 401(k) Cyber Theft Prevention

 

Approximately 1 in 20 Americans have been affected by identity fraud. According to the Javelin 2020 Identity Fraud Report, approximately 13 million Americans every year face some form of identity fraud, including credit card fraud, account takeovers, and government benefits fraud.

While many individuals and organizations have become accustomed to the risk of identity fraud, the recent rise in 401(k) theft perpetrated by strangers is cause for renewed concern.

How Scammers Target Vulnerable Populations

 

In 2019 the Federal Trade Commission (FTC) reported approximately $2 billion in losses due to scams targeting private individuals, with estimates for 2020 appearing significantly higher. While loss due to scams is widespread and harmful, scams can be especially devastating to the most vulnerable members of society. Scams that specifically target vulnerable populations often go unreported and remain outside the public eye.

Due to limited legal and social protections, immigrants and the poor are often easy targets for unscrupulous scammers. Having seen the gamut of fraud and scams, SDC CPAs (formerly Studler Doyle) aims to bring awareness to some of the scams that prove most harmful to vulnerable populations.

 

Immigration Scams

Predatory scams against immigrants are common occurrences with the potential for particularly destructive consequences. During recent periods of anti-immigrant movements, scammers seized opportunities to exploit immigrants’ fear and need for advocacy. A common scam involves individuals falsely claiming to be lawyers or immigrant advocates while charging exorbitant rates and not providing any services.

In these cases, immigrants may be misled, manipulated, and even blackmailed by these phony representatives. Knowledge of the victim’s immigration status and the threat of deportation can often be weaponized against the victim as a means to deter reporting and further exploit individuals.

In an especially cruel twist, falling victim to these scams can lead to immigrants being deported or having their immigration delayed.

 

Lending Scams

Lending scams tend to target individuals living in poverty by offering a quick fix. These scams typically work by providing immediate cash at interest rates as enormous as 500%. In many cases, these loans force the individual deeper into debt and can create a cycle in which loans to fix an immediate problem consume peoples’ entire paychecks, leaving them in need of more loans.

According to Dana Sweeney, a representative of the Alabama Appleseed Center for Law & Justice, approximately two thirds of the population of the US lives in states where payday lending is legal and, in some places, almost completely unregulated. In states where payday lending is illegal, the practice may continue underground and even further from the public eye.

Even in circumstances in which payday loaning itself is legal, exploitive and dishonest practices – such as misrepresenting interest rates and timelines – present a distinct threat to people in poverty.

While scams targeting vulnerable populations are unconscionable, they are not impermeable. SDC CPA believes that raising awareness and calling attention to these predatory practices is one of the first steps to facilitating change.

 

History of Women in Accounting – Mary T. Washington Wylie

 

As the profession of accounting becomes increasingly diverse and benefits from that variety of perspectives, it is important to recognize the individuals who paved the way for inclusion. Mary T. Washington Wylie is not only known for becoming the first African American female CPA, but for her dedication to training future generations of African American CPAs.

 

Becoming an Accountant

Born in 1906, Mary Washington was raised in Chicago, Illinois by her grandparents. She showed interest in math from a young age and excelled in math at her high school. After high school, Washington worked at the prominent black-owned Binga State Bank. Always ambitious, Washington rose to the position of assistant to the bank’s vice president, Arthur J. Wilson, the country’s second black CPA.

Under Wilson’s mentorship, Washington attended the accounting program at Northwestern University and opened her own small accounting business. After graduating from Northwestern in 1941 and fulfilling a two-year apprenticeship with Wilson, she passed the Illinois CPA exam in 1943 and became the first African American woman to receive the CPA designation.

 

Building a Community

Washington’s firm continued to grow and thrive as small black-owned businesses sought her services. Her firm grew along with these business and helped develop Chicago’s highly successful African American business community.

With her high-profile practice and commitment to supporting the community, Mary T. Washington and Co. became an “accounting underground railroad” where aspiring black accountants from across the country sought employment and apprenticeship as a point-of-entry to the world of accounting. Going into the 1960s, Chicago had the country’s highest concentration of African American CPAs—in large part due to Washington’s work. 

Mary T. Washington died in 2005 but is still remembered and celebrated. In Chicago, September 30 has been officially declared “Mary T. Washington Wylie Day” to honor her contributions to the African American business community. The Illinois CPA Society continues her work of empowering aspiring African American accountants with the “Mary T. Washington Wylie Opportunity Fund.”

Her legacy and efforts also live on in the always-growing number of black-owned and women-owned accounting firms, the latter of which SDC CPAs and its founder Dee Studler are proud to represent.

‘Tis the Season for Employee Theft

In the last two months of the year, sales boom and shoppers flood retail spaces. The holiday shopping season is critical for many businesses. With 20% of annual retail sales occurring during the holidays, a number of factors lead to a disproportionate 25-30% of annual loss occurring during the holidays.

Abundant Opportunity

The increased store traffic and sales create distinct vulnerabilities for businesses trying to match seasonal demand.

The most notable risk factor for employee theft during the holiday season is reduced oversight due to greater customer volume. When staff and supervisors are spread thin, businesses tend to neglect their usual oversight measures. Under these conditions, employee theft practices are more likely to go undetected—among these are “sweetheart deals,” where employees give under-the-table deals to friends and family.

Applications of Forensic Accounting

 

Forensic Accounting is the specialty practice area of accounting that describes engagements that result from actual or anticipated disputes or litigation. “Forensic” means suitable for use in Court, and it is to that standard and potential outcome that forensic accountants generally have to work.

Forensic accountants examine data to determine where missing money has gone and how to recover it. They may also present reports of their financial findings as evidence during hearings, where they often testify as expert witnesses. This work serves an important purpose at public accounting and consulting firms, law firms, law enforcement agencies, and insurance companies.