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At Perry & Associates CPAs, our culture of growth mindset inspires a forward-thinking, ever investing and ever-innovating approach to accounting, which includes staying on top of the latest accounting technology to ensure accurate reporting and compliance with security rules and regulations. Accounting Information Systems (AIS)  are a crucial component of any organization’s financial management. These […]

At Perry & Associates CPAs, our culture of growth mindset inspires a forward-thinking, ever investing and ever-innovating approach to accounting, which includes staying on top of the latest accounting technology to ensure accurate reporting and compliance with security rules and regulations.

Accounting Information Systems (AIS)  are a crucial component of any organization’s financial management. These systems involve the collection, storage, processing and dissemination of critical financial information. For most organizations, Accounting Information Systems (AIS) consists of six primary components: people, procedures and instructions, data, software, information technology infrastructure and internal controls. In this blog, we’ll dive into these key factors of AIS and explain how they work together to keep confidential data safe and secure.

1. People

An AIS helps the different departments within a company work together, and a variety of professionals may need to use an organization’s AIS, including accountants, consultants, business analysts, managers, chief financial officers and auditors. A well-designed AIS should allow everyone within an organization to access the same system and retrieve the same information. An AIS also simplifies the process of reporting information to people outside of the organization. Ideally, an AIS is easy to use and helps the people who use it improve efficiency.

2. Procedures and Controls

Procedures and controls encompass the policies and processes that govern AIS operations and include both manual and automated methods used to collect, store, retrieve, process and report data. While AIS procedures and instructions are coded into the AIS software, it’s important that they are also “coded” into employees through effective documentation and training. These internal controls are essential to the accuracy, reliability and security of financial data.

3. Data

AIS software uses a database structure to store information, and this includes financial transactions, journal entries, ledger entries and more. The data contained in an AIS is all of the financial information pertinent to the organization’s business practices, and any business data that impacts the company’s finances should go into an AIS. This data is then used to prepare accounting statements and financial reports.

4. Software

AIS software relates to the computer programs used to store, retrieve, process, and analyze an organization’s financial data. Businesses can choose from a variety of different software packages, including the popular Intuit Quickbooks software (which we provide training for) which works well for small to medium sized businesses, and packages such as Oracle’s PeopleSoft and Epicor Financial Management for larger organizations. At Perry & Associates CPAs, our experts set up and integrate AIS software into your organization and provide ongoing support that allows this technology to automate and simplify operations.

5. IT Infrastructure

This component includes the hardware and network infrastructure that supports the AIS, such as servers, computers, databases, printers, surge protectors, routers, storage media, back-up power supply and more. It’s important for the hardware selected for an AIS to be compatible with the intended software, and also that a plan is put in place for maintaining, servicing, replacing and upgrading components of the hardware system.

6. Internal Controls and Security Measures

Internal controls are a crucial component of AIS, as they provide security measures to protect sensitive data and also ensure accuracy and reliability. This includes user authentication, access controls, encryption and other security measures to protect sensitive financial data. AIS internal controls should limit access to authorized users and to protect against unauthorized access, and also protect from computer viruses, hackers, internal and external threats to network security, and even something like natural disasters that could cause data loss.

How Can AIS Protect Your Business?

Now that you have a better understanding of AIS, it’s time to make sure you have the best software and technology at your business to stay supported and secure! At Perry & Associates CPAs, we provide the following AIS services:

  • Information Systems Auditing
  • Internal Reporting Process Optimization
  • Business Data Analysis & Analytics Consulting
  • Systems, Financial & Data Risk Evaluation
  • Process Mapping & Documentation
  • System & Organizational Control (SOC) Reporting & Auditing

We are committed to partnering with you and using advanced technology to ease the burden and protect your organization. Contact us today to learn more about our AIS services and improve operations, security and safety!

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Audits are a great way to receive constructive solutions that improve processes and identify risks at your organization. However, to ensure your next audit goes as smoothly as possible and leaves everyone involved feeling satisfied and confident in the next steps that need to be taken, there are best practices that can ensure you are […]

Best Practices for an Effective Financial Audit

Audits are a great way to receive constructive solutions that improve processes and identify risks at your organization. However, to ensure your next audit goes as smoothly as possible and leaves everyone involved feeling satisfied and confident in the next steps that need to be taken, there are best practices that can ensure you are prepared.

Take a look at our top tips to ensure a successful audit that will make it easier to achieve your audit goals and objectives.

Reconcile Accounts and Prepare a Trial Balance

The audit process begins before the initial in-person meeting. A good first step is closing and reconciling all accounts, as this prevents balance sheet errors and allows auditors to check for possible fraud. Preparing a trial balance before the audit is also recommended, as this ensures that entries in a company’s bookkeeping system are mathematically correct and there are no errors. Once that is confirmed, more complex audit procedures and analysis can begin. If your organization has been through the auditing process before, it could also be helpful to disclose past audit findings to your new auditor so they have more insight into issues affecting your organization.

Create a Schedule and Stick to a Realistic Timetable

If you have found that audits for your organization have a trend of becoming a lengthier project than anticipated, then it’s time to develop a realistic audit timetable. The timetable should allocate time towards the planning phase, risk assessment, audit procedures, evaluating financial records and statements, and reporting. However, this could vary depending on the objectives of your organization. Setting up a shared calendar that includes both auditor and your team is a convenient way to ensure more accountability from your team, and is also more secure than exchanging confidential information through back and forth emails.

Don’t Be Afraid of Innovative Technology

Advanced technology is being used to transform many areas of the finance and accounting industries, and that applies to audits as well. Certain technologies help the auditing process become more streamlined, efficient and cost-effective. Analytics, in particular, help auditors better understand processes and data flow, create better audit recommendations and enhance an audit’s value proposition to your organization. So if you haven’t used technology to transform your audit process, the time is now! Asking your auditor if they use certain software or technologies throughout the process could be an indicator of capability and if they are a good fit for your organization. We recommend this article from RSM to learn how automation, analytics, AI and other innovative technology can improve the audit experience.

With these best practices, an effective, positive auditing experience is on the horizon! Remember that our team has experience with numerous non-profit and government agencies, so if your organization falls into either of those categories, we have the skills required to ensure you meet all audit rules and regulations. We also have experience conducting many types of audits, so whatever type of audit is needed, we can perform at the highest level.

Contact Us Today – Let’s work together to make sure your next audit runs as smoothly as possible!

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As a team of investigators who have received extensive training at the best organizations in the world, we have encountered a variety of different types of fraud at many different types of organizations. Regardless of the type of fraud, however, one thing remains the same – it causes government agencies, non-profits, financial entities and businesses […]

Perry Forensic Services
As a team of investigators who have received extensive training at the best organizations in the world, we have encountered a variety of different types of fraud at many different types of organizations. Regardless of the type of fraud, however, one thing remains the same – it causes government agencies, non-profits, financial entities and businesses to experience major financial setbacks and embarrassment.

Check out the following statistics according to studies conducted by the Certified Fraud Examiners (ACFE):

  • The median loss due to business fraud was $125,000
  • More than 10% of fraud occurs within non-profit agencies, and 18.7% of fraud happens to governmental agencies.
  • 66% of frauds were committed by individuals from one of six departments (accounting, operations, sales, management, purchasing, and customer service).

The Perry Forensic team is on a mission to prevent you from becoming another alarming statistic, which is why we have provided our best tips on preventing financial fraud at your organization.

Don’t Leave 100% of the Accounting Duties to One Person

Regardless of organization type, it is highly recommended that multiple people share accounting duties because this encourages employees to hold each other responsible for any suspicious activity. Implementing a system of checks and balances and separation of duties limits the opportunity for fraud. Outsourcing some of your accounting needs to a firm such as Perry & Associates CPAs is a great way to ensure a highly respected team of financial experts keeps your sensitive financial information safe and secure.

Conduct Regular Audits

Consistent audits are an effective way to identify risks, detect irregularities and ensure employees are following established internal controls that protect your organization from threats. It allows you to review your company’s policies and procedures and determine if changes should be made to safeguard your company. With all organizations, it has been proven that audits can be most effective if they are not routine, but unplanned, as it prevents anyone in the middle of fraud or a scam from covering their tracks.

Establish a Culture of Ethics and Integrity

While this may seem obvious, sometimes everyone needs to be reminded about fair employment practices and organizations need to stress the importance of integrity, honesty and transparency in all financial dealings. Encourage team members to speak up if they suspect any financial wrongdoing or have concerns about current financial practices. Better yet, establish a fraud policy and code of conduct that makes all protocols, procedures and potential consequences very clear.

Establish Updated Cybersecurity Measures

In our current digital age, every type of organization needs to implement new security measures such as two-factor authentication, encryption, ID management and more. This goes a long way in protecting sensitive information and reducing data breaches.

And remember, if you notice the following taking place at your business:

  • Unusual cash transactions
  • Mismatched payees
  • Strange, out of character emails
  • Questionable activity from those who have access to assets
  • Suspicious looking documents
  • High travel reimbursement costs
  • Mishandling of donations or grant funds
  • Missing inventory

It’s time to call Perry Forensic and identify the source of error or wrongdoing. With forensic services that range from litigation support, whistleblower allegations, embezzlement, money laundering, hidden assets, ponzi schemes and more, we can immediately, discreetly and comprehensively find ways to protect your organization and give you the upper hand.

You worked hard to make your organization a success – make sure it is protected with Perry Forensic!

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The number of businesses for sale rose 4.7% in 2022 from 2021, according to BizBuySell’s Insight Report. This is still about 7% lower than pre-pandemic levels in 2019. However the median sale price dropped by about 3% in 2022, so what can you do to maximize your value, if you’re looking to sell? Increase Profitability […]

How to Maximize the Sale Value of Your Small Business
The number of businesses for sale rose 4.7% in 2022 from 2021, according to BizBuySell’s Insight Report. This is still about 7% lower than pre-pandemic levels in 2019. However the median sale price dropped by about 3% in 2022, so what can you do to maximize your value, if you’re looking to sell?

Increase Profitability

It’s time to look at those margins—Forbes urges business owners looking to sell to take an honest look at their company and see where they can reduce costs, without damaging the business before a sale.

This can be done in a variety of ways, including looking at business insurance and other contracts, to see where you might be able to reduce costs. Forbes also recommends looking at staffing levels. Could you make cuts? And, finally, work on only buying the inventory you need.

Know Your Assets

Some assets are obvious, while others you might forget to consider. Forbes recommends taking account of any physical assets you have—such as buildings, vehicles, office furniture and servers. You might be surprised at what has value! Your brand, procedures, along with any future revenue streams are all important assets.

Re-Examine Your Prices

Are your current prices reflective of your costs? If not, it might be time to raise your prices! ESOP Partners says you need to be careful about this one—you don’t want customers to leave! But even a small increase could help your margins significantly.

Have A+ Employees

What better way to look like a hot commodity than having great established employees. ESOP Partners says it’s important to keep a strong team on board; you can do that by offering opportunities for growth.

Money isn’t everything

When you’re looking at a business’ sale price, you’re talking about money. But the business value can mean so much more. The Business Transition Academy discusses in its book Cashing Out of Your Business the importance of having a quality and well-run business. Does the business need you to be successful? Are customers coming back year after year? Are you respected in your industry? It is crucial for a prospective buyer to easily see the value a business offers.

You may only get one chance to make an impression on a potential buyer; it’s important to maximize what your business can offer!

We are invested in your success. Contact us today and start maximizing the value of your business!

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For business owners, being aware of new business tax laws, legislation and obligations is crucial to planning for the year ahead and minimizing tax liabilities. Before meeting with your tax professional, read our guide that outlines key tax changes in 2023 that could impact your business. SECURE Act Updates That Affect Pension Plan Startup Costs […]

2023 Tax Updates All Business Need to Know

For business owners, being aware of new business tax laws, legislation and obligations is crucial to planning for the year ahead and minimizing tax liabilities.

Before meeting with your tax professional, read our guide that outlines key tax changes in 2023 that could impact your business.

SECURE Act Updates That Affect Pension Plan Startup Costs

The SECURE Act has nearly one hundred provisions that discuss retirement savings plans. One change is the increase in Section 45E credit for all or a portion of employer contributions to small employer pensions for the first five employer tax years, starting in 2023. The credit for employer contributions is capped at $1,000 per employee, and the new updates allow for credit to be available to employers with fifty or fewer employees and is phased out completely for employers with more than a hundred employees. Additionally, the existing tax credit for qualified plan start-up costs for employers with no more than fifty employees is increased from 50% to 100% of such costs, starting with the 2023 tax year. Learn more about new changes made under the SECURE 2.0 Act of 2022.

Certain Businesses May Receive Higher Federal Tax Bills

The 2022 Inflation Reduction Act (IRA) and removal of temporary provisions in the 2017 Tax Cuts and Jobs Act will mean that in 2023, the federal government is placing more financial responsibility on businesses. However, Section 179D significantly increases the energy-efficient commercial building deduction, making it especially useful for the architecture, engineering, and construction (AEC) industries as well as commercial building owners. Also, some states have provided state-level tax cuts to provide relief to this change. Find out if your state is one of them.

New 1099-K Form Rules Postponed for One Year

According to the American Rescue Plan Act of 2021 (ARPA), beginning in tax year 2022, small business owners and freelancers who received more than $600 from third-party digital platforms were scheduled to receive Form 1099-K and report that income. Platforms such as Amazon, Etsy and eBay were also obligated to report this income to the IRS. While a postponement was declared after much pushback from businesses, businesses that fall under the requirements will receive a Form 1099-K in 2024 for the 2023 tax year. See what the IRS has to say about these new income reporting rules.

Be Aware of the SALT Cap

The state and local SALT tax cap states that since 2020, filers can deduct only up to $10,000 in state and local property and income taxes. Business owners who operate a pass-through entity in a high-tax state may find their deductions limited by SALT rules. However, recently a group of House representatives relaunched the SALT causus for last week, calling for relief from the $10,00 limit on the federal deduction for state and local taxes. Learn more about the SALT Cap.

Additional 2023 Inflation Adjusted Items

Take note of these additional inflation-adjusted updates that could have implications on your business 2023 taxes.

These are just some of the tax updates taking place in 2023. If this seems overwhelming, then we have good news – we are here to help! Contact us today if you would like direct assistance in preparing for the tax year ahead and our experienced experts will provide you with personalized tax strategy that helps your business find opportunities that enable growth.

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SOC reports are a type of audit that bolsters a company’s reputation in the eyes of clients and customers. There are many kinds of audits, both internal and external. The acronym SOC stands for “System and Organization Controls.” Therefore a SOC report checks a business’s systems and controls for effectiveness and security. The report will […]

business professionals doing a soc report

SOC reports are a type of audit that bolsters a company’s reputation in the eyes of clients and customers. There are many kinds of audits, both internal and external. The acronym SOC stands for “System and Organization Controls.” Therefore a SOC report checks a business’s systems and controls for effectiveness and security. The report will then outline any risks to potential customers and the business itself. 
 
Is your business able to identify threats or oversights related to financial reporting, sensitive medical data, or intellectual property? Is your business able to respond to failures of said controls? These are the questions a SOC report seeks to answer. 
 
SOC reports are beneficial for any business that provides a service to another company. If your company handles another entity’s information systems, a SOC report will be relevant to you. However, there are some industries where a SOC report is mandated by governing bodies. Payroll or medical claims processors, data center companies, loan servicers, and Software as a Service (SaaS) providers that may touch, store, process or impact financials or sensitive data of their user entities are examples of businesses that require a SOC report.
 
A SOC audit can only be performed by an independent CPA (Certified Public Accountant) or accountancy organization. After the audit, the CPA will provide a detailed report outlining: 

  • Audit results 
  • Areas for improvement
  • Whether or not the CPA can sign off on whether controls have been satisfactorily met

 

Types of SOC Reports

 
SOC reports fall into one of four categories: SOC 1, SOC 2, SOC 3, or SOC for Cybersecurity. A qualified CPA consultant can help you determine which type you need.

SOC 1

This category of report focuses on outsourced financial reporting services. It will tell a business owner about the effectiveness of their controls related to the client’s financial data. For example, a payroll company that processes bi-weekly pay stubs (QuickBooks, Gusto, etc.) will need a SOC 1 audit. Debt collectors, accounting firms, and some data centers fall under the purview of the SOC 1 as well. 

SOC 2

The SOC report applies to non-financial outsourced systems. This is the main way it differs from the SOC 1 report, which deals specifically with financial controls. An SOC 2 report will address the security, availability, processing integrity, confidentiality, and privacy of all company systems. Relevant company sectors often include Enterprise IT Outsourcing Services, Managed Security, Customer Support, Healthcare Claims Management & Processing, and FinTech Services.

SOC 3

Previously known as a SysTrust or WebTrust, the SOC 3 report is a less comprehensive SOC 2 report. An SOC 3 report will not contain descriptions of any controls or results of testing. This makes it great for marketing purposes while not as strong for addressing fundamental failures in controls. 

SOC for Cybersecurity 

As the name implies, a SOC for Cybersecurity report focuses on an organization’s enterprise-wide cybersecurity risk management program. This kind of report is becoming more popular as more services move online and the incidence of hacking rises. 

Type 1 & Type 2

SOC reports can fall into two different types. This is most common with SOC 1 and SOC 2 audits. For example, a SOC 1 audit can either be done as Type 1 or Type 2.
Type 1 audits are performed on a specified date. They only test the design of a service organization’s controls, not the operating effectiveness. Some companies use Type 1 reports as stopgaps until they can complete a full Type 2 report. 
Type 2 audits can last multiple months as an auditor observes and tests company controls. This is the most comprehensive type of report. At the end of the audit, your company will receive:

  • An opinion letter
  • Management assertion
  • A detailed description of the system or service
  • Details of the selected trust services categories
  • Tests of controls and the results of testing
  • Optional additional information.

 

Benefits of a SOC Report

A SOC report is beneficial to any company that handles outsourced services and data. In a general sense, it shows clients that you’re proactive about protecting their assets. Potential clients are more likely to work with you when they see your commitment to strong controls and operations. 
 
Here are five reasons why you should consider a SOC report.

  1. Add legitimacy to your company by demonstrating a sound operational foundation 
  2. Remain compliant with industry SOC requirements (for many companies dealing in financial and medical reporting) 
  3. Catch security breaches before they happen and avoid damaging reputation hits 
  4. Discover operational inefficiencies and boost profit margins 
  5. Display the AICPA logo on your website and marketing materials showing you’ve received an SOC report

 
Perry & Associates is here to guide you through the SOC reporting process. We will consult with you on the best kind of report for your business. Then our professional accountants will conduct the audit thoroughly and efficiently. For more information about your SOC report options, call Perry & Associates at 740.373.0056.