Business Archives - Page 18 of 45 - Whalen & Company, CPAs

What is your external auditor’s responsibility for cybersecurity?

Jacob Courtright on January 2, 2024

Data breaches can be costly. The average total cost of a data breach has risen to roughly $4.45 million, according to a 2023 survey of information technology (IT) security professionals by the Ponemon Institute (a research center dedicated to privacy, data protection, and information security policy). That figure has grown 15% overall in the last three years. Notably, data breach costs have increased 53% in the health care sector since 2020.

Auditors consider all kinds of risks when they prepare financial statements. Here’s how they specifically tackle the issue of IT security in an audit.

Audit scope

When it comes to evaluating cybersecurity risks, auditing standards require auditors to:

Learn how businesses use IT and the impact of IT on the financial statements,
Understand the extent of the companies’ automated controls as they relate to financial reporting, and
Use their understanding of business IT systems and controls in assessing the risks of material misstatement of financial statements, including IT risks resulting from unauthorized access.

The auditor’s role is limited to the audit of the financial statements and, if applicable, the internal control over financial reporting (ICFR).

Primary focus

An auditor’s primary focus is on controls and systems that are in closest proximity to the application data of interest to the audit. This includes enterprise resource planning (ERP) systems, single-purpose applications (such as fixed asset systems), and any connected systems that house data related to the financial statements.

Companies must continuously update their controls and systems to stay atop the latest hacking techniques. Increasingly, companies are using artificial intelligence (AI) and automation to detect and contain breaches. According to the 2023 Ponemon Institute report, organizations that fully deploy cybersecurity AI and automation on average saw 108-day shorter breach lifecycles than organizations without these technologies in place. In addition, organizations that extensively use cybersecurity AI and automation to identify breaches experienced $1.76 million lower average loss than those without these technologies. In fact, these technologies were the biggest cost-savers identified in the report.

An auditor’s responsibilities don’t encompass an evaluation of cybersecurity risks across a company’s entire IT platform. But, if auditors learn of material breaches while performing audit procedures, they consider the impact on financial reporting (including disclosures) and ICFR.

Fortifying your defenses

Data breaches have become increasingly common and costly. It’s critical for business owners and managers to understand the scope of the external auditor’s responsibilities in this area and develop a cybersecurity program that mitigates the risks.

The standard business mileage rate will be going up slightly in 2024

Jacob Courtright on December 27, 2023

The optional standard mileage rate used to calculate the deductible cost of operating an automobile for business will be going up by 1.5 cents per mile in 2024. The IRS recently announced that the cents-per-mile rate for the business use of a car, van, pickup, or panel truck will be 67 cents (up from 65.5 cents for 2023).

The increased tax deduction partly reflects the price of gasoline, which is about the same as it was a year ago. On December 21, 2023, the national average price of a gallon of regular gas was $3.12, compared with $3.10 a year earlier, according to AAA Gas Prices.

Standard mileage rate vs. tracking expenses

Businesses can generally deduct the actual expenses attributable to business use of vehicles. These include gas, tires, oil, repairs, insurance, licenses, and vehicle registration fees. In addition, you can claim a depreciation allowance for the vehicle. However, in many cases, certain limits apply to depreciation write-offs on vehicles that don’t apply to other types of business assets.

The cents-per-mile rate is helpful if you don’t want to keep track of actual vehicle-related expenses. However, you still must record certain information, such as the mileage for each business trip, the date and the destination.

The standard rate is also used by businesses that reimburse employees for business use of their personal vehicles. These reimbursements can help attract and retain employees who drive their personal vehicles for business purposes. Why? Under current law, employees can’t deduct unreimbursed employee business expenses, such as business mileage, on their own income tax returns.

If you use the cents-per-mile rate, keep in mind that you must comply with various rules. If you don’t comply, reimbursements to employees could be considered taxable wages to them.

Rate calculation

The business cents-per-mile rate is adjusted annually. It’s based on an annual study commissioned by the IRS about the fixed and variable costs of operating a vehicle, such as gas, maintenance, repairs, and depreciation. Occasionally, if there’s a substantial change in average gas prices, the IRS will change the rate midyear.

Not always allowed

There are cases when you can’t use the cents-per-mile rate. In some situations, it depends on how you’ve claimed deductions for the same vehicle in the past. In other situations, it hinges on whether the vehicle is new to your business this year or whether you want to take advantage of certain first-year depreciation tax breaks on it.

As you can see, there are many factors to consider in deciding whether to use the standard mileage rate to deduct business vehicle expenses. We can help if you have questions about tracking and claiming such expenses in 2024 — or claiming 2023 expenses on your 2023 tax return.

Tips for QuickBooks users: 5 mistakes to avoid during bank reconciliation

Jacob Courtright on December 27, 2023

Reconciling bank accounts is critical to ensuring the accuracy of your company’s accounting records. The primary purpose of a bank reconciliation is to confirm that the transactions recorded in your bank statement match those shown in your accounting records.

Generally, bank accounts should be reconciled at least monthly. However, conducting weekly or daily reconciliations for accounts with a high volume of transactions can help uncover accounting errors and fraud quickly. Here’s a list of five common mistakes to avoid when reconciling bank accounts in QuickBooks® software:

Reconciling infrequently. When too much time elapses between reconciliations, it can complicate the process. Stale, undetected errors can create significant weaknesses in your financial records. It may also be harder to investigate discrepancies as memories fade regarding the specifics of unreconciled transactions.
Not reviewing every transaction. It can be tempting to skip smaller transactions to expedite the reconciliation process. Reconciling every transaction, however small, ensures the accuracy and integrity of your accounting records.
Relying exclusively on bank records. While QuickBooks allows users to import bank transactions, assuming every transaction is legitimate and accurate can be a mistake. For example, check payments issued to suppliers should match their invoices. Reconciling payments to source documents and bank records can uncover errors by financial institutions that processed the payments or alterations of the checks by the recipients, for higher amounts.
Routinely creating accounting entries to adjust for differences. Differences may arise despite your best efforts to reconcile transactions in QuickBooks with those shown on your bank statement. The software can create an entry to adjust for the difference. Use caution, as adjusting unreconciled balances can mask errors and fraud.
Not accounting for outstanding checks and deposits. Failure to keep track of checks and deposits that haven’t cleared or been posted to your account can complicate the reconciliation process. To avoid unreconciled items and the need to adjust for differences, gather unpaid and uncleared transactions before beginning a reconciliation and refer to them during the process.

Reconciling bank and credit card accounts can be time-consuming and tedious, especially if an account includes many transactions or your business operates many accounts. However, allowing accounts to be unreconciled can cause errors to multiply, impacting the accuracy of your financial records. Contact us for guidance on how to reconcile your accounts and how QuickBooks can help make the process more efficient.

State of Dentistry: 2023 Challenges, Opportunities & Tips for Aspiring Dentists

Jacob Courtright on December 18, 2023

In our latest podcast episode, we delve into the current state of the dental industry, exploring both the challenges and opportunities that lie ahead. This listicle-style summary captures the key takeaways from the discussion, providing you with valuable insights into the evolving landscape of dentistry. If you’d like to listen to the podcast, it can be found at the bottom of this article.

Let’s dive in!

Challenges:

Hygiene Crisis: A 12% workforce reduction during COVID has created a shortage of dental hygienists, driving up their pay and making it difficult for some dentists to afford them. This in turn leads to fewer patient visits, impacting practice revenue.
Rising Costs: Inflation has caused the cost of supplies, equipment, and other goods and services to skyrocket. This makes it harder for dentists to be profitable and often leads to higher costs for patients.
Staffing Shortages: The hygiene crisis is just one aspect of a broader staffing shortage impacting all areas of dental practice. Finding qualified and reliable employees is proving difficult, and high turnover rates only exacerbate the problem. Short-staffing can lead to burnout and reduced quality of care.
Reimbursement Challenges: Insurance companies often reimburse dentists at low rates, making it hard to cover expenses. Constant changes in regulations add to the administrative burden and make it difficult to plan for the future. Low reimbursement rates also make it difficult to provide affordable care to patients.
Changing Consumer Landscape: Patients are more cost-conscious than ever before and are comparison shopping for dental care. Online reviews and reputation management play a bigger role than ever before, requiring dentists to adapt their marketing and communication strategies to reach new patients. There is also a need for greater transparency in pricing and treatment plans.
Regulatory Burden: Dentists must comply with a complex and ever-changing set of regulations. Administrative tasks take time away from patient care and compliance costs add to the financial strain on dental practices. There is a need for simplification and streamlining of regulations.

Opportunities:

Technology and Innovation: New technologies are emerging that have the potential to improve dental care and efficiency. Examples include digital imaging, 3D printing, and teledentistry. While adoption can be expensive and time-consuming, technology has the potential to overcome staffing shortages and provide better care for patients.
Student Debt Burden: Dental school is expensive, leaving many graduates with significant debt. This can be a barrier to starting a practice or owning a business. However, there is a growing movement to address student debt and make the dental profession more accessible.
Public Perception: Many people have negative perceptions of dentists and dental care. This can be a deterrent to seeking preventive care. Dentists have an opportunity to improve their image and educate the public about the importance of oral health.
Future of the Profession: Despite the challenges, the future of dentistry is bright. Dentists who are able to adapt to change, embrace innovation, and manage their businesses effectively will be the most successful.

Business Tips for Aspiring Dentists:

Start Early: Begin thinking about your business vision early, even during your studies. This helps you make informed decisions about your future practice, including location, software, and lab partners.
Network: Build relationships with other dentists, accountants, attorneys, and other professionals who can provide guidance and support. Attend dental meetings and conferences to stay up-to-date on industry trends.
Understand Business Basics: Familiarize yourself with accounting, depreciation, and compliance regulations. This will help you make sound financial decisions and avoid costly mistakes.
Research Products and Services: Take the time to research different products and services that can benefit your practice. Consult sales reps and other dentists for recommendations.

Bonus Tip: Find a mentor. Having a mentor who can offer advice and support can be invaluable as you navigate the challenges of starting and running a dental practice.

By understanding the current state of dentistry and taking steps to prepare for the future, aspiring dentists can enter the profession with confidence and build successful practices.

What to Do When Patients Don’t Show – Dental Efficiency

Jacob Courtright on December 9, 2023

Nothing is like walking into your dental practice and discovering that the schedule has fallen apart. The cause may be the first warm and sunny day in spring after a long winter or a new round of flu spiking in your area. Whatever the cause, broken appointments are frustrating and unavoidable.

Sometimes, it is possible to patch a productive day together using a short-notice patient list or by gleaning some work out of hygiene, and at other times, all efforts result in no significant change to the dismal prospect of a long day for no gain.

When a day’s production evaporates, and no effort to redeem it works, it is best to use the time to attend to other practice priorities. One tip for maximizing the lost time is to develop a list of neglected tasks. Keeping a to-do list can help you rebound quickly from feeling like you wasted your day. Tasks on this list may be important but not urgent in the day-to-day business operations. The tasks should be able to be accomplished quickly. They should also significantly impact keeping the practice healthy and compliant. Examples include the following:

Updating the medical emergency kit: Make a list of expired drugs and re-order them. Throw out expired drugs. Re-stock disposable items like band-aids and cotton swabs.
Update the patient list: After years of practice, the patient list is likely full of names of people who have moved away or no longer receive services at your office. Most experts agree that the active patient list should include patients seen within the last 18-24 months. Identify the people who fall outside that date range. Print some labels to mail a reminder or utilize your text and email systems to invite them back to the office for a check-up. If you know they will not be returning, use the mechanism in your office software to inactivate them.
Deep clean the patient spaces: Walking into an office with dust on surfaces and grime on the floor is unappealing. Insects get in and die on windowsills, and waiting room chairs scuff walls. Apply some elbow grease to the waiting room and thoroughly clean the surfaces and decorations. Don’t forget to dust off the plants and clean the windows. Cleanliness is an excellent way to show patients that your office is intentional about details.
Perform some training: Dentists have many compliance requirements. An empty day is a great time to indulge in some training updates. Review your radiology update requirements, perform some OSHA or HIPAA training, talk about handling sharps, and what to do if there is a conflict in the waiting room. Discuss ways to improve patient service or spend time resolving staff issues. Take time to verify that you have posted current employee posters. Whatever tasks you complete, document conversations, and have attendees sign that they were trained or informed.
Design a patient appreciation gift: There are always patients who are office ambassadors. Show these patients some appreciation by taking the time to design and purchase thank-you gifts for them. Everyone loves to be recognized, so show your supportive patients that you appreciate their trust in your office.
Plan a staff outing: Patients are not the only people who like appreciation. Your staff is the glue that holds the office together. Thank them for their service by planning a small get-together or planning a day to buy lunch for them. A cohesive office is a treasure, so show the staff you care.
Close early: Never underestimate the value of having a good work-life balance. If patients are willing to come in early, try to move them forward and let the staff have an early night. The gift of time is always appreciated! Staff members will enjoy your flexibility and may complain less when they are kept late on another day.

You can never eliminate broken appointments. Hopefully, the next time they happen in your office, you can use these tools to seize all of the production you can and then find other tasks to accomplish that are important to your practice’s success.

Category: Business

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