With the amount of financial info you have to track, a spreadsheet is one of your most potent tools. But the more important (and complicated) a spreadsheet is, the more likely it is to have one of these major flaws. The good news: They’re all fixable. And those fixes can help you work more efficiently in the long run. Here’s what to look out for:

1. Hidden errors. No matter how well — or often — you check, a big complicated spreadsheet is bound to have some errors sneak in over time. And it’ll happen twice as fast if it’s a worksheet that multiple people have access to.  The fix: Periodically use one of the many programs that searches spreadsheets for cells that have missing formulas, broken links, references to empty cells, etc.
2. Too many chefs stirring the pot. There may be good reason for a dozen people to have access to see a spreadsheet — but chances are they don’t all need access to input data. Whenever possible, use Excel’s existing features (such as password-protection) to limit access to “read-only” for key files that need to be shared among many people.
3. Not knowing who did what. Even if access to input data into the worksheet is limited to only two trusted people, there may be times when it’s not clear which version of the spreadsheet is the last one. Make sure you have a system in place to track who made what changes and when. (For larger departments, software is available to handle this. For smaller companies, you may be able to get by with a solid naming/”save as” system.)

Chances are you’ll face more security threats this year. Are you ready?  Whenever the economy slumps, more would-be fraudsters are minted. Part of it is that people are desperate for money and get tempted by the apparent ease with which they can steal.

Others take advantage of everyone else’s fear, and use seemingly legit offers to con people — and companies — out of their money.

There are signs it’s already happening. The SEC has pursued 88% more enforcement actions related to securities fraud this year than it did in 2006. And the FBI recently said it expects its fraud investigations to increase from 38 cases last year to hundreds in the next year or two.

Internal solutions to internal and external threats

No matter how unlikely it seems that Betty in the next cube could be embezzling, or that a fake vendor could get its invoices approved and paid, it’s smart to take preventative steps now.

Your best bet is a two-prong plan to ensure that:

• no one inside the company has the ability to commit fraud, and
• if anyone from outside attempts financial shenanigans, that you’ll be able to catch it right away before any damage is done.

Start by doing an internal review of procedures to find any weak spots and shore them up first. And if you were debating any changes to procedure that might tighten controls, start implementing them. (Upper management isn’t going to grumble about changes or time lost if you can explain how this will help save money long-term.)

Once Accounting has done its part, there’s still one more step: Explaining the changes to other departments. If they aren’t on board, your controls won’t be fully effective.

Granted, you don’t want to give away too much detail — otherwise, you could actually make some types of internal fraud easier. But there are  a few key things you’ll want to communicate to employees:

• Controls have been made even stronger, and their compliance with new procedures is expected
• A way for them to report any suspicious activity they see so it can be investigated, and
• A list of fraud prevention red flags so they know what to look for when dealing with people outside the company.

Are you worried about more fraud attempts this year? What are you doing to shore up your procedures? Share your ideas in the comments.

You think you have your bases covered for the next audit. But chances are your boss doesn’t have the same faith in you. That’s the learning from a recent survey by Deloitte. The company asked executives to rate their organizations based on how ready they are for audits or other “regulatory investigations.” Only 20% said they thought their troops were “very ready.”

Worse news for Accounting pros: 24% of execs said their companies are at a much greater risk for such an investigation than they were just a year ago. Given the economic climate — and people’s feelings about it — it seems certain that some companies are bound to get more scrutiny in the near future. And coming up short of good answers could lead to not only financial or legal action — it could leave your company with the proverbial egg on its  face.

How to get ready

One bright spot from the survey: 60% of company execs agreed that self-reporting results of internal audits could help identify problems while they’re still fixable and/or mitigate the damage from other investigations.

If you don’t already have self-audits scheduled, now’s the time to get the ball rolling. Even if you’re already sure your procedures and books are as tight as a drum, a successful self-audit can give you two other important benefits:

• proving to upper management that you are ready for the “real” audit, and
• finding errors, cash-drains and other ways to potentially save money down the road.

Tell us: Do you think your company’s ready for an audit or investigation? Is upper management’s skepticism warranted? Sound off in the comments.

Think of all the sensitive company info on your computer. It’s all at risk if someone guesses the right 6-8 characters. Which makes it all the more disconcerting that the most popular password in America is: “password,” closely followed by “123456.”

That’s the result of a study by PCMag.com.

If your password is on that list, the time to change it is yesterday.

Of course, part of the reason people rely on such easy to remember passwords is that we need a password for almost everything these days. Many find it too difficult to have truly secure log-ins that are unique and memorable.

Tips for secure passwords

Here’s some tips for making stronger, easy to remember passwords — and keeping them private:

• Don’t write your password down. Seems like a no-brainer, but you’d be shocked how many people keep passwords on a sticky note next to their computer. If you simply must have something in writing, use a reminder, to jog your memory, not the actual password.
• Use a mix of numbers as well as upper and lower case letters. Tip: To remember which letters are uppercase, use a shortened multi-word phrase and capitalize the “start” of each word. Example: “Time for lunch” could become “Tm4Lnch”
• Avoid using a password that appears in the dictionary. Automated programs can crack these passwords as easily as a squirrel cracks an acorn.
• Another option: If you only want to remember one word, use it backward or with a “creative” spelling.
• Assign individual passwords even for shared tasks. If you have three staffers who need access to a financial account, don’t use a “team” password. If someone is tempted to misuse information, you won’t be able to trace it to the guilty party — and knowing it can’t be traced can be very tempting to some people. Instead, have IT create separate log-ins. (Note: That doesn’t mean using a sequence like, Payroll1, Payroll2, Payroll3.)

After all the bickering, Congress finally approved an economic stimulus. So what’s it all mean?

The package that finally passed wasn’t all that different from the original proposal: Some spending was cut, some taxes were lowered, but the main ideas carried through.

Here’s a quick and dirty analysis of the final legislation, focusing on aspects of the law that will affect your company — and those who work for it:

Taxes

• Single filers will get a tax credit of $400, couples get $800, with the credit phasing out for single filers with incomes over $75,000 and couples making more than $150,000.
• State and local sales taxes paid on cars, SUVs and light trucks are exempt from federal taxes.
• Temporary exemption from income taxes for certain unemployment benefits.
• The Alternative Minimum Tax is patched, exempting an estimated 24 million people from having to pay AMT.
• The Earned Income Tax Credit is expanded for families with three or more children, and is restructured to provide relief for the so-called marriage penalty.
• Low income families now qualify for the child tax credit starting once they have income above $3,000.

Workers and unemployment

• Extends through December 2009 a program that gives up to 33 weeks of unemployment benefits.
• Increases weekly unemployment benefits by $25.
• Provides a federal subsidy of 60% to continue workers’ COBRA coverage for up to nine months.
• Provides for $4 billion in job training, as well as another $3.5 billion to provide short-term rental assistance and to buy and fix vacant properties.

In addition, the law calls for increased spending on health care, education, infrastructure, energy and technology that should have long-term benefits for businesses by providing improved efficiency, cleaner energy and better trained workers.

What’s next

Some of the changes to the tax code will take a little time to hammer out the details. For example, the $400 per worker credit will most likely be handled through changing withholding rates. We’ll keep you posted as news comes out.

It’s easier to catch T&E swindlers if you know why — and how — they do what they do. A recent survey by T&E Magazine got the real scoop from people who freely admit to having fudged their travel expenses in one way or another. Some of the findings may surprise you.

For starters, employees appear to be getting more honest. 83% said they were always totally honest on their expense reports. That’s up from just 70% in 2004.

Of those who admit to cheating, the amount they wrongfully claimed is down: 8% said they padded their expenses $100 or more — that figure was 34% in 2004. Another 32% said they padded expenses by $50 to $99.

Most travelers who admitted to cheating (66%) said they did so because being on the road cost them in ways that don’t fit on any expense report category. Another 30% said they routinely have to use personal money for business costs when traveling. Padding is their way of “righting” the books.

And 26% say taking a little extra cash is their way of being compensated for the hassles of being on the road. Only 4% said they cheat because they can. [Note: Respondents could pick more than one reason.]

While no one wants to have cheaters in their office, those “reasons” for padding expenses give you a good opportunity to make sure you don’t see any of it in the future. It indicates that people are less likely to inflate their expenses if they feel the company appreciates the hassles — and out-of-pocket expenses — of being on the road.

It’s a good reminder to periodically review your company’s T&E policies and guidelines. Making sure they’re still fair to your road warriors could end up saving you time and money, as well as improving employee morale.

What do you think: Do most traveling employees pad their expenses to right a perceived wrong? Or is that simply an attempt to justify stealing from the company?

And what’s the most egregious attempt at expense report padding you’ve seen? Share your stories in the comments.

Everyone wants the new administration to do something to end the economic slide. But will the likely courses of action mean more work on your part? It seems likely.

Even before he officially took office, President Obama had outlined several steps he planned to take to stimulate the economy, create jobs and put more cash into people’s pockets.

Some proposed changes will affect businesses directly. But even those that are aimed at the average worker and consumer could significantly affect your work in Accounting. Here are some of the biggest proposed changes — and how they could impact you:

1. Minimum wage increases — by 2011, the federal minimum wage may be increased to $9.50. And some states may further increase their own minimum wages, resulting in more work — and more questions — for Payroll.
2. Expanding the Earned Income Credit — some full-time workers would be eligible for much larger credits. Again, more questions regarding eligibility and claims for Payroll to field.
3. Changing federal withholding rates — The Obama administration wants to reverse most of the Bush-era tax cuts for the highest-income earners, as well as a permanent tax reduction of $500 per person through a change in federal withholding rates and/or a federal payroll holiday. In either case, it’s more calculations you’ll have to make to ensure everyone has the right withholding. And again….more questions from workers when they seen new numbers on their pay-stubs.

Several proposals would also tweak the rules and regulations surrounding popular employee benefits. These changes could have you dealing with more paperwork and having to explain new rules to employees:

• Penalty-free hardship withdrawals from employees’ 401(k) accounts.
• Automatic enrollment in pension plans. If your company doesn’t have a pension plan, it would have to offer an IRA with direct deposit. Employees would be able to opt out of the program.
• Expanded health insurance options. There are several proposals in this area, including a small business health tax credit for providing health insurance benefits, coverage for catastrophic health costs and mandated health care coverage for larger employers.

It’s too soon to say exactly which of these measures will pass — and what their final form will be — as Congress and the President negotiate the various bills pending. But there’s no doubt that some of these changes will be prompting you to make some changes in your department relatively soon.

For more details on the government’s fiscal and tax proposals, click here.

Tax compliance has never been easy — and mistakes are always costly. But it seems the situation is about to get a lot worse. Transaction taxes — sales and use taxes, VAT, etc. — are all expected to see more enforcement and stepped up penalties in the next year or two.

The reason is simple: States need more funds, and lawmakers don’t want to hike the rates of voters who are already feeling pinched.

In fact, the signs are so ominous, 88% of companies said they expect to see more audits in the near future. That’s according to recent research from Sabrix.

What it means for Accounting

With more audits — and auditors who are less likely than ever to cut you some slack — even a small compliance error can snowball into big fines.

Take some time now to review your books and procedures. If there are any errors lurking in your books, you’ll want to find and fix them now — before auditors show up at the door.

Another good idea: Have a refresher meeting (or at least a memo) to remind other key department heads about the importance of getting Accounting the information you need.

Other departments don’t always realize the tax implications of, say, moving a piece of equipment from one facility to another. It’s vital they understand that you’re asking for transaction details not just because “it’s procedure,” but because  it can have serious consequences to your company’s tax compliance.

Even if you’re not overly concerned about the economic downturn, there’s no question the next few months will be rocky ones for businesses. As your company steers a course through the storm, Accounting will play a key role — so you need to know what you’re up against.

Ernst & Young published its list of the top 10 business risks for 2009. Five of them are likely to require your direct involvement. Here’s what you should prepare for:

1. The credit crunch. Less credit can pose a number of challenges to your company: You may see slower-paying customers and may have to stretch payments yourself. You’re not in a position to change that, but keeping the lines of communication open can lessen the impact and keep small payment issues from snowballing into larger ones.
2. Regulation and compliance. The feds, states and cities are all going to be looking for ways to collect every last penny of taxes they are due. And for publicly traded companies especially, there are likely to be many new regulations to follow. Keep a close eye on the industry news to make sure your company is up to date with every rule.
3. Deepening of the recession. No one can say with any certainty how much worse the overall economy might get or when it will turn around. For now, expect even healthy, stable companies to hold off on extra spending. It means you may have to do more with less for the short term. You can make the most of limited resources by reviewing processes and procedures to ensure they are as streamlined as possible.
4. Cost cutting. Accounting pros are in the best possible position to help their companies find ways to save money — who else has such an “up close and personal” view of where each dollar goes? Look for every cost-saving opportunity you can. Every dollar you save right now only proves your value to upper management. There’s no better time to make the case for taking more early-payment discounts or switching payroll over to direct deposit if it will save money.
5. Managing talent. When money’s short and days are stressful, it can take a toll on even the most loyal, hard-working staffers. To make sure your stars don’t jump ship — or just burn out — find low-cost ways to show you appreciate their hard work. Hosting the occasional group lunch, offering a paid day off or other perks shows you notice the effort key staffers put into the job. Sometimes, even a well-timed “attaboy” can make all the difference in a person’s day.

What risks do you expect to loom largest for your company in the next year? And how do you plan to manage them? Share your thoughts in the comments.

Our next president will have to deal with the economic crisis immediately. Here’s what his proposed stimulus plan would mean for your company — if it gets approved by Congress. President-elect Obama’s proposed stimulus package has several benefits in store for companies of all sizes. But each one will likely require a little more effort on Accounting’s part to take advantage of.

Here are the business-related aspects of the proposal as it currently stands:

• More than $100 billion (yes, with a b) in tax cuts for businesses — on top of another $200 billion or so for individual taxpayers.
• A refund provision that would allow companies with recent losses to claim refunds for taxes paid as long as five years ago. (To get the refund, you’d have to refile the old returns and use the past year’s losses to offset prior gains.) Currently, you can only go back two years to claim those refunds.
• New incentives (credits, bonus depreciation, etc.) for qualifying purchases of new equipment.
• Companies that hire new workers could be eligible for a new one-year tax credit.

Most of the proposals are clearly aimed at stimulating spending — and giving companies a quick infusion of cash so they actually can do more spending.

But some of the proposals aimed at individuals could impact your procedures as well. Most notably, the stimulus package would provide a tax cut for workers (estimated to be $500 for individuals and $1,000 for couples).

The most likely way this would be implemented is by adjusting federal income tax rates. So Payroll needs to be prepared to not only make the switch — but to field a lot of questions from concerned and/or confused employees.

When’s it going to happen — if it happens?

Some Congressional Republicans are already raising concerns that the package has too much spending, not enough tax cuts. But the proposals aimed at businesses have been supported by a broad range of business and political interests.

With everyone nervous about where the U.S. economy stands, as well as their place in it, the passage of some stimulus shortly after Obama takes office seems likely.

The only real question is how close it will be to the one he’s outlined. We’ll keep you posted as the story develops.

Do you think the proposed stimulus package will work? What do you think needs to be done to right the economy? Share your two cents in the comments.

Update: You can see a fuller version of the President-elect’s stimulus plan here.