Let’s Hire a Bunch of Auditors

Along with millions of Americans I watched the Congress pass President Obama’s health care reform bill the other night. Obviously my first question is what does it mean for me? The next thing that came to mind is why are we expanding Medicare and Medicaid, two of the most fraudulent government programs ever created? Part of the bill included an increase in Medicare taxes of nine tents of a percent on income over $200,000 for single tax payers and over $250,000 for joint filers to help fund the cost of the program. I think I may have a better suggestion on how to help fund the program. Let’s hire a bunch of auditors!

Senator Tom Coburn (R-Okla) says that “Medicare has at least $80 billion or more in fraud annually.” The U.S. Senate Permanent Committee on Investigations in 2008 reported that “Medicare paid dead physicians 478,500 claims totaling up to $92 million from 2000 to 2007.” How long would it take to compare these claims against the Social Security death index to see if the recipient is still living? There are numerous stories of Medicare paying for walkers for paraplegic patients and patients with sinus problems. Doesn’t anyone look at these claims for reasonableness; apparently not. In fact claims are paid by computer without any human intervention. There are very few controls and almost no checks and balances. One writer suggested that if you want to steal from Medicare learn how to bill for your lies correctly then your claims will be paid in full and on time.

Here is what I think should be done. Hire a consulting firm, preferably an accounting firm, to redesign the Medicare payments system with actual controls. Next, hire a few hundred auditors to audit Medicare reimbursement requests for reasonableness. This should substantially reduce fraudulent Medicare claims and decrease expenditures. In fact the government has said that for every dollar they invest to fight fraud they get $1.55 in return. I think a 55% return on your investment is pretty good. What do you think?

GRC and You and Me

What is GRC? What started it? Who is the best at it and how does it affect me? I will see if I can explain. Wickipedia defines Governance, Risk Management and Compliance (GRC) as “the umbrella term covering an organization’s approach across these areas. GRC typically encompasses activities such as corporate governance, enterprise risk management (ERM) and corporate compliance with applicable laws.”
The three most common areas within GRC are, Financial GRC, IT GRC and Legal GRC.

To some degree, GRC has always been a part of large corporate operation. GRC is not new but the emphasis on it by major corporations is basically a response to the increasing complexity of their operations, globalization, increased mergers, heightened regulatory scrutiny and the relatively recent multitude of corporate frauds and failures, some simply from greed and others from bad business decisions. But what really spurred the interest in GRC was the issuance of the US Sarbanes-Oxley Act (SOX) and the need for public US companies to design and implement suitable governance controls for SOX compliance. Sarbanes-Oxley, however, is no longer the main driving force behind GRC. A recent study commissioned by KPMG International found that companies are embracing GRC to avoid business failures and non-compliance by expanding their GRC departments. You can read the entire article at http://www.kpmginstitutes.com/404-institute/insights/2010/pdf/eiu-survey-convergence-challenge.pdf

Forrester Research, Inc. recently evaluated the top 14 enterprise GRC platform vendors using some 80 criteria. The objective of this research was to determine who the market leaders were in this area. Thomson Reuters – Paisley, BWise, and OpenPages earned the highest scores overall due to their comprehensive capabilities and strong strategies. You can access more information about the Thomson Reuters – Paisley group at http://www.paisley.com/website/pcweb.nsf/pages/ARAE-7N3MQD

So how does this affect you? Well for one thing it has created a job boom in the GRC area with companies rushing to create Governance, Risk and Compliance departments and groups internally to address these issues. These efforts were often not completely successful because GRC initiatives require an integrated approach and an enterprise-wide view of risk and compliance. I think that the opportunities in this area will continue to grow for CPAs to use their experience and knowledge to make a valuable contribution to their employers and improve the company’s compliance and risk management. What do you think?

Non-profit Organizations Beware!

On January 21, the IRS issued notice IR-2010-10 reminding tax exempt organizations that in 2010 their tax-exempt status will be automatically revoked, if the entity has not filed the required form in the last three years. So what is this all about; exactly what must be done and when is the deadline?

The Pension Protection Act of 2006 contains the automatic revocation provision. The Act says that non-profit organizations that do not file a required information form for three consecutive years automatically lose their Federal tax-exempt status. The Act went into effect at the beginning of 2007 therefore the initial three year period is now up. If an organization loses its exemption, it will have to reapply with the IRS to regain its tax exempt status. Also, any income received after the revocation date may be taxable.

Small non-profits with annual receipts of $25,000 or less can file an electronic notice, Form 990-N (e-Postcard). They will only need a few pieces of basic information for the filing. Non-profits with more than $25,000 in annual receipts will need to file Form 990 or Form 990-EZ annually. Private foundations file Form 990-PF. Churches and integrated auxiliaries of churches are not required to file any notices or returns.

Form 990-series returns and e-Postcards, are due by the 15th day of the 5th month after an organization’s tax year ends. Don’t miss this date; the consequences of doing so will be maddening if not downright costly. Additional information is available from the IRS at http://www.irs.gov/newsroom/article/0,,id=218550,00.html

Telecommuting, Has Its Time Come

The ubiquitous use of computers and the Internet has spurred the growth of telecommuting; the activity of working outside the traditional workplace. Telecommuting has become a popular practice both from the employee’s perspective as well as from the employer’s point of view. One of the reasons that telecommuting has recently become so popular is because it is considered a green initiative. Removing cars from our highways reduces pollution levels and that’s a good thing. There are a lot more positives than negatives associated with telecommuting. Here are just as few of each:

Positive

Employee
1. Lack of interruptions.
2. No commuting.
3. Reduced personal expenses.
4. Flexible hours.
5. No child care expenses.
6. Work in your pajamas.

Employer
1. Reduced business interruption costs.
2. Reduced need for office space.
3. No relocation expenses.
4. Increased productivity.
5. Reduced employee tie off for appointments.
6. Attract the best employees.

Negative

Employee
1. Lack of socialization.
2. Coordination of work with others.

Employer
1. Not always physically accessable.
2. Managing people is a problem.

I think that telecommuting is a trend that is here to stay. There are just too many cost cutting, time-savings, and environmental benefits for both employees and employers for its growth not to continue. What do you think?