Friday, 11 August 2017

New Phishing Scam Worries IRS

What Phishing Scams Should Taxpayers Avoid This Quarter

Participants of the Security Summit such as the Internal Revenue Service along with other state tax agencies and the tax industry have cautioned tax professionals and businesses about a newly discovered scam.

The scam they were talking about is similar to other phishing strategies done by scammers. It involves an email sent to unknowing victims made to impersonate a legitimate tax software provider. The victim is led to enter vital information such as usernames and passwords to important sites.

The timing of this new phishing scam is not as random as it seems. Scammers coincided the release of these emails with the busy tax season as tax professionals are rushing to beat the the September 15 and October 15 tax extension filing deadlines. This season is also when most tax software providers offer most of their system upgrades.

What are Phishing Emails?

Phishing email messages, websites, and phone calls are designed to steal money. Cybercriminals can do this by installing malicious software on your computer or stealing personal information off of your computer.

-Microsoft Safety And Security Center

As explained on Microsoft’s website, phishing emails are meant to steal someone’s personal information for the purpose of taking money. However, during recent years, the uses of phishing emails have spread to stealing company secrets, blackmailing, or even corporate sabotage.

Phishing emails are no new threat to the corporate world. Scammers had used them as far back as 1995 when American Online (AOL) was still then the largest internet provider. Phishers, people who conduct phishing schemes, then used the email services of AOL to steal user passwords and then used a random credit card number generator to find the account that matches with that password.

The successful matches they made back then were relatively few; however, they were significant enough to cause a lot of people to lose significant amounts of money. Fast forward a few years later, phishers are now targeting not only individuals but even banks and financial institutions.

How Do These Phishing Email Work?

Some common words and phrases that can be seen in these phishing emails include “Software Support Update,” “Important Software System Upgrade,” or the likes. The message of the email would often copy the template of legitimate emails that come from actual software providers.

The email would then proceed to inform or warn the recipient, usually, a tax preparer, that they need revalidate or update their login credentials due to recent changes in the tax software that they are using.

The recipient will then be told by the phishing email to click a button which will redirect them to a website that looks almost exactly the same as the actual website of the real software provider. They will then have to insert their login credentials either to “Update the Account” or “Download Software Updates.”

However, instead of an update, two other things may happen to the unfortunate victim. The website could either take the person’s login credentials for the scammers to access their actual accounts to steal information or the site could install a virus on the victim’s computer which would grant full access to the scammers on the victim’s important files.

Similar types of phishing scams were reported just this June. However, instead of posing as an update for tax software updates, the emails pretended to offer free tax software seminars or education. The scam, on the other hand, primarily aimed to steal identities instead of money.

This would enable the phisher to file fraudulent tax returns under the name of the victim. What gave away this previous scam was that it asked for too much sensitive information from the target.

What To Do According To The Internal Revenue Service

The Internal Revenue Service reminded tax professionals that legitimate businesses and organizations would never ask for sensitive information like usernames, passwords or sensitive data through email. Also, they warned tax professionals to avoid sending such sensitive information to unknown people or through email.

The Internal Revenue Service has a particular email for phishing concerns. If ever you receive or fall victim to any questionable emails that you feel like is a scam, do not hesitate to email them through phishing@irs.gov.

The post New Phishing Scam Worries IRS appeared first on Aldaris CPA Group.

Sunday, 6 August 2017

Two Types of Bookkeeping Methods

The Double and Single Entry Method

Bookkeeping is one of the most important processes in the accounting cycle. In layman’s term, it is the process in which the transactions, both income and expenses, of a business is recorded in the books of the company.

It would be impossible to do any accounting if one were to skip this step. This is because, through bookkeeping, the company is able to gather the critical information needed to paint a picture of how the company is doing.

The history of bookkeeping has been traced as far back as 2600 BC when Babylonians used clay slabs and styluses to record their daily biddings. However, some speculate that it had existed even before 8000 BC when the kings of Jericho used informal records of their properties. (1)

Only two types of bookkeeping are mostly used around the world. One is the single entry system, and the other is the double entry system. Let us discuss the differences between, the advantages and the disadvantages of them both.

The Double Entry System

What is the Double Entry System?

 

The double entry system uses the simple accounting equation “Assets=Liabilities+Capital.” One of the main principles behind the double entry system is the “two-fold effect.” The two-fold effect states that for every value received (debit), there must be a value given up (credit). (2)

It is necessary that an accountant has the skill necessary to determine which elements are affected by a business transaction, and the effect or effects of the transaction on said elements.

History of The Double Entry System

The double entry system was first mentioned by Benedetto Cotrugli in his book “Of Trading and the Perfect Trader.” Cotrugli’s book was able to elaborate some of the fundamental principles that are used in modern day bookkeeping.

In 1494, Luca Pacioli, famously known as “the Father of Modern Day Accounting,” expounded Cotrugli’s work to create the basic blueprint of the bookkeeping system used today. (3)

Advantages and Disadvantages of the Double Entry Method

The double entry method, though preferred, is not a perfect system. There are instances that the single entry is preferred more than it. Listed below are some of the advantages and disadvantages of the double entry method:

Advantages

  1. It allows the company to create and understand financial statements more efficiently.
  2. The business is able to keep a record of every transaction that happens and the effect of it on every element.
  3. It uses the trial balance which makes the accuracy of the books easier to monitor.
  4. It makes the comparison of one period to another easier.
  5. The matching principle allows a company to determine the correct profit and loss of the company with higher detail.

Disadvantages

  1. It is harder to understand for beginners.
  2. The cost to maintain is higher for a double entry system than a single one.
  3. More time is spent to record each transaction.

The Single Entry System

What is the Single Entry System?

The single entry system is the most basic type of accounting. Unlike the double entry system, the single entry method does not need a trained professional for it to be done. With it, the bookkeeper only needs to record transactions in a one sided manner.

This means only the effect on a single element is recorded for every transaction. For example, only the effects on the cash account are recorded for all the transactions conducted by the business. It is way easier than the double entry. However, it carries many more disadvantages than the latter. (4)

History of the Single Entry System

The single entry system dates back as far as accounting itself. Scientists have traced its origins way back in the ancient civilizations. Because of this, not much is known about the origin of it. However, it was the oldest method of accounting used by traders as early as 2000 BC. (5)

Advantages and Disadvantages of the Double Entry Method

As the “prototype” of the modern day accounting, the single entry lacks many features that can be offered by its modern counterpart. Nevertheless, it still has some advantages which make it a better choice for some smaller businesses. (6)

Advantages

  1. Easier to understand and apply for those without a background in accountancy.
  2. No skilled or trained professional is needed to be hired making it cheaper to implement for businesses.

Disadvantages

  1. The single entry method is Hence errors are easier to neglect.
  2. It does not reflect the true profit and loss of the business.
  3. Fraud can be done with ease as there are no counterbalancing accounts to compare to.

To wrap things up, the choice between the single entry system and the double entry system lies with the owner of the business. No matter which method you use, remember to consult a professional to avoid making any errors that may adversely affect your business.

The post Two Types of Bookkeeping Methods appeared first on Aldaris CPA Group.

Tuesday, 1 August 2017

Most Common Accounting Services Available

What are the Types of Accounting Services?

Accounting has been described as the bloodline of any business. Whether you’re monitoring inventory, recording sales, or checking for inconsistencies, you are already applying basic accounting principles. But of course, professional accountants have been trained to perform the same routines but in a more organized, accurate, and effective way.

That is why when some business owners look at accounting as simple recording and computing, they get surprised by how complex it is watching a professional do it. Accounting’s flexibility allows it to be one of the most adaptable services. It can be applied anywhere between our personal lives up until government finance.

Here are some of the most common types of accounting services available in the market.

Major Types of Accounting Services

Public Accounting

Accountants who are not exclusively tied to a single company are the ones that perform Public accounting. Some of the processes involved in public accounting are preparation, review, and audit of financial statements, tax preparation, and consultation or advisory services.

This type of service is often performed by Certified Public Accountants (CPA). CPAs often undergo rigorous training before they take examinations required to get them accredited. (1)

Management Accounting

Management accounting is a process wherein accounting professionals analyze past and present accounting data to synthesize an effective and efficient business model for their client. Some of the processes under management accounting include budgeting, asset management, cost management, and performance evaluation.

Management accounting is also known as advisory services. Its primary function is to improve the client’s use of its capabilities and resources to achieve the objectives of the organization. In short, it aims to help internal users analyze management problems or opportunities. (2)

Governmental Accounting

The largest finance body in any country is the government itself. That is why it should be no surprise that particular types of accounting services are formulated to cater to its needs. Accounting bodies created government accounting to tackle specific issues present in the government that is not in businesses.

The main objective of this service is to help government sectors properly budget and allocate their resources, making sure that each decision is in consonance to both local and national law. Hence, this type of service is one of the most flexible due to varying laws per locality.

Internal Auditing

Large companies often have issues assuring the accuracy and reliability of their financial statements. It is because, as much as we want it to be otherwise, there is always the possibility of mistakes, or worse fraud occurring in the preparation of financial statements.

Internal auditing aims to detect possible departures from set accounting standards. Managers of often employ this service at the end of financial cycles. This type of service does not involve the preparation of services since the responsibility of auditors is limited to giving opinions regarding the reliability and accuracy of financial statements. (3)

Other Types of Accounting Services

Bookkeeping

Accountants consider bookkeeping as one of the most basic accounting services. It is often the first step in the preparation of financial statement since it involves the recording of business transactions of the entity.

Many small and medium enterprises make use of this service since it is significantly cheaper and simpler in comparison to other services. You can check out Aldaris’ bookkeeping services here.

Tax Accounting

Tax accounting is a service focused primarily on the business’s tax liabilities or claims. It is another accounting service that is heavily affected by local and national codes.

A country’s Internal Revenue Code determines how an accountant applies tax accounting to a company. Tax accountants aim to minimize a business’s tax liability without violating any laws or accounting standards. (4)

Forensic Accounting

Forensic accounting can be compared to auditing; however, its main focus is to detect malicious fraud. Forensic accountants are required to have an in depth knowledge of laws that could help them determine violations by concerned parties. Law enforcement agents often use this service when investigating financial related crimes.

External Auditing

External auditing follows the same processes of internal auditing. The difference lies with who uses the audit opinion created. Whereas internal audit opinions are used by internal users such as managers or board of directors, external audit opinions are used by external users such as investors. (3)

The financial sector is becoming more complex and fluid. Hence, it is only right that new and more specific services are created. This results in the Accounting field getting wider and wider as time passes by. This is to cater to the changing needs of businesses.

With this said, every manager or business owner must have at least a minimal knowledge of the differences of these services. So that they could choose which accounting service best fits their needs.

The post Most Common Accounting Services Available appeared first on Aldaris CPA Group.