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Tom may well be our biggest fan. He has been at Clark Nuber since graduating and has built an incredible career for himself.

Trust is foundational to any relationship, both personally and professionally.  Trust is also something that needs to be nurtured over time, with the main ingredients being integrity, honesty and demonstration of respect.   Lack of trust in the workplace can lead to a culture of backstabbing and paranoid suspicion, and perhaps even to the demise of a business.

But at the same time, trust has a dark side as well.  Too much trust can leave the door wide open for occupational fraud.

Picture the following:  An Accounting Manager (AM) for Firm X has been with the business for decades and is beloved by staff and management alike.  She is like family and has gained absolute trust from the CEO all the way down to her staff.  In theory, there are some internal controls, but since the AM has been with the company for so long, no one ever checks to see if the controls are holding up or even being followed.  This inherent trust is a badge of honor for the AM – it also leaves the door wide open for her to take advantage of the situation.  In fact, over the last 20 years, the AM embezzled a tidy sum of $1.2 million.

How could this fraud go on for so long without being uncovered?  The answer: blind trust.  Nobody at Firm X could ever conceive that the AM would do anything like this, yet it happens.  This scenario happens all too frequently in occupational fraud cases.

So what can be done?  We need to go back to the old adage “trust but verify.”  It is perfectly reasonable to have allowed the AM the freedom to do her job with minimal oversight.  But there needed to be vigilance on the part of management to periodically verify that processes are occurring the way they should be.

Personally, when I feel trusted in the workplace I get the amazing sense that my work is valued and I am empowered to do the best job I possibly can.  It’s a great and exhilarating feeling.  However, I expect management to review my work, verify that I am following procedures correctly, and question me from time to time.  Ironically, this verification also empowers me because I know that our leadership cares about the quality and integrity of our work.

To find out more on how you can implement fraud controls for your workplace, please contact Mike Nurse or Pete Miller.


Mike Nurse is a manager in the Accounting and Consulting Group at Clark Nuber PS.

© Clark Nuber PS and Focus on Fraud, 2017. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Clark Nuber PS and Focus on Fraud with appropriate and specific direction to the original content.

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Financial Education for Your Children: Allowances Are Just the Beginning

Chores are your child's first job If your child understands the difference between a nickel and a dime, then they can start learning the value of currency. Distributing a weekly allowance for chores completed is a good way to reinforce this learning. You could start with a weekly allowance of a dollar for every year of age, but no matter the amount, they’ll have a chance to earn money and decide what to do with it. The key piece is that age-appropriate chores must be completed before the child receives the weekly allowance. If they beg for an advance without finishing their chores, consider the message you could be sending if you agree. By providing “a loan” on an allowance, parents could unintentionally be reinforcing a harmful pattern of overspending and debt. Try this productive alternative instead: if your child is hoping for additional funds for a certain week or is saving for a particular item, then additional chores or tasks could be completed in order to increase the allowance. In short, they could work “overtime.” Don’t spend it all in one place Whether your child is earning an allowance from you or receiving monetary gifts from grandma, it’s important to instill a desire to save a portion of their money for a rainy day. And whether it’s a set percentage of the income or a customized amount spurred by a conversation between you and your child, it’s imperative you emphasize the difference between spending, saving, and sharing – and the importance of each. For younger children, you could divide their income into tangible envelopes or jars so they are able to watch each stash grow. Alternatively, there are apps and websites for older children to track their cash. Either way will inspire them to carefully consider how to use money. Interested in interest? To help drive home the importance of saving, you could introduce the topic of compounding interest and spark an awareness of the relationship between money and time. Use a calculator or create a spreadsheet to show just how quickly the saved funds can multiply. It can be used as a way to track the funds as time passes and help encourage that savings stay out of the spending bucket. Bargain shopping If your child is constantly begging for new and trendy clothes or toys, you may want to consider emphasizing that you are willing to pay for the economy version and he or she could pay the difference for an enhanced model. You may be pleasantly surprised when he or she suddenly decides to forgo the expensive item and then comparison shop to find a version cheaper than the one you offered in order to pocket the difference! The family that invests together… If you’re looking for summer activities to keep the kids busy, you could work with them on taking their savings experience a step further. The next time they express an interest in a consumer product, encourage them to do some additional research to determine if they would invest in the company that produces said product. By working with them to research, purchase and track publicly traded stock, you’ll be creating a whole new family activity and they will begin to understand the stock market and investment potential beyond bank accounts. No matter which method you choose, it’s important to teach your children valuable finance habits. Setting a good example is only the start. Talk with your children and set them up for financial success by establishing healthy financial habits that will benefit them throughout their lives. If you have any questions or need additional tips, contact your Clark Nuber advisor or Megan Kuchan at © 2017 Clark Nuber PS All Rights Reserved

The Top 3 Things that Puget Sound Real Estate Asset Managers Should Know

The conversations between the panel and the audience were engaging and wide-ranging, so for this article I distilled the event down into three main takeaways for real estate asset managers. 1. When it comes to sustainable growth, you need to be creative to add value. Bill Pollard pointed out that, as pricing and valuations of commercial real estate have increased, there is also a lack of product and opportunity. Properties are full and rent is high, and owners have no reason to sell. Therefore, one should establish a possible migration of demand - pick a center and determine a perimeter of leakage. Bill sees a trend of not accecall out box outlinespting secondary/tertiary submarkets but expanding existing markets. But what does that type of expansion look like? He gave an example: downtown Bellevue has a diversity of amenities, transportation, and housing. One could buy real estate just north of downtown Bellevue, but an ecosystem needs to be created by providing a comparable set of amenities. In short, creativity comes into play – for example, bringing in food trucks or providing shuttle buses to transportation. Stretch and pull the amenity base to a broader area to add value, and be a first mover on this. 2. New trends in managing real estate Greg Duff sees the role of tenant improvement (TI) allowances as being not as important as it was 10 years ago, and in most cases TI’s are a bad thing for the average space (the exception being restaurant spaces). More tenants are requesting “flex” space so that the space is adaptable for different uses.  He pointed out that when you start putting in gyms, showers, pet policies, etc., you need to negotiate a flexible schedule so all tenants needs/concerns are accommodated. On the risk side, Susan Stead advised that landlords need to focus more on the details and not be in a hurry to get a deal done:  Does the insurance policy have a clause about pets/dog bites? What if the food truck runs over someone - who is liable? She stated that landlords need to bring everything to the insurance person’s attention. If it’s not defined in the lease, you need to figure it out. Greg also said he’s seeing attention being paid to triple net leases. The state of the building is of major importance. Bill agreed and said that CFOs should pressure landlords on this. 3. Trends in smart buildings and technology – what’s important? Greg sees more hotels are turning to artificial intelligence for managing building maintenance. Anthony Hargreaves agreed, pointing out that there are alerts for aging parts and maintenance for more efficiency. Anthony added that, from a tenant’s perspective, Wi-Fi strength and agility is important but that it comes with responsibility. Is the Wi-Fi encrypted? How secure is it?  Greg suggests that if connectivity is provided, use every disclaimer possible and consider it in the same way as a utility. Anthony talked about smart buildings from a safety perspective. For example, if a tenant is an early morning worker, lights can come on automatically when they enter and let them know which elevator is available; however, a digital profile is then being created. He pointed out that technology is smaller and portable now, so the cost can be scalable. Because no one owns their own digital footprint, he said the question for consideration should be, “Is it ok that someone has all of this digital information on me?” Greg agreed, saying there should be an expectation that third-parties can harvest data and own it unless they are told otherwise. So, how is technology risk mitigated? Susan offered that, while technology moves quickly and some risks can be insured, a company’s policies and procedures need to evaluated as well. If a building’s technology shuts down and the tenant can’t get in, is there business interruption insurance on smart systems?  She said there also needs to be an understanding of tenant expectations. There are cyber-liability policies available, but those are perhaps not as extensive coverage as some would like. The underwriters haven’t caught up with cyber criminals. Bill adds that there’s a movement to pull back with regard to cyber liability, the prevailing thought being, we’re providing a space, it’s up to tenants to cover themselves. Other Items to Note The panel discussion included observations on ADA enforcement by third parties, earthquake coverage, insurance disputes, and data analytics – all of which I’ll cover in my next article. In the meantime, please contact me if you have any questions about the topics covered here. © Clark Nuber PS, 2017. All Rights Reserved

Colorado and Massachusetts Put the Summer Heat on Remote Sellers

July: it typically marks the start of the dog days of summer, when most people’s thoughts are focused on barbecues, trips to the beach, and summer vacation plans, rather than state and local taxes. But for remote sellers (that is, businesses that sell primarily over the internet or mail order), July 1st is shaping up to be an important date this year.

New Vendor Reporting Requirements

First, Colorado’s long awaited (and litigated) vendor reporting requirements finally go into effect on July 1, 2017. Although the Colorado law was enacted way back in 2010, it was immediately challenged, eventually making its way up to the US Supreme Court. However, the dust has now settled from the litigation and Colorado has announced it will begin enforcing the law. Under the Colorado law, any out-of-state vendor that makes at least $100,000 of annual sales to Colorado customers – and does not collect Colorado sales tax – must inform those customers that their purchases may be subject to the state’s use tax. This notification may be provided on the customer invoice, or in another communication made in conjunction with the sale (an online order summary, for example). Additionally, if individual customers purchase more than $500 worth of taxable goods in a year, these sellers must send them an “annual purchase summary” listing purchase dates and amounts. The annual purchase summary must also reiterate that Colorado consumers must pay use tax on all untaxed, nonexempt purchases. Finally, the vendor must send the Colorado Department of Revenue an annual customer information report, listing the name, address, and total untaxed purchases of each Colorado customer. The first of these annual summaries and customer reports are not due until early 2018. To be in full compliance with the new law, however, remote sellers with Colorado customers should start providing notifications to customers and compiling information on nontaxed sales as of July 1st. Unfortunately, for sellers that make more than $100,000 of annual Colorado sales, the only way to avoid being subject to these requirements is to voluntarily start collecting tax from Colorado customers. It is a Hobson’s choice, to be sure, but one that the Colorado Legislature fully intended when it passed the law back in 2010.

Remote Sellers and State Sales Tax

The second reason July 1st is significant for remote sellers is that Massachusetts will start requiring sellers with more than $500,000 in Massachusetts sales, and at least 100 transactions with Massachusetts customers in the prior 12 months, to begin collecting the state’s sales tax on that date. The state is following South Dakota, Alabama, and a smattering of other states that have begun imposing a duty to collect sales tax on remote sellers that have never set foot in the state. Massachusetts is notable in that it is the most populous state yet to try to impose such a duty. Further, it is doing so by administrative pronouncement, without any change in the relevant laws or regulations. This action would seem to be a clear violation of the US Supreme Court’s holdings in the 1967 National Bellas Hess and 1992 Quill decisions, which both confirmed that some physical presence on the part of the seller is required for a state to impose a duty to collect sales tax for the state. However, in his dissenting opinion in a 2015 decision related to the Colorado remote seller law, Justice Kennedy stated that he felt that it was time to revisit those earlier decisions. The tax collection requirements now being imposed by Massachusetts, and other states, are a clear attempt to create just such a case.

What Can We Expect?

In response, two trade groups (NetChoice and the American Catalog Mailers Association) filed suit in Massachusetts state court on June 9th, seeking a preliminary injunction to block enforcement of the remote seller directive, as well as a declaratory judgment that the directive is unconstitutional. A decision (at least on the injunction) is expected before the July 1st enforcement date. Thus, it may come down to the wire as to whether remote sellers must actually start collecting Massachusetts tax on that date, or will get some sort of a reprieve. So, it looks like, while the rest of us are working hard to beat the summer heat, remote sellers may be feeling the heat of the Colorado and Massachusetts state taxing authorities. Save them a cool beverage, won’t you? Questions? Seeking more information on the new legislation, or wondering how it might affect you? Contact Joe Haberzetle at for more information.   © Clark Nuber PS, 2017. All Rights Reserved

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