November 14, 2018

COSO’s ERM Framework Has Fresh Paint, New Open Concept

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I remember in college, I’d turn in a paper and feel a sense of relief knowing that I never had to look at it again. Feedback from the instructor was informative but required no further action. Man, do I miss that. Don’t you? I’m sure PwC, who authored the COSO Enterprise Risk Management (ERM) Framework, did when they had to take another hack at updating it. And, I find it slightly amusing that COSO didn’t even want to do the legwork on the update themselves, passing it back off to PwC. They just supervised.

But, nevertheless, after over a decade, someone decided we couldn’t put off updating the Framework any longer. In September, COSO offered up the final version of the new, improved COSO ERM. The Journal of Accountancy quoted Bob Hirth, COSO’s chair, that the “our overall goal is to continue to encourage a risk-conscious culture.”

Much of it is essentially the same, but a nip and tuck here and there to rejuvenate it, including:

  • A flashy, new title: Enterprise Risk Management – Integrating with Strategy and Performance. (Very creative; kudos to whoever came up with that.)
  • A greater emphasis on strategy alignment and integrating ERM with decision-making
  • Reminder that ERM shouldn’t be an isolated exercise performed periodically. Seems they caught on to the fact that we’re all lazy and just want to check the box.
  • Adoption of a components and principles structure, mimicking COSO Internal Control – Integrated Framework (2013)
    • Eight components got re-envisioned and turned into just five.
    • 20 principles
  • Simplification of the ERM definition to make sure after reading the behemoth Framework, you at least grasp what ERM is.
  • COSO nixed the Rubix cube diagram, finally! What is this thing?

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But never mind the clunky visuals, this refreshed COSO is a snoozer.

There’s always been something about COSO standards that I can’t quite put my finger on. Maybe it’s all the jargon, but am I the only one who feels like I’m reading a last-minute final paper from that required management class you took in college? It even starts the executive summary with the classic, “art and science” trope:

Our understanding of the nature of risk, the art and science of choice, lies at the core of our modern economy. Every choice we make in the pursuit of objectives has its risks. From day-to-day operational decisions to the fundamental trade-offs in the boardroom, dealing with risk in these choices is a part of decision-making.

As we seek to optimize a range of possible outcomes, decisions are rarely binary, with a right and wrong answer. That’s why enterprise risk management may be called both an art and a science. And when risk is considered in the formulation of an organization’s strategy and business objectives, enterprise risk management helps to optimize outcomes.

But, hey, I’ve used the “art and science” introduction a time or two, so I won’t bash it too hard.

We’ll see if executives find value in transitioning to the new guidance. No one’s forcing them since 2017 COSO ERM doesn’t supersede the 2004 version.

I expect it will take a while for people to embrace the changes. Everyone’s always a little skeptical and slow to implement new guidance. Just look at the procrastination on the standard updates for leases as an example. If history is any indication, on the last go around GC reported that a year after the 2013 update was made to the sibling standard, COSO Internal Control – Integrated Framework, approx. 20% of companies were planning to blow it off, and only 60% were on top of using it for SOX compliance. The remainder were “unsure,” whatever that means.

As Greg Kyte put it for the last COSO update, “[We] wondered if either update was actually necessary”

Necessary or not, it’s another way to convince clients that they should pay you to consult them on all the revolutionary changes. Good luck with that!

Image: iStock/bobaa22

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Tracking Charitable Donations? Now There’s a CPA-Developed App for That

In more non-iPad, Apple-related news, we learned earlier this week about iDonatedIt, an iPhone app developed by BMG CPAs in Lincoln, Nebraska. The app is designed to track all non-cash charitable contributions whether it be clothes, furniture or family members (okay maybe not the last one). This will allow you to track all of our donations to Goodwill, Salvation Army, etc. rather than receiving that crappy receipt they give you that has nothing on it.

Being interested in all things accountant-ish, we got in touch with BMG to find out how this bit of ingenuity came about.

We spoke with Todd Blome, a partner at BMG who came up with the idea and he told us that as soon as he got an iPhone he was thinking of ideas for apps that would be useful for his clients. Since Todd is the tech-savvy partner at BMG, (he heads up their IT consulting services) he started kicking around ideas right away and eventually landed on the idea for iDonatedIt.

Todd told us that the development was fairly simple and that there were only two test versions prior to releasing the app.

“So far we’ve 100% positive feedback on iDonatedIt,” Todd told us, “We’re definitely looking for suggestions for improvements or add-ons.” The one idea that has been floated to Todd was adding a tax savings tool to the app so that a user could determine how much tax savings would be created by the donations. “That will probably be in version two,” he told us.

iDonatedIt retails for $2.99 at the app store and as Todd noted, “a donation of one item pays for the app.” A version for the Droid is currently in the works as well.

Todd and the rest of of his team at BMG are kicking around a few more ideas for apps but he said they want to make sure iDonatedIt is working as good as possible before committing to another project. Check out the demonstration below and jump over the firm’s website or follow them on Twitter to give them your feedback.

Shoeboxed: Saving Accountants One Nightmare Client at a Time

Last week we briefly mentioned and how they can make all your shoebox receipt toting clients disappear. Not only that but it may save some of your more aggressive employees the trouble of explaining why they punched out the deadbeat who showed up with their receipts on April 15th.

We were fortunate enough to spend a some time with Stacy Chudwin, the Company’s Director of Communications, to learn more about the Durham, North Carolina Company.

Stacy told us that the Company got its start by servicing small businesses who wanted to avoid the hassle of tracking expenses by keeping a mind-numbing amount of receipts around, “Businesses can simply compile all their receipts, send them to us and we scan, enter the data and categorize them.”

Now the Company offers an “Accounting Professional Plan” which allows CPAs to do the exact same thing for those clients who aren’t so organized with their bookkeeping, “CPAs can either have their clients send us the receipts directly or they can send the us shoebox that gets dropped off on their desk and we’ll take care of the rest,” Stacy said.

Once all the data entry is finished you can access the information via your business’ account and for CPAs, you can create sub-accounts for each individual client. These reports can then be exported to a number of applications including QuickBooks, Quicken, Excel, and others.

The Company has also developed a free iPhone app that will extract all the information from a photo of the receipt. So for you Holiday Inn jockeys out there, you don’t have to stuff all your receipts in your suitcase and try to decipher everything you spent two weeks later.

“So far all of the feedback from our clients and users of the mobile apps have been great, however everyone wants more features both in their accounts and for the app,” Stacy told us.

Stacy also maintains the Shoeboxed Blog that is updated a few times a month that has areas for “Small Businesses”, “Taxes”, “Budgeting” and “ Resources”. She also informed us that they have a very active Twitter account, “We like to use Twitter to make announcements, to highlight recent press, and to retweet some positive feedback from followers, but we will also respond one-on-one if a user has an issue and reaches out to us via Twitter.”

If you’re not hip to the whole Twitter thing the Company has online customer support and a toll free number for all your questions.

The Company has several different plans for both businesses and accountants and both come with 30 day trials. So if you’ve more nightmare clients thatn you can count, what are you waiting for? Thanks to Shoeboxed, now you can add more clients instead of wanting to physically attack them.