Money Is Not the Only Cost of Fraud

Marcelle H. Piglia, Financial Analyst

When you read articles or listen to news about fraud, what is the one thing that is always heavily emphasized? The amount of money the person allegedly stole. While this is a very important reality and cost of fraud, it is not the only cost of fraud. Through some of my own experience of cases I’ve worked on, I’ve observed other “costs” of fraud that are not quite as obvious: 

Anxiety – Some victims of fraud partially blame themselves for the wrongdoings of the fraudster, always pondering what-if scenarios. They constantly wonder “Why didn’t I see this sooner?” “What if I would have paid more attention?” “What if this happens again?” This could lead to a person feeling insecure about his or her abilities as a manager or even his or her job security. 

Loss of Trust – I’ve witnessed firsthand the emotional toll these situations put on business owners and its employees. People feel betrayed, confused, and vulnerable. I’ve seen clients choke up after explaining how the fraud was discovered. It’s heartbreaking. People say, for example, “We’ve worked together for 20 years. How could she do this to me?” It is difficult for business owners and managers to fully trust their employees after something like this has happened to the company. 

Time – Fraud investigations generally take a lot of time. If the investigation is conducted internally, the time an employee spends examining the fraud is time not spent on his or her normal duties (after all, time is money, right?). Even if the investigation is conducted by an independent forensic accountant, there is the time the accountant spends at the client’s office and the time the client spends answering his or her questions. It does not end after the accountants tabulate the damages – there is time spent pursuing criminal charges, civil litigation, or both against the perpetrator.

What Types of Transactions are Subject to Sales Tax in the Media/Advertising Industry?

Nicole Doeschot, CPA, Tax Senior 

Missouri sales tax regulations are complicated, and they become extremely obscure when dealing with the sale of media/advertising. Typically considered a service industry,   these regulations can affect the way media, advertising and related companies do business.  It’s important to clearly understand the way Missouri interprets and enforces the sales tax law. 

In general, Missouri regulations state that if a sale involves the transfer of tangible personal property, it is a sale of tangible personal property and is subject to sales tax. This is specifically stated in Missouri Department of Revenue Chapter 103 Sales/Use Tax – Imposition of Tax. Therefore, according to Missouri sales tax law, if you deliver the final product to the client on a tangible piece of property (i.e. DVD), everything that went into that sale, including the services, is taxable. 

Missouri specifically says that “preliminary art” is not taxable. So, if it’s not the final product, but instead it’s just a rough cut that you are showing the client before completing the project, it is not taxable. This needs to be explicitly stated on the client invoice. 

There are a few caveats. Missouri Letter Ruling 1952 specifically states that if a business transfers the completed recording, film or video electronically through the Internet to a customer, the services are currently not subject to sales tax. This is because there was not a sale of tangible personal property since the final product was delivered electronically and not physically. 

To summarize, when determining if a transaction is subject to sales tax, the key is the method of delivery of the final product. To remain competitive in the industry, companies may consider making it a business practice to deliver final products via the internet and avoid the delivery of tangible products. If you must use a DVD, CD, etc., the entire sale then becomes taxable. The client needs to be aware of the implications of receiving the tangible product and the extra cost to them in the form of sales tax. 

A good way of making this a business practice is to add a disclaimer to the bottom of your invoices and estimates, stating that it is your practice to deliver the final product though electronic means, and if a tangible delivery method is requested, the client will be charged sales tax on the entire invoice.

Goals for Retirement Planning

Kris L. Pearce, CPA, Tax Senior

There are lots of items to think about when planning for retirement.  The earlier in your career this is done the better, and it can always be adjusted over time.  Any plan should be discussed with your spouse as well as your attorney, financial advisor, and accountant. In addition your plan should be reviewed when there is life changing moments, such as the birth of a child, marriage, or divorce.  

Each item below should be given a number between 1 and 5 with 1 being the least important and 5 being the most important to you.  After ranking, discuss each item with the individuals above to make sure the planning being done agrees with what is most important to you. 

1.  At what age do you want to retire and with how much income 
2.  Achieve a certain return on investment 
3. Provide for your favorite charity 
4. Provide financial security for loved ones 
5. Fund education for generations after you 
6. Provide safety net for items such as loss of job, death of spouse, or disability 
7. Maintain flexibility in the overall plan 
8. Avoid probate and other associated costs 
9. Avoid disputes among family members
10. Avoid the complexity of the plan 

This is not an exhaustive list but something to get you started if retirement planning has not been on your radar.  Finally, remember to discuss with loved ones so they are aware of what is important to you.

Google Profiles: What are they?

Kevin Bolin, CPA, Audit Senior 

Social media is becoming a part of our daily lives.  We are all on Facebook; professionals use LinkedIn; and no one knows why anyone would use Twitter.  We always hear stories about to keep your profiles professional.  The problem with these profiles is that they are mostly limited to your closed group of contacts.  What about people who are not connected with you on these sites? 

Given the fact that Google is the dominant player in internet search, the odds are that they will search for you on Google.  I know I have done a search for my name and even I have had trouble finding information about me.  Let’s face it, no matter how unique, we all share our name with other people.  

A Google Profile displays a page YOU create at the top of the search results when your name is searched.  The use of a Google Profile is another way to ensure that when a search is made for you a potential client gets the information you want them to see. This is much better than having the potential client view random bits of information gathered from unknown sources. The profile page can have descriptive texts, links to blogs, your LinkedIn profile or your Facebook page and much more.   Best of all, they are free and easy to set up. 

There is a huge potential to use this as a marketing tool.  For example, if you have a created a professional profile on your firm’s website or LinkedIn, you can create a custom link directly to the page on your Google Profile.  You can add photos, contact information or any other information you want. 

Having a Google Profile page is another way to market yourself and your firm’s services. When a person searches for you, you have the best possible information available for them via a Google Profile.

Tips for Balancing Your Email and Staying Current on Important Health Care Topics

Chastity Werner, Health Care Consultant 

One of the greatest struggles for many healthcare managers is “How do I keep up with all of the emails?” While there is critical information in some email correspondence, there is also information that is not relevant to your particular job or responsibility. Email accounts get flooded with newsletters, articles and copy from a variety of sources, and it all starts running together.  If you do not have time to read them when you first receive them, next thing you know your email box has 1,500 emails and you don’t know where to start.  

Here are a few pointers to help you stay on top of hot topics: 

• Start Fresh!  Utilize your delete button and start from scratch.
• Be selective – choose only the topics that directly affect your situation.�
  • If you are the director of a multi-specialty practice, let’s be realistic, you can still be a high achiever and not know everything about every specialty!
• Designate different individuals in your department to stay on top of different topics.
• Meet weekly to briefly update the department on important matters that affect your organization.
• After you read a newsletter-delete it!  You can always do a Google search or go to the resource’s website and pull it up again if you need it.
• Subscribe to a couple of periodicals that pick the hot topics for you.  A good example would be Modern Healthcare.
• Remember, just because there is a new article on healthcare reform does not mean that there is new information related to the topic.  You can say the same information many ways!

Join a professional organization. Local and national organizations can be wonderful sources of knowledge and have great support groups.  Many of these organizations have periodic meetings which double-play as great networking as well as good content opportunities.  For some direction on choosing professional organizations – see our blog on Professional Organizations – Which is Right For You?

Act Now to Minimize the Corporate Gain on Real Estate

Brent R. Robbs, Tax Associate

Since the advent of LLCs and S Corporations, tax consultants generally have advised clients to keep their real estate holdings outside of C Corporations because of the potentially devastating tax ramifications of a future sale.  Unfortunately, for a variety of reasons, taxpayers find themselves in this position more often than you would think.  The good news is the current economy provides a unique opportunity to minimize the tax impact of removing real estate from C Corporations. 

There are two primary ways to remove real estate from a C Corporation and maintain control of the property: 

1. Distribute the real estate as a dividend, or
2. Sell the real estate to a related party 

Distributing real estate as a dividend is rarely a viable method because the transaction doesn’t provide cash to the C Corporation to cover the tax generated by the distribution.  One instance where this strategy can work is when the C Corporation has net operating losses or capital losses to offset the gain at the corporate level. 

A better method is a sale of the real estate to a related party.  Unlike a distribution, the corporation will receive cash which can be used to cover the tax generated by the sale.  Furthermore, the shareholders are not subject to tax since there is no dividend distribution.  In a down market, this option keeps the tax bill associated with the sale manageable, moves future appreciation of the property outside the corporation and maintains the taxpayer’s control of the property. 

A third, less obvious, solution is for the corporation to make an election to be taxed as an S Corporation.  This option removes a layer of tax from the ultimate sale of real estate, but only after the statutory built in gain holding period. 

As is the case with any real estate transaction, there are a multitude of tax and legal ramifications to consider.  Because every taxpayer’s situation is different, it is imperative that you review off of the options with your tax advisor before proceeding.

Does Your Body Language Reflect the Message you are Trying to Send?

Jerrie K. Weith, FHFMA, CMPE, Director of Health Care Services

More of our message is delivered through body language than through verbal communication.  Yet many of us don’t realize the importance of it.  In fact, body language can derail the verbal message we think we’re delivering.  

There’s an excellent book on the subject, “Strictly Business Body Language: Using Nonverbal Communication for Power and Success” by Jan Hargrave.  Here are some interesting tidbits from the book:

• Generally when people look to the left as they speak, they are recalling stored information and telling the truth. However, looking to the right, could demonstrate dishonesty.
• When people move their hands apart when speaking, they are signaling factual importance to the statements they are making.
• People who hold on to objects during negotiations show a need for support.  Do you find yourself holding on to a file or pen?
• If you’re one of those people who are “self-touching” (hands on chin, ear, nose, arm, clothing) you’re showing tension. 
• Did you know there are power or “control” positions in every meeting setting?  Check the book out for interesting information on this topic. 

Keep in mind that when you’re assessing someone’s body language (even your own); it isn’t only about the current movement, but more about the context of the movement.  It isn’t just the eyebrow raise, but also the position of the arms, legs and the eye contact.  It’s critical to each person’s success in communicating to understand body language to get the appropriate message across as intended.

How Do I Know if a 529 Plan is Right for Me?

DeAnna Cassat, Tax Associate

It’s never too early to begin thinking about ways to save for your children’s college education. One of many plans available that you may not be aware of is a 529 plan. The 529 is an education savings plan operated by a state or educational institution designed to encourage savings for future college costs. Like all things, it has its advantages and disadvantages. This plan may be beneficial to you for the following reasons: 

• Regardless of age, anyone who plans to attend an eligible postsecondary education institution can be a beneficiary
• A state income tax deduction may be taken for the funding of the 529 plan
• A qualified distribution can be taken without federal income tax or penalty for qualified education expenditures
• Assets grow tax free 

The following are potential downsides to the plan: 

• A change to the investment option is only available one time per year
• These plans are subject stock market volatility
• May decrease your child’s eligibility in need-based financial aid 

While a 529 plan can be an advantageous way to save for college, make sure you know the potential risks before you create a fund. See the following article for more information:  http://www.latimes.com/business/la-fi-college-529-20111218,0,485132,full.story 

If you have questions or need assistance in determining if the 529 plan is right for you, please contact AMD or your tax advisor.

Make Your Practice Healthy by Staying On The Right Financial Path

Chastity Werner, Health Care Consultant

Do you find yourself wondering what more you could do to help your practice succeed financially and increase your bottom line? 

Here are a few ideas that can put you and your practice on the right path: 

• Compare your practice numbers to relevant benchmarks, local and national. You can obtain this information from organizations such as MGMA or HFMA. 
• Stay on top of your trending reports.  Comparing your A/R month-to-month and year- to- year. By measuring the differences month-to month and year- to- year, you will get a clear picture of both areas where you excel and those that need attention.  Don’t forget your appointment counts and levels of service provided.  For example, how many 99215 codes did you bill for in 2010?  Did your production increase or decrease? How about 2011? The similarities as well as the differences will provide great insight.  
• Compare your payers’ fee schedules.  Determine your average reimbursement for those services and whether they increased or decreased.   Are your top payers paying according to your contracts?  If you don’t have the time to look at all payers, analyze your Top Five.  That will give you a baseline.  
• Study your denial management procedure.  Do you monitor and analyze your denials?  Are you proactive with the denials?  If you are getting an increase of a particular denial such as invalid ID number, investigate!  Make sure your front desk personnel are verifying patients’ insurance information and demographics, and checking insurance cards as well as the data entered in the system.  
•  Have a budget and stay on track throughout the year.  Budgets are great tools to monitor where your costs are for the year compared to where you thought they were going to be.  Examine your budget on a monthly basis and pay attention to what is both higher and lower than expected. 

Even though all of these suggestions are time-consuming and may seem tedious, they are critical to your practice.  If you are unable to handle the tasks in-house, seek help from trusted healthcare management professionals. That way, you can concentrate on patient care and they can keep your practice financially healthy.

Nine-Year-Old Beats the Odds and the Brackets to Win Hoops for Hope Tournament

Jack McCook, age 9, was victorious in his quest to win the AMD Hoops for Hope NCAA Basketball Tournament, and the coveted first place prize, the new iPad.  Jack is the youngest person to win in the 25-year history of the AMD-sponsored pool, which benefits AMD’s Charity of Choice. This year, all proceeds will go to Nurses for Newborns.  

Jack, who played the pool with his mom, Jennifer, was quick to point out that she didn’t help in selecting his brackets. “She asked me which team I wanted and I picked the ones that were on a winning streak.”

His “winning streak” methodology paid off as he picked six of the Elite Eight and three of the Final Four.  When asked about the biggest upset in his brackets, he immediately responded with “Mizzou”, his only pick not to make it to the Final Four.

“I knew that if Kentucky won, I was going to win the new iPad, said Jack.  I was so excited.”  Jack said it was the best day of his life, according to his dad, Brian McCook, a partner in AMD’s Healthcare Group.

Joe, Jack’s younger brother, played a bracket with his dad and was confident that the winning new iPad would become a family iPad.  Jack, however, says he thinks he will let him use it “maybe twice a week.”   

An avid football fan, Jack’s favorite team is the Oklahoma Sooners like his dad. When it comes to basketball, he likes college basketball but his favorite players are in the NBA – Kevin Durant  and Blake Griffin.

A strong competitor, he likes to play basketball, football, baseball and soccer, so beating 505 other players made him very happy. A well-rounded third-grader, he likes to play the violin and piano, too.    

On his way out, Apple gift certificate in hand for the new iPad and a smile from ear-to-ear, Jack said to thank the sponsors and everyone who played.  He is pictured here with Craig Campbell, tax partner and pool organizer and Robert Minkler, managing partner.