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February 2018

EU’s General Data Protection Regulation (GDPR)


The world is changing and a business must find a way to adopt to any changes.

After four years of preparation and debate the GDPR was finally approved by the EU Parliament about two years ago.

Now the enforcement date of May 25 of 2018 is quickly approaching at which time those organizations in non-compliance may face heavy fines. This new regulation will affect all companies processing personal data of data subjects residing in the Union.

Regardless of the company’s location, if you are dealing with personal data of those who reside in the EU, it applies to your employees, customers and others. There is a stiff penalty. We do not know how the EU will enforce this regulation to US entities, but we should be very aware of potential implications of this regulation.

CDH belongs to Moore Stephens International and their European partners are well versed with this regulation. If you have any questions, please feel free to contact Brian Davidson. We will provide you with necessary guidance on how to cope with this new regulation in the US. 



Koh Fujimoto

CDH

Kroll has released its 10th annual Global Fraud and Risk Report.  The report is a sobering reminder that fraud, cyber, and security risks continue to grow and continue to negatively impact businesses and their employees and stakeholders around the world.  In short, all categories of risk show increasing rates of occurrence and, with few exceptions, all types of incidents (e.g., misappropriation of assets, virus infestation, etc.) also show increasing rates of occurrence

In this article, I will focus on a few specific takeaways from the report and consider implications for manufacturing and distribution companies.

Takeaway #1

Data is valuable and needs to be handled with care.  2018 is the first time that physical theft is not the most frequently reported type of fraud.  The most frequently reported type of fraud is information theft, loss, or attack.[1] 

The first question to be asked with regard to information is whether or not the business has evaluated the information used in the business and identified how such information is used and where it might be vulnerable.  Manufacturing companies, for example, may have proprietary formulas that are used for purposes of production and both manufacturing and distribution companies would have confidential customer lists.  Who has access to such information and how do employees with access use the information?  What about vendors and suppliers?  Is access appropriately restricted?  Where is the information stored and retained?  Do certain employees carry this confidential information on laptops when traveling for business?  These are all examples of the types of questions that must be answered in order to develop an appropriate risk posture for the business with regard to a specific information asset.

When was the last time your business took a hard look at its information assets?  (read more)


[1] Kroll.  Global Fraud & Risk Report (New York, 2018), 11, https://www.kroll.com/en-us/global-fraud-and-risk-report-2018

 


The new standard requires significant management judgement and the changes will impact software, procedures, systems, and financial reporting.

CDH is here to discuss these changes with you and be your trusted resource.
  • How will these changes affect my business
  • Preparing for operational challenges
  • Working with your auditor

The new standard will not affect every company's revenue, but it will affect every company, whether it's internal controls, contract changes, software adjustments, additional disclosures, or revision of the estimate process.

The new 5-step revenue recognition standard will be required for all companies that use Accounting Principles Generally Accepted in the United States of America or IFRS.  It takes effect for public companies in fiscal year 2018 and for non-public companies in fiscal year 2019.
CDH is here to help you assess the impact of the new standard to your organization, and assist in developing a plan for diagnosing, implementing and fine tuning.

If you have any questions on the new standards, please reach out to your CDH contact at 312.332.2900, or any of our Audit leadership team listed below.

Andrea Krueger, Principal
akrueger@cdhcpa.com

Wendy Kelly, Principal
wkelly@cdhcpa.com

Tomoko Nakao, Sr. Manager
tnakao@cdhcpa.com

Emily Bartlett, Sr. Manager
ebartlett@cdhcpa.com


 

As the college basketball season kicks into high gear I am struck by the similarities between the elements it takes to create a championship basketball team and the expectations of a recruiter working for any business.  Being an HR professional, I spend a great deal of time recruiting for my firm and our valued clients.

I find myself energized in reflecting on what recruiting does for companies and how that relates to principles of basketball- especially as tournament time approaches.

Top Four Similarities

1.  Need to Recruit Top Talent to Meet the Team’s Needs
One thing all championship teams have in common is their ability to attract and retain top talent.  However, top talent is not the entire picture.  What is required is diverse talent to create a broad range of skills to meet the needs on the court.  There are countless candidates that are qualified to perform the job duties, but as a recruiter we need to recognize which of these candidates will best fit our team dynamics and prepare us to respond effectively to demands on the job.

2.  Having a Great Game Plan and System

Generally, the teams with the most success have a solid game plan in place.  They realize the importance of having a system that everyone understands and adheres to for the season.  Recruiting should follow the same principles.  Having a system to follow that is efficient and doesn’t have lapses of time is crucial.  As the pressure intensifies during a game or real-life business situation, having a system in place will give everyone the confidence to execute and ensure success.  Unnecessary slowdowns can lose a game.

3.  Learning from Mistakes

Very few teams make it to the tournament being undefeated so anticipate some mistakes along the way.  The key is realizing the hiring mistakes you made, making adjustments, and using your new insight to improve the overall strength of the team moving forward.

4.  Tapping into Fan Support

Often the most successful teams have a huge base following of fans and alumni that create a high energy culture.  Relying on, and tapping into that culture is essential to build momentum and a winning organization that continuously attracts top talent.  The more engaged the company and fans are in the overall recruiting process, the more success the team will enjoy.

Enjoy the upcoming tournament and consider how you can engage in the recruiting process to help develop a championship team for your organization.


If you are interested in learning more about CDH Recruiting Services, please contact
Lee Arnsman.

 

In 2014, the Affordable Care Act or ACA changed the way insurance companies were allowed to rate small group health insurance plans.  Prior to the ACA, insurers were allowed to rate plans based on factors such as insured members’ age/gender/health, location of the employer, and SIC code or nature of business.  Post ACA, insurers are only allowed to rate plans based on age, geography, family size, and tobacco use.

Unfortunately, this new form of underwriting resulted in higher health insurance premiums for most employers so the ACA allowed temporary “transitional” relief.  Simply put, transitional relief allows employers to temporarily maintain their existing health insurance plan, but in many cases, they are not allowed to make any plan or benefit changes to help negate premium increases when the plan renews.  As a result, many employers are forced with two unfavorable decisions.  1.  Remain on a transitional plan and watch rates continue to increase; 2.  Move to an ACA regulated plan that often times is more expensive than the transitional health plan.  (read more)


To see if this unique group health insurance solution may help your company, please contact your CDH representative or John Jaeger at OneDigital Health & Benefits;  jjaeger@onedigital.com

 
AI is here. One of the significant challenges is properly managing the data for AI. The cloud and Sage Intacct start this process by providing the foundation for AI to extract meaningful transactional data.

Only after a clean data extraction can AI start the process of analyzing and highlighting trends in the data to make better machine/human decisions. AI will change and disrupt numerous industries over the next 24-36 months. These include finance, healthcare, customer service, transportation, and manufacturing.

Here’s a look at how it will affect the finance area:

  • Automating the back office
    • Purchase orders from a customer can be read via a supplier portal where machine language can read/check for required information, pricing and create automated sales orders or shippers at the supplier distribution centers without human intervention
  • Auditors
    • Natural language will be able to process and interpret thousands of contracts and key on outliers, quickly develop risk profiles and identify areas of concern
  • Symbiotic relationship
    • AI and machine learning will quickly become part of the fabric of accounting. Along with keeping up with GAAP and FASB, you can now add AI as part of this increasing complex function

AI is not the end all. It can deal with repeatable, logical functions and can “learn” over time given enough data sets to visualize patterns and make better decisions. What is missing from AI is the context of data analysis, this is where the human element is needed to synthesize and provide the right decision for clients. The accounting firms of the near future will combine AI tools with value added human context and judgement to retain, grow, and capture market share from those who do not embrace this change.

Check out the link below for how Sage Intacct and AI are changing finance to form a technology/human driven decision model.

https://www.sageintacct.com/blog/five-ways-accountants-have-mastered-ai?referral=cdhcpavar

For more information on Sage Intacct, please contact Barry Coyne.

I was recently asked by the facilitator of a local Business Practice Organization to make a presentation to their group about what types of information do companies share with their managers and employees such as sales, margin, and profit.  Even more specifically, what types of tools can be used to communicate this information throughout the organization?

Many private companies don’t share their financial information with their managers and employees for fear that employees may demand more in compensation as the bottom line increases.   If this is a concern, a two tier approach can overcome this issue.  Provide a full open approach with your management team, but segregate the bottom line profit from your employees.  Even if a company does not provide bottom line results to all employees, many Key Performance Indicators (KPI’s) can be used to keep employees informed and vested in business operations. 

It is my contention that an open book policy can help overcome complacency within an organization if it is executed on a regular monthly basis.  Providing the management team and employees with a better understanding of the business can help lead to a feeling of ownership and potentially spark an influx of out of the box ideas that can lead to an increase in efficiencies and thus profits.  Empowering people with knowledge and holding them accountable can have a dramatic impact on profitability. (read more)

 

By: Tony Szczepaniak

For years my wife, another couple, and I have participated in a couples bowling league.  We are not great bowlers, but we hold our own. 
During a recent game our team was not playing well and, being the competitive person I am, I became frustrated while the rest of the team seemed to be oblivious of the score.  After losing (badly) we left, and during the car ride home a radio commercial hit me between the eyes. The point of the message was that if you are unhappy, frustrated, or angry in any given situation, perhaps you need to look at the direction of your focus.  Wow…like maybe that night’s score meant nothing? As if she could read my mind, my wife acknowledged that same point – while I was focused on my score, the rest of the team was focused on the benefit of being together and enjoying time together. Sometimes simple reminders provide the nudge we need to consider where we invest our time and energy.

That experience triggered a recollection of one of the insights gained from a book I read some time ago. In The Go Giver, Bob Burg and John David Mann emphasize that a drive for success can sometimes take people away from a notion that achievement comes easier when the focus is on two things – providing an experience of value and relationship. The relentless pursuit of success can blind us or rather turn focus away from these key elements,  focusing on the end game rather than the experience in pursuing the goal. (
read more)