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Automating Success: Why Strong Financial Controls Are Essential for Business Growth

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Imagine a growing company where invoices pile up, approval processes lag, and financial oversight can’t keep up. Now, picture the same company with streamlined workflows, automated fraud detection, and visibility into finances that help the business. The difference? Strong financial controls.

Financial controls are the guardrails of good decision-making in any business. They include the procedures, policies, and methods for monitoring and controlling economic resources. In today’s digital age, these controls have evolved beyond traditional manual processes.

In the webinar “Mastering Internal Financial Controls for Sustainable Success,” ApprovalMax experts Jonathan Kyritsis and Angela Bierman shared a critical truth for Certified Public Accountants (CPAs) and their clients: modernizing financial controls is vital to sustainable business growth.

But how can CPAs use these evolving controls to deliver tangible value? Let’s explore three key areas:

  • The evolution of financial controls in the digital era
  • Using automation for efficiency and fraud prevention
  • Building scalable controls for long-term success

Whether you’re a CPA looking to enhance your services or a business leader aiming to strengthen your financial processes, these insights will provide tips on where to focus your attention and how to get started in modern financial management.

The Digital Evolution of Financial Controls 

“Financial controls are the guardrails of good decision-making in any business,” Angela said. These controls protect against fraud, prevent costly mistakes, and provide the foundation for sound financial stewardship. The digital era has changed how these controls operate and their role in business growth.

Consider the traditional invoice approval process. Angela described the old way:

“If it’s paper, you take the stack of invoices to the various people who need to approve them, and they sign it. They may have a comment or a question, or they come back with post-its, and you’re like, whose signature is this? And what’s the status?”

This manual process is inefficient and prone to errors.

Modern, digitized financial controls automate this process. Invoices are automatically routed to the right approvers, reminders are sent systematically, and every action is logged with a clear audit trail. This removes the chaos of paper trails and reduces the risk of lost or mishandled documents.

Beyond digitizing paperwork, modern financial controls use technologies like optical character recognition (OCR) and machine learning (ML) to extract data from invoices, detect anomalies, and predict potential issues before they arise. 

This evolution allows CPAs to offer more strategic, value-added services. Instead of spending hours on manual data entry and chasing approvals, CPAs can focus on analyzing financial data, identifying trends, and sharing insights that help business growth. Jonathan says it’s about understanding “how we can impact your business” through tailored, modern financial control systems.

Using Automation for Efficiency and Fraud Prevention

Automation underpins modern financial controls’ evolution, boosting efficiency and security. For CPAs, becoming familiar with these systems can be important for offering innovative services that support client success.

There are big efficiency gains from automation. Angela candidly said: “Chasing invoices is such a time suck. We all have better things to do.”

Automated systems handle tasks like routing invoices, sending reminders, and tracking approvals. Technologies like OCR automatically extract data from invoices to reduce manual data entry and errors.

These improvements allow finance professionals to shift focus from routine tasks to strategic analysis and decision-making. For CPAs, this means spending less time on data processing and more on consulting clients.

Automation also enhances fraud prevention. Automated systems constantly monitor for suspicious patterns and anomalies. They can flag payments just below approval limits—a common tactic in fraud schemes. Angela noted: “When you have a threshold of $10,000, $50,000, whatever it is, and you start to see bills coming in just under that threshold, that should be a flag.”

Automation fortifies vulnerable points in financial systems, such as vendor information changes. Angela highlighted this risk: “Where they get you, and where the areas of higher risk are, is the changes. Someone says, ‘Oh, I have new banking information. Can you update my account?'”

Automated systems enforce strict protocols for such changes, requiring multiple approvals and flagging suspicious updates.

However, automation complements rather than replaces human judgment. Jonathan said: “Logic sometimes might fly out the window because this is something quick that your boss’s boss is getting you to do. So again, it’s about having the processes in place.”

Automation provides the framework and flags potential issues, but human oversight is still key.

Building Scalable Financial Controls for Sustainable Growth

As companies expand, their financial control needs become more complex. Scalability becomes essential. Angela advised: “With every decision you make regarding processes, policies, and technology, ask yourself: Does this scale? Can this work with more people, more departments?”

A manual approval process suitable for a team of 10 can become a nightmare for a company of 100. Scalable, automated controls adapt effortlessly—moving from a single-tier approval system to a multi-tiered one that accounts for different departments and spending thresholds.

Establishing scalable controls empowers CPAs to transition from traditional number crunchers to vital strategic partners in growth. By anticipating future client needs and creating adaptable processes, CPAs can deliver exceptional value that enhances their role and influence.

Flexibility is important, Jonathan said: “Every client is not the same from client to client. We have to be flexible in this day and age, especially with the world changing as quickly as it is.”

Customization plus scalability ensure that financial controls remain effective and efficient regardless of a company’s size or complexity.

Scalable controls also democratize the oversight process. Angela noted: “What I think is so important is to empower every single person involved in the accounts payable process with the ability to press pause and say, ‘I’m not comfortable with that.'”

This approach maintains robust oversight even as organizations grow.

Setting up scalable controls early saves businesses from growing pains later. Angela pointed out: “It’s so much easier as an employee, as a project manager, as a relationship manager, to say to somebody, ‘Hey, these are our policies. This is what we’ve got in place.'”

It’s more efficient to grow into robust controls than to build them retroactively.

Watch the Full Webinar and Earn Free CPE

Digital, automated, and scalable financial controls form a powerful triad for sustainable business growth. They provide efficiency for daily operations, security against fraud, and flexibility for long-term expansion. For CPAs, mastering these controls is critical to delivering extra value in today’s business landscape.

To fully grasp the role of strong financial controls, watch the webinar “Mastering Internal Financial Controls for Sustainable Success.” Jonathan and Angela offer practical insights and real-world examples to enhance your service offerings.

Register for free here and earn free CPE for watching:

Addressing Gaps in Accounting Firm Support

Accounting firms today face numerous challenges—from managing remote teams to staying updated with ever-changing regulations. Rachel highlights the struggle:

“We were looking for a community that could serve our team. We wanted accountability and ongoing support solution for the real-life, day-in and day-out challenges our team members were facing—not just the owner but the entire team.”

Existing peer communities in the accounting profession fell short, often focusing solely on firm owners or offering fragmented support. Marcus adds:

“We wanted to support the whole team, from leadership to admin. We wanted to ensure everyone was supported in one place with similar teams.”

Recognizing a gap in comprehensive, team-wide support, Rachel and Marcus, along with Amy McCarty, created Collective by DBA. Their goal was to address the technical aspects of running an accounting firm and the human element—fostering collaboration, facilitating professional development, and cultivating a sense of community across all levels.

Creating a Holistic Support Ecosystem

Collective by DBA is more than a professional network; it’s a carefully crafted ecosystem designed to support accounting firms at every level. At its core, it is a community platform where members, called “Insiders,” can share resources, communicate, and collaborate on topics ranging from client management strategies to the latest tax regulations.

Rachel explains:

“When you join the Collective, you become an Insider. It’s for the firm—not just one person or the owner or a partner. It’s for the whole team.”

The platform offers:

  • Webinars on current topics: Providing insights into industry trends and challenges.
  • Live streams for real-time problem solving: Allowing members to tackle issues collaboratively as they arise.
  • In-person events: Facilitating deeper networking and learning opportunities.
  • Discussion boards: Providing a place for members to share and receive feedback on potential initiatives and current challenges.
  • Resources: Offering guides and templates related to accounting firm operations and management.

The community is structured around three main pillars:

  1. Strategy: Helping firms define their vision, target the right clients, and plan for growth.
  2. Structure: Guiding firms in organizing their teams, roles, and workflows for maximum efficiency.
  3. Systems: Assisting in selecting and implementing tools and processes to streamline operations.

A standout feature of Collective by DBA is its vendor-free environment. Marcus emphasizes:

“There are no vendors in this group. Behind the paywall are other firm owners. There’s nobody with a vested interest in a software company trying to sell you something.”

This approach fosters open, honest discussions about software, best practices, and industry challenges without the pressure of sales pitches. Members can freely share their experiences with different tools or strategies, ensuring the focus remains on practical, peer-tested solutions.

Embedding Core Values into Operations

At the heart of Collective by DBA is a clear vision and core values guiding every operation. Rachel articulates this vision:

“We are creating a future where success is measured by the positive impact we make on individuals, businesses, and our communities by connecting and inspiring professionals focused on continual learning and leaving a legacy.”

Their core values, encapsulated in the acronym IMPACT, are:

  • Integrity. “When we say yes or no to the size of an event or the location of an event, we’re doing back to those values,” Rachel notes. “Does it align? If it doesn’t, then it’s an easy no.”
  • Meaningful work. “We want our Insiders to continually get better. So we want to see a change—a noticeable difference, a positive impact,” Rachel says.
  • People first. This value is evident in their commitment to supporting entire accounting teams, not just firm owners.
  • Appreciation. “This has always been on our heart and, really, a calling to serve others, to serve our peers in the industry,” Rachel explains.
  • Collaboration. Central to their community platform, encouraging knowledge sharing among peers.
  • Transparency. This influences their approach to events and vendor relationships. Marcus notes, “We’ve turned down some people for various reasons. These are hand-selected people that DBA uses, and they’re not there to sell.”

Looking ahead, Collective by DBA plans to expand its offerings. Marcus outlines:

“We will build out different types of accountability at different levels, all the way through to one-on-one support. At the end of the day, you’re either going to spend money or spend time.”

This tiered approach ensures firms of all sizes can find the right level of support to meet their needs and drive growth.

Conclusion

By addressing the need for comprehensive, team-wide support, creating a vendor-free community focused on practical solutions, and embedding core values into every aspect of their operations, the Collective by DBA community meets the holistic needs of high-achieving accounting firms.

Imagine an accounting profession where firms collaborate, share best practices freely, and support and value every team member. Collective by DBA is working to realize this vision.

This community offers an exciting opportunity for CPA firm owners and accounting professionals to transform how they operate, collaborate, and grow. Whether you’re grappling with team management, seeking innovative ways to serve clients, or looking for a supportive community of like-minded professionals, Collective by DBA provides a new path forward.

Ready to transform your accounting firm? Listen to the full Who’s Really the BOSS? podcast episode to learn more about how Collective by DBA can benefit your practice.

Rachel and Marcus Dillon, CPA, own a Texas-based, remote client accounting and advisory services firm, Dillon Business Advisors, with a team of 15 professionals. Their latest organization, Collective by DBA, supports and guides accounting firm owners and leaders with firm resources, education, and operational strategy through community, groups, and one-on-one advisory.

From Wall Street Darling to Financial Disgrace: Unraveling the Equity Funding Scandal

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In 1973, the financial world was rocked by a scandal that seemed almost too outrageous to be true: a respected insurance company had fabricated over 56,000 policies, amounting to a staggering $2 billion fraud. This wasn’t just a case of cooking the books; it was a masterclass in how innovation, technology, and unbridled ambition could combine to create one of history’s most audacious financial deceptions.

Welcome to the Equity Funding Corporation of America world, where the line between financial innovation and fraud is blurred beyond recognition. In this episode of the Oh My Fraud podcast, we dive deep into this fascinating case, which offers crucial lessons for modern finance and fraud prevention.

Join us as we explore the birth of Equity Funding’s innovative insurance-mutual fund product, its evolution into a complex fraudulent scheme, and its ultimate unraveling. Along the way, we’ll uncover valuable insights that resonate in today’s world of high-speed trading, complex financial instruments, and ever-present market pressures. The Equity Funding scandal may be a story from the past, but its lessons are more relevant than ever in our ongoing battle against financial fraud.

The Seeds of Fraud: Financial Innovation Gone Awry

At the heart of the Equity Funding scandal lay an innovative financial product that seemed too good to be true—and ultimately proved to be just that. In the late 1950s, Gordon C. McCormick devised a clever combination of mutual funds and term life insurance that would become the cornerstone of Equity Funding’s success.

The product was revolutionary for its time. As Caleb Newquist explains, “Customers could borrow against their mutual fund holdings to pay for a ten-year term life insurance policy.” The genius was in the timing: “The idea was that at the end of the ten years, the value appreciation in the mutual funds would outpace the total amount of the loan.”

This approach offered customers a win-win scenario: they could invest for the future while securing life insurance protection, all without significant upfront costs. For Equity Funding, it was a ticket to rapid growth. The company quickly became one of Wall Street’s favorite financial insurance stocks.

However, this innovative product also laid the groundwork for fraud. Its complexity made it difficult for regulators and auditors to scrutinize, while its success created immense pressure to maintain growth. The stage was set. What began as financial innovation would soon evolve into one of the most elaborate deceptions in corporate history.

The Anatomy of Deception: Crafting a Fraudulent Empire

As Equity Funding’s success grew, so did the pressure to maintain its meteoric rise. At the helm of this growing empire were Stan Goldblum, Fred Levin, and Sam Lowell—a trio whose backgrounds ironically included insurance regulation and embezzlement detection. Goldblum’s approach to leadership was summed up in a chilling statement to Levin: “publicly held companies do not lose money.”

This pressure to always show growth led to the perversion of their innovative product into an elaborate fraud. The company began creating fake insurance policies, manipulating their original concept of combining mutual funds and life insurance into a vehicle for deception.

Technology played a crucial role in this fraud. Greg explains, “Equity funding’s Electronic Data processing department had designed a computer program that would recognize categories of insurance by a code number. Code 99 indicated a business that involved no direct billing. These blocks of policies, Code 99, were then sold to the reinsurers.”

The fraud’s complexity was mind-boggling. A group known as the “Maple Drive Gang” created physical policy files to fool auditors. In a macabre touch of realism, the company even simulated policyholder deaths at a rate comparable to actual mortality rates.

The scale of the deception was staggering. By the time the fraud was uncovered, Equity Funding had created over 56,000 fake policies worth approximately $2 billion. Of the $117 million in loan receivables booked to finance these bogus policies, $62 million was completely non-existent.

The Unraveling: Detection, Exposure, and Consequences

The elaborate fraud at Equity Funding began to unravel in February 1973 when Ronald Secrist, a recently fired vice president, made two pivotal phone calls—one to the New York Insurance Department and another to Raymond Dirks, a securities analyst.

Dirks’ investigation quickly gained momentum. He interviewed former employees, met with current executives, and compiled extensive notes. As word spread, the company’s stock plummeted. On March 27th, the stock hit a low price of $14, and trading was suspended. Desperate attempts by Goldblum and his associates to maintain the facade, including bugging their own offices, proved futile.

The legal consequences were swift and severe. As Caleb details, “On November 1st, 1973, indictments against 22 defendants on 105 counts ranging from securities fraud, mail fraud, bank fraud, filing false documents with the SEC, interstate and transportation of counterfeit securities were filed.” Goldblum, Levin, and Lowell received prison sentences of eight, seven, and five years respectively.

The Equity Funding scandal exposed significant weaknesses in auditing and regulatory oversight, particularly in the face of emerging technologies. Greg’s observation is telling: “I was surprised during the story how much they relied on computers to help perpetrate the fraud.”

This case offers enduring lessons for modern fraud prevention. It underscores the need for robust checks and balances, the importance of whistleblower protections, and the need to adapt auditing practices to keep pace with technological advancements in finance.

Lessons from a Financial Scandal

While rooted in the 1970s, the Equity Funding scandal offers timeless lessons for our modern financial landscape. This case vividly illustrates how innovation can spiral into massive fraud when warped by greed and enabled by technology.

Key insights from this scandal resonate powerfully today:

  1. Complex financial products require equally sophisticated auditing practices
  2. Technology can be a double-edged sword – both a tool for fraud and its detection
  3. Robust whistleblower protections are crucial in exposing corporate malfeasance
  4. Regulatory oversight must evolve as quickly as the financial instruments it governs

As we navigate an era of AI-driven finance, blockchain technologies, and ever-more complex derivatives, the fundamental challenges highlighted by Equity Funding persist. The methods may change, but the potential for fraud remains.

To truly appreciate the intricacies of this landmark case and its relevance to modern fraud prevention, we invite you to listen to the full episode of Oh My Fraud. Whether you’re a finance professional or simply fascinated by white-collar crime, this deep dive into the anatomy of corporate fraud offers valuable insights.

Divine Oversight? Lessons from the Vatican’s €350M Real Estate Debacle

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What happens when the guardians of morality become entangled in a web of financial deceit? The recent Vatican scandal, culminating in the prosecution of Cardinal Giovanni Angelo Becciu, offers a startling answer. Once the third most powerful figure in the Catholic Church, Becciu now faces a five-and-a-half-year prison sentence for embezzlement and fraud, sending shockwaves through one of the world’s oldest and most revered institutions.

This extraordinary case, meticulously dissected in an episode of the “Oh My Fraud” podcast, lays bare a troubling truth: no organization, regardless of its spiritual or moral standing, is immune to the temptations of financial misconduct. From a €350 million luxury real estate deal in London’s elite Chelsea district to suspicious transfers to a family member’s charity, the scandal reads like a Hollywood script – yet it unfolded at the very heart of the Vatican.

The Vatican’s Power Structure

In 2014, the Vatican’s leadership triumvirate comprised the Pope, the Vatican Secretary of State, and Archbishop Giovanni Angelo Becciu. Becciu’s position placed him in a unique position of influence over the Church’s financial affairs. This role, combined with the Vatican’s complex financial operations and limited oversight, created an environment ripe for potential abuse.

In Becciu’s case, his authority allowed him to greenlight questionable investments and transfers without sufficient checks and balances. The Vatican’s unique status as both a religious institution and a sovereign state further complicates matters, creating a complex web of authority that can be difficult to navigate and monitor effectively.

The 60 Sloane Investment

In 2014, under Cardinal Becciu’s guidance, the Vatican invested €160 million for a 45% stake in 60 Sloane, a luxury apartment development in London’s exclusive Chelsea area. Five years later, they doubled down, paying an additional €190 million to gain full control.

The controversial nature of this investment goes beyond its sheer size. The Vatican, an institution often associated with charity and spiritual matters, was deeply involved in high-end real estate speculation. Greg adds, “When I think about how any church should spend its money, I’m thinking homeless shelters and soup kitchens, not homes for the ultra rich.”

Moreover, the investment’s structure was a labyrinth of financial complexity. Rather than investing directly, the Vatican put money into a fund that owned 60 Sloane. This fund charged exorbitant fees: a 2% annual management fee plus a 20% incentive fee. This convoluted arrangement allowed paper profits to be booked, resulting in high fees even as the actual investment hemorrhaged value.

The financial impropriety extended beyond the investment itself. Cardinal Becciu authorized a transfer of €125,000 to a charity run by his brother in Sardinia—a clear conflict of interest that the court later ruled embezzlement. In another shocking instance, €575,000 earmarked for negotiating a kidnapped nun’s release was instead misused by an alleged geopolitical expert for luxury shopping and vacations.

Ultimately, the 60 Sloane investment resulted in a staggering loss of €140 million for the Vatican. This case study demonstrates how even seemingly sophisticated investors can fall prey to financial misconduct when proper oversight and ethical leadership are lacking and complex financial structures obscure the true nature of transactions.

Accountability in Action: The Trial and Its Implications

The Vatican financial scandal culminated in a historic two-and-a-half-year trial, marking the first time a Catholic cardinal was prosecuted in the Vatican’s criminal court. 

Cardinal Becciu, once considered a potential future pope, was found guilty of several counts of embezzlement and fraud, receiving a sentence of five and a half years in prison and a fine of €8,000. Other key players faced similar fates: Gianluigi Torzi, involved in the property deal, was sentenced to six years for extortion, while Cecilia Marogna received a three-year and nine-month sentence for embezzlement.

The case of Cardinal Becciu is particularly intriguing because he was convicted of crimes from which he did not directly benefit. This nuance underscores the complexity of financial misconduct in large institutions, where the lines between poor judgment, conflict of interest, and outright fraud can often blur.

Conclusion: A Universal Lesson in Accountability

The challenges of implementing effective financial controls, as revealed in this case, are not unique to religious organizations. The Vatican scandal is a cautionary tale, reminding us that in finance, reputation, and moral authority are no substitutes for rigorous oversight and ethical conduct.

Those intrigued by this fascinating intersection of faith, finance, and fraud should listen to the full “Oh My Fraud” podcast episode. It offers a detailed account of the scandal and valuable insights for anyone interested in understanding and preventing financial misconduct.

Multi-Project Reporting to Nonprofit Integration: Sage Intacct’s Bold New Features

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In an era where client needs span from multi-entity corporations to nonprofit organizations, how can CPAs leverage technology to offer comprehensive financial management across diverse industries? The latest episode of the Unofficial Sage podcast, hosted by Doug Lewis, Emily Madere, and Matt Lescault, dives into this pressing question by exploring Sage Intacct’s latest product release.

At the heart of Sage Intacct’s evolution is a carefully crafted balance between enhancing core financial capabilities and expanding into specialized vertical markets. This approach enables accounting professionals to offer comprehensive financial management services across various industries while maintaining a unified technological platform.

Strengthening Core Financial Capabilities: Multi-Project Reporting

The new multi-project reporting feature significantly enhances Sage Intacct’s core financial reporting capabilities. This feature represents a major leap forward in financial management efficiency, especially for organizations dealing with multiple projects or grants.

Matt explains, “What Intacct has invested in is to bring some of those capabilities out of the interactive custom report writer… directly into the financial reports section of the reporting.” This enhancement streamlines the reporting process, enabling more timely, accurate, and insightful financial analysis across multiple projects.

Vertical Specialization: Construction Industry Enhancements

Sage Intacct is making significant strides in the construction industry, where unique financial management needs demand tailored solutions. Key enhancements include:

1. Addition of retainage to invoices

2. Integration of Sage Construction Management (formerly Core Con)

3. Introduction of Sage Field Operations

Emily notes, “Sage Intacct has added retainage to invoices. So now it includes project contract billing information. And this is really giving people visibility that they need.”

These construction-specific features put Sage Intacct in direct competition with established players like Procore while offering the advantage of seamless integration with its robust financial management platform.

Strategic Partnerships: Donor Perfect Integration for Nonprofits

Sage Intacct’s strategy for vertical specialization extends to strategic partnerships, particularly in the nonprofit sector. Integrating Donor Perfect, a popular CRM for nonprofits, into the Sage Intacct platform exemplifies this approach.

Matt explains the “gray labeling” concept: “Intacct is going out into the marketplace, finding the best in class solutions, and partnering with them to bring a fully-fledged software solution to the micro verticals.”

This integration offers significant benefits for CPAs serving nonprofit clients. It enables them to link financial data directly to donor information and generate comprehensive reports demonstrating the impact of donations on specific programs.

Enhancing Platform Power: User Interface and Integration Improvements

Sage Intacct is also focusing on improving its overall platform usability. Two key enhancements in this area are the introduction of a new REST API (currently in beta) and significant upgrades to the user interface, particularly in list views.

The new list view capabilities have been met with enthusiasm from both prospects and clients. Emily explains, “Our people, whether they’re prospects or clients, are so excited about this feature because… you can now expand columns, you can move columns, you can filter columns. There’s also a subset that comes out of the column.”

These improvements significantly streamline the review process, allowing CPAs to work more efficiently and gain insights more quickly.

Conclusion: A New Era of Comprehensive Financial Management

Sage Intacct’s latest product release marks a significant step in the evolution of financial management software. By balancing core functionality enhancements with industry specialization and strategic partnerships, Sage Intacct is positioning itself as a versatile solution for CPAs serving diverse client bases.

These developments offer exciting opportunities for CPAs to streamline current services, expand offerings, and take on more diverse clients. As the line between general financial management and industry-specific solutions continues to blur, CPAs who can leverage comprehensive platforms like Sage Intacct will be well-positioned to lead in the new era of financial management. For more information, listen to the full episode of the Unofficial Sage podcast.