News & Tech Tips

How to leverage AI in your accounting department

Many people speculate that artificial intelligence (AI) will replace humans for certain work-related tasks in the future. But accounting and finance jobs may be safe — at least for now.

Recent study

Brigham Young University recently put AI to the test. Academic researchers administered an accounting exam covering such topics as accounting information systems, auditing, financial accounting, managerial accounting, and tax. The results? Undergraduate students scored an average of 76.7%, compared to only 47.4% by AI-powered ChatGPT. In particular, the study found that humans outperformed AI in several key areas, including tax, financial, and managerial assessments.
AI may not yet be advanced enough to handle complex, managerial-level accounting and finance tasks. But it can be leveraged to automate certain lower-level accounting duties. Examples of tasks where you can eliminate manual (human) intervention include journal entries, bank reconciliations, and some aspects of the budgeting and forecasting process.

Getting started

To begin automating these accounting processes, consider taking the following five steps:

1. Inventory manual processes. Prepare a list of manual processes and rank them by complexity and the number of hours to administer them. This provides a prioritized list of automation candidates. Select the most straightforward process to convert first.

2. Standardize processes. Automation works best with standardized tasks and processes. So, you’ll need to apply a standard approach to all transactions. Identify exceptions and scrutinize why they exist and how they can be eliminated.

3. Focus on the source data. Accounting data often exists in different formats and locations, which doesn’t facilitate automation. So, you’ll need to centralize your accounting data using a consistent structure and format.

4. Document requirements. Many types of AI software solutions exist. Identify the functionality and capabilities you’ll need and use this list to screen potential providers.

5. Conduct robust testing. Before relying on the output generated by AI software, test the output to make sure it’s accurate and reliable. Such testing should use statistically valid sampling techniques. You’ll also need to consider judgmental sampling procedures, which allow team members to select transactions based on their training and experience.

Putting AI to the test

In general, the use of AI software can minimize data entry errors, reduce processing time and lower costs. However, getting it to work in the accounting department of a business takes some initial legwork and a fresh mindset. It also may affect the procedures a CPA performs when preparing your financial statements. Contact us for more information.

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Overview of discontinued operations reporting

Traditional business models in many sectors have been disrupted by the COVID-19 pandemic, geopolitical uncertainty, rising costs, and falling consumer confidence. If your company is planning a major strategic shift this year, management may need to comply with the updated accounting rules for reporting discontinued operations that went into effect in 2015.

Discontinued operations typically don’t happen every year, so it’s important to review the basics before preparing your year-end financial statements.

Defining discontinued operations 

The scope of what’s reported as discontinued operations were narrowed by Accounting Standards Update (ASU) No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Since the updated guidance went into effect in 2015, the disposal of a component (including business activities) must be reported in discontinued operations only if the disposal represents a “strategic shift” that has or will have a major effect on the company’s operations and financial results.

Examples of a qualifying major strategic shift include the disposal of:

  • A major geographic area,
  • A line of business, or
  • An equity method investment.

When such a strategic shift occurs, a company must present, for each comparative period, the assets and liabilities of a disposal group that includes a discontinued operation separately in the asset and liability sections of the balance sheet.

Disclosing the details

In addition, ASU 2014-08 calls for expanded disclosures when reporting discontinued operations. The goal is to show the financial effect of such a shift to the users of the entity’s financial statements, allowing them to better understand continuing operations.

The following disclosures must be made for the periods in which the operating results of the discontinued operation are presented in the income statement:

  • Major classes of line items constituting the pretax profit or loss of the discontinued operation,
  • Either 1) the total operating and investing cash flows of the discontinued operation, or 2) the depreciation, amortization, capital expenditures, and significant operating and investing noncash items of the discontinued operations, and
  • Pretax profit or loss attributable to the parent if the discontinued operation includes a noncontrolling interest.

Management also must provide various disclosures and reconciliations of items held for sale for the period in which the discontinued operation is so classified and for all prior periods presented in the balance sheet. Additional disclosures may be required if the company plans significant continuing involvement with a discontinued operation — or if disposal doesn’t qualify for discontinued operations reporting.

For more information

Major strategic changes don’t happen often, and in-house personnel may be unfamiliar with the latest guidance when preparing your company’s year-end financial statements. Contact us to help ensure you’re complying with the updated guidance.

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Achieving the right balance of working capital

Working capital — the funds your company has tied up in accounts receivable, accounts payable, and inventory — is a critical performance metric. During times of rising inflation and interest rates, managers search for ways to free up cash and eliminate waste. However, determining the optimal amount of working capital can sometimes be challenging.

Balancing act 

The amount of working capital your company needs depends on the costs of your sales cycle, upcoming operating expenses, and current repayments of debts. Essentially, you need enough working capital to finance the gap between payments to suppliers and creditors (cash outflows) and payments from customers (cash inflows).

Having too much-working capital on the balance sheet can drain cash reserves, requiring a company to tap into credit lines to make ends meet. In addition, money tied up in working capital can detract from growth opportunities and other spending options, such as expanding to new markets, buying equipment, hiring additional workers, and paying down debt.

But having too little working capital to act as a buffer can also create problems — as many companies learned from supply chain shortages during the pandemic. Ongoing geopolitical uncertainty has caused some companies to scale back on just-in-time inventory practices, causing working capital balances to increase.

3 keys to reducing working capital

Working capital best practices vary from industry to industry. Here are three effective ways to manage working capital more efficiently:

  1. Expedite collections. Possible solutions for converting accounts receivable into cash include the following: tighter credit policies, early bird discounts, collection-based sales compensation, and in-house collection personnel. Companies also can evaluate administrative processes — including invoice preparation, dispute resolution, and deposits — to eliminate inefficiencies in the collection cycle.
  2. Trim inventory. This account carries many hidden costs, including storage, obsolescence, insurance, and security. Consider using computerized inventory systems to help predict demand, enable data-sharing up and down the supply chain, and more quickly reveal variability from theft.

It’s important to note that, in an inflationary economy, rising product and raw material prices may bloat inventory balances. Plus, higher labor and energy costs can affect the value of work-in-progress and finished goods inventories for companies that build or manufacture goods for sale. So rising inventory might not necessarily equate to having more units on hand.

  1. Postpone payables. By deferring vendor payments, when possible, your company can increase cash on hand. But be careful: Delaying payments for too long can compromise a firm’s credit standing or result in forgone early bird discounts. Many companies have already pushed their suppliers to extend their payment terms, so there may be limits on using this strategy further.
For more information

There’s no magic formula for reducing your company’s working capital requirements, but continuous improvement is essential. Contact us for help evaluating working capital accounts and brainstorming solutions to minimize working capital without compromising supply chain relationships.

© 2023

Cybersecurity: as much about technology as it is about training and awareness

Cybersecurity is essential in the workplace because it helps to protect the company’s data, networks, and systems from unauthorized access, theft, and damage. The reality is we cannot hide from the fact that there are people who want to infiltrate our computer system to obtain private information or to hold our data hostage. Cybercriminals have no scruples. Driven by financial, political, corporate espionage, and “FIG” (Fun, Ideology, and Grudge) motives, they have no concern for who or how they harm companies or individuals. It is crucial, with the increased sophistication and frequency of cyber-attacks, that companies implement robust security measures.

A cyberattack can have a devastating effect on your business:

• Data loss and manipulation
• Unexpected ransom payment
• The cost associated with response and recovery
• Cost of investigation
• Regulatory breach reporting and legal consequences
• Potential fines and damage payments
• Operational disruption and decreased productivity
• Reputation damage and compromised trust
• Loss of customers/clients
• Threat to ongoing business operations

As business owners, we have many safeguards in place to protect our computers and networks. We have purchased firewalls, website blockers, antispam filters, EDR systems, antivirus protection, multi-factor authentication, data encryption methods, and backup systems. However, cybersecurity is as much about technology as it is about training and awareness.

Proper cybersecurity training is crucial in the workplace. Employees are often the weakest link in the security chain, and they can unwittingly expose the company to cyber threats through simple actions such as clicking on malicious links or using weak passwords. Therefore, it is advantageous for companies to train staff members about cybersecurity policies and best practices to aid them in identifying possible threats, taking appropriate action, and avoiding security lapses.

We must be diligent and intentional in protecting our data and computer systems.

Consider the following areas of cybersecurity training in the workplace:
  1. Password management: Employees should be trained on how to create strong and work-specific passwords.
    • Internal passwords should not be the same as personal ones, and do not use personal information in passwords.
    • Remove lists of passwords from the network.
    • Utilize password management software.
  2. Data protection: Employees should be trained to handle and send sensitive information, such as customer data and financial records, to others.
    • Encryption is key – purchase and require the utilization of encryption software.
    • Do not use public Wi-Fi.
    • Do not use flash drives.
    • Create separate users for bank accounts and use two-factor authentication.
  3. Phishing awareness: Employees should be educated on how to identify and report suspicious emails and links that may be part of a phishing attack.
    • Never click links, open attachments, send money, or provide information if you don’t know the sender. (Note: Unsubscribe links are dangerous)
    • Narrow the attack surface: Don’t shop online or surf the web while at work. These activities open you up to more phishing assaults.
    • Block news channels
    • Phones are easily hackable – do not plug phones or other devices into your computer to charge.


Cybersecurity awareness and training are crucial in the workplace to safeguard the company’s assets, reduce the danger of data breaches and cyberattacks, and uphold stakeholder and customer trust. It is your business to protect and preserve, and it is your business to lose if you don’t. Stay ahead of the next cyberattack. Start today and schedule a training session with your users to heighten awareness.


Linda L. Nay

Vice President, Administration




How to use QuickBooks as a fraud detection tool

Many businesses and nonprofits use QuickBooks® as a cost-effective solution to manage their accounting processes. However, the software’s capabilities extend beyond organizing and streamlining your company’s accounting. QuickBooks can also help you detect fraud. Here’s an overview of the software’s fraud detection and prevention features:

Transaction audit trails

QuickBooks creates audit trails that capture user activities. This can help your company identify unauthorized changes. The audit trail includes:
• The transaction date,
• The user’s name, and
• The type of change.
Administrators can apply filters to audit log data that can help evaluate what’s happening and determine whether further analysis is required.

Trend detection and analysis

QuickBooks can generate accounts receivable and accounts payable aging reports to identify unusual balances. Creating periodic and ad-hoc financial statements can help uncover sudden changes or irregularities in revenue, expenses and cash flow. Unexplained anomalies can foreshadow asset misappropriation and financial misstatement schemes.

Exception reporting

Exception reports can be used to flag transactions that deviate from established patterns or thresholds. Customized reports can focus on specific areas of concern, such as duplicate payments, unusual expense categories, voided transactions and vendor payments. QuickBooks also makes it easier to perform bank reconciliations to detect discrepancies between bank and company records that can signal fraud.

User roles and access

Controlling access to data and limiting a user’s ability to engage in certain transactions is a crucial component of an effective internal control system. QuickBooks allows businesses to assign predefined and customized user access. Simply put, by limiting user access rights, your business can reduce the likelihood of fraud happening.

Fraud Awareness

In general, QuickBooks streamlines the detection, reporting and investigation of potential fraud. In turn, this creates a culture of fraud awareness that filters from the accounting department to the rest of the organization — and demonstrates that management is watching out for dishonest behavior. Proactive managers can thwart would-be fraudsters by minimizing perceived opportunities for fraud to happen, thereby minimizing the organization’s potential for losses.

More than an accounting solution

QuickBooks has built-in capabilities that make it a valuable tool for detecting and preventing fraud. Contact us for help using the functionality embedded in the software, adopting a proactive approach to loss prevention, and fostering a culture of fraud awareness.

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