Fraud advice and more on the value of client advisory services

Hosted by Neil Amato

Businesses’ approach to fraud and internal controls has undergone drastic change as a result of the pandemic. Danielle Supkis Cheek, CPA/CITP, CGMA, the director of entrepreneurial advisory services at the firm PKF Texas, says that rules around things such as on-time payment of payroll taxes now have to be reconsidered. She shares more about the unintended consequences of pandemic-related relief, advice for applying technology to limit fraud, and more.

Also, hear more about recent articles and an AICPA & CIMA ENGAGE 2021 session on the topic of client advisory services.

What you’ll learn from this episode:

  • How fraud risks have changed for businesses in the past 18 months.
  • Why it can be “a puzzle” for some businesses to establish segregation of duties.
  • Why the thinking around certain internal controls has been changed by the pandemic.
  • A preview of the August JofA cover story on tips for starting a client advisory services practice.
  • An ENGAGE presenter’s advice for firms positioning themselves to be acquired.

Play the episode below or read the edited transcript:

To comment on this episode or to suggest an idea for another episode, contact Neil Amato, a
JofA senior editor, at


Neil Amato: Welcome back to the Journal of Accountancy podcast. This is senior editor Neil Amato. Coming up next is a conversation with Danielle Supkis Cheek. Danielle is a CPA and is the director of entrepreneurial advisory services at the firm PKF Texas. She’s a repeat guest on this podcast. You’ll hear from her after this brief sponsor message.

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Amato: Danielle, welcome back to the podcast. When we last spoke, it was the early days of the pandemic, March of 2020. What areas of fraud will businesses need to become more cognizant of in the next 12 months as a result of the pandemic?

Danielle Supkis Cheek: You know, I think the same risks still apply as before, but I think there’s more risks that are just being piled on. You know, as everybody’s pivoting again — so, it was a fast pivot last time — anytime you have the pivots, there’s just a lot of things that are changing. The nice part now is people have a little bit more time to plan for things, but it’s still anytime you have major disruptions or major changes, there’s always opportunities to sneak something through.

So, I think that the organizations should really be cognizant of, do they really understand who they’re paying money to? The vendors, there’s been a lot of spend for a lot of organizations on new vendors, new technology, new software. Making sure that they’ve vetted their different, new things. I think clearly the cyber — it’s on the news all the time. The cyberattacks, business email compromised is huge right now.

But the other thing that is different right now is after there’s been so much government relief. A lot of money moved into organizations very quickly, and have you put controls in place to either make sure that that money is secure? Or, if it’s one of these relief programs where you don’t have to pay the money right now and get to delay paying the money back, such as the payroll tax deferral, do you have money being set aside enough to be planning to pay it back and have you made the appropriate accommodations in your organization?

Amato: Your bio on the PKF Texas website says that you’re “passionate about protecting clients’ businesses from fraud.” Why does that appeal to you?

Supkis Cheek: Well, I think it’s still the case that small- and medium-size businesses really are the engine of our economy. I think this entire situation has proved how important those businesses are to our economy and employ many people. If you have a medium or small business that has a loss due to fraud – yeah, they may have some insurance that covers it, maybe not — but it’s catastrophic. That’s what closes businesses down. You know, losing $25,000 or $50,000 for a business right now can be a make-or-break situation for business where they have to close.

Trying to make sure that those businesses have their assets protected, I think really does protect a good segment of our economy as well as people that are employed by those businesses. I think it protects a — I wouldn’t call them a “vulnerable population” because I don’t think it’s vulnerable. But it’s a population that doesn’t have the resources to put protections in place at scale the same way other businesses do but yet are more vulnerable in the sense of — I don’t want to call it a “small fraud” because any fraud is bad and it’s all relative — but what seemingly for a larger business would be a small fraud is catastrophic to a medium-size business.

Amato: For those smaller businesses, creating the fraud control of segregation of duties can be difficult. I guess simply because of lower number of employees. How can those puzzles be worked out to set up proper segregation of duties, and how has that changed since the onset of the pandemic?

Supkis Cheek: You are right, it’s a puzzle. I think this is one of the most interesting areas in my space because you can’t just go tell a client, “Go hire three more people that are going to twiddle their thumbs and do nothing.” Right now, with the talent shortage in certain industries, it’s even more imperative to find ways around it.

So, I usually recommend either software or banking tools to start mimicking what things could be done as segregation of duties with a bigger staff. But yet using a technology piece to do a piece that would have otherwise needed to be done by a different staff person. Or, putting people that normally don’t have a key role in controls but have no other role within the accounting function, give them an easy step because the technology makes it very easy. They have this narrow-scope thing, then you train them very appropriately on the nuances of what they’re looking for, and bringing other people into the steps because they don’t need to know as much as you would if you were having a whole accounting department. You just need to understand, “This is what I’m supposed to be reviewing. These are the things I’m looking for. I’ve already had a validation checked by a software tool that does all these extra steps for me.”

So, you can start having this decentralization within smaller companies by leveraging outside software tools and honestly, I do love banking products. So, I guess if there’s any bankers listening, you’re welcome. But, you know, people are always afraid to pay for banking services. To me, it just doesn’t make much sense. It’s kind of penny wise, pound foolish because these products really should be compared to the cost of FTEs, you know, fulltime equivalent employees in your business. [The services] are a couple hundred dollars a month. They can really protect you from internal as well as external fraud if you implement them appropriately within your own business. They’re great products, usually.

Amato: I think that’s good advice. Anything you’d like to add in closing? Thank you for the time today.

Supkis Cheek: I touched on it in the beginning, but I would say the piece that is new, uncharted territory that businesses need to pay attention to are things that we told businesses to never allow happen, such as not paying their payroll taxes. We set up no processes for clients to ever have this be a growing account of letting those payroll taxes grow. It is now permissible to do some of those things on a limited basis if you apply for the right things or qualify or whatnot. Those monies are going to have to be paid back at some point; it isn’t money you get to keep. Businesses have not prepared for it.

In the past, these were controls that we said, “Never let this happen.” In order to even comply with some of these government programs, you’re having to override your own controls that you created because this was a thing that should have never happened in a traditional or non-pandemic time setting. So, as monies are owed back or as things go back to — I hate the term “new normal” these days because it’s overused — but as things go back to whatever it’s going to go back to, watching for those things, are you actually making sure you get everything paid you need to get paid, planning for it? Because I really see a tidal wave coming of money that needs to be paid back.

And I’m not talking about PPP stuff. I know that’s a big, hot topic. But other monies and other unintended consequences of some of these programs that have been out there and making sure you understand all the strings that came with the money you got because you needed it at that time.

Amato: Again that was CPA Danielle Supkis Cheek. The type of insight she’s talking about falls under the umbrella of client advisory services, or CAS, which is a service area that’s growing in importance for CPA firms.

The recently completed AICPA & CIMA ENGAGE 2021 event had several sessions focusing on CAS, and CAS is also emphasized in the latest issue of the Journal of Accountancy. The August cover story by JofA senior editor Courtney Vien features 7 tips to help launch a CAS practice, and another article highlights the ways CPAs have used CAS to save small businesses during the pandemic.

CAS also came up in an ENGAGE session with speaker Joel Sinkin, president of Transition Advisors. His session focused on mergers & acquisitions, and he mentioned that firms are seeking to acquire certain niches, including CAS. For firms that may be in the market to be acquired, Sinkin offered advice on three fronts:

First, don’t ask buyers to take over your property lease, as the profession is trending toward a smaller real estate footprint. Second, limit your list of “must-haves” or other constraints.

And third, stay up to date on technology. Sinkin said buyers are wary of firms that aren’t taking full advantage of cloud computing, for instance, or don’t have a smooth-running remote work setup.

In other news, the U.S. Small Business Administration issued guidance in late July intended to speed up and simplify the forgiveness process for Paycheck Protection Program loans of $150,000 or less. Jeff Drew has that story. A large majority, 93% of outstanding loans in the $800 billion program, are beneath the $150,000 threshold.

That’s all for this week. A quick reminder, especially if you’re liking what you hear, to subscribe, rate, and review. We’d love to hear your feedback. Thanks for listening to the Journal of Accountancy podcast.