streamline management & prevent fraud: newer banking tools and technology september 18/19...
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Streamline Management & Prevent Fraud: Newer Banking Tools and Technology September 18/19 2014. Learning Center for Nonprofits Discussion Leaders: Kay Sohl Nikki Geiszler & Susan Thompson. Workshop Topics. New Tools for : Cash receipts & disbursements Payroll & Benefits - PowerPoint PPT PresentationTRANSCRIPT
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Streamline Management & Prevent Fraud: Newer Banking Tools and Technology
September 18/19 2014
Learning Center for Nonprofits
Discussion Leaders: • Kay Sohl
• Nikki Geiszler & Susan Thompson
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Workshop Topics
New Tools for:• Cash receipts & disbursements• Payroll & Benefits• Electronic records• Internal audit/compliance
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Electronic Tools & Services
Risks• Never ending story• Fraud• Compliance • Data security• $$$$
Rewards• Save time• More effective
controls• Improved security• Streamlined audit
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Cash Disbursement Options
• ACH• Debit & credit cards• Purchase cards• Positive Pay• Wire• Outsourced A/P
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ACH
• Automated Clearing House• Electronic payment – no checks• Initiation & review controls • Filters- permit only authorized
vendor ACH payments• Blocks – prohibit all ACH
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Credit Cards
• Nonprofit is liable to issuer• Name of authorized user appears
on card• Explicit agreement that named
users are responsible for any improper charges
• Zero tolerance for misuse
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Credit Cards Red Flags
• Card available to multiple users• Inappropriate matching of limits to
users’ needs• Delayed submission of invoices• Acceptance of charge slips rather
than detailed invoices• Executives exempted from review
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Debit Cards
• Direct withdrawal from organization’s bank account
• Fewer legal protections for fraud than credit cards
• Your controls:Prohibit withdrawal of cash
Hold care holder responsible for all charges
Set daily and/or transaction maximums
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Purchase Cards
• Prepaid loading of cash onto cards• Issue for specific purposes• Ties up cash flow• Control risk by limiting amounts• Require detailed reporting from
vendor
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What about Points?
• Use of organizational credit and purchase cards ensures that points belong to organization
• Need clear policy for authorization for use of points
• Regular analysis of costs and benefits of points systems
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Positive Pay
• Electronic verification of checks before bank makes payment
• Requires transmission of disbursement records to bank
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Wire Payments
• Useful for same day transfers• Nonprofit must set up dual
controls for authorization• Fees may exceed ACH or check
preparation
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Outsourced A/P
• Outsourced provider handles:o Establishing vendor fileso Processing payments –ACH or checkso Maintaining record of disbursement
• You must provide controls for:o Vendor approvalo Invoice review & approvalo Review of disbursement reports
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Cash Receipt Options
• Remote capture devices• Credit & debit card payments• EFT• Web processors – PayPal, etc.• Wire transfers• Lockbox
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Remote Deposit Capture
• Device scans checks & transmits image to bank
• May permit electronic transfer of info from checks into A/R or fund development system
• Eliminates photocopying & physical bank deposits
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EFT
• Electronic Funds Transfers• Key tool for individual fund raising• Useful for recurring client charges-
child care, etc. • Controls required for data security• Less fully automated than recurring
credit card charges
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Credit & Debit Card Payments
• Credit card processing machine – transmits to bank & yields report of transactions
• Virtual terminal – Authorize.net, etc. -online processing
• Online software – Greater Giving, PayPal etc. - greater flexibility in reporting and data management
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Credit/Debit Cards - continued
• Controls must protect security of customer/donor data
• Out-dated processing equipment may facilitate fraud
• Significantly improves collection of fees
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Web Payment Processors
• Secured payment portals such as PayPal
• Permits donations & payments online
• Fees vary• Must control authorization for
transfer of funds from processor
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Lockbox
• Used for high volume payment receipt – donation campaigns, memberships, etc.
• Donor/customer sends payment directly to Lockbox P.O. Box
• Secured processing by bank results in immediate deposit & transmission of detailed electronic record
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Payroll & Benefits
• Electronic timesheets & review• Automated allocation to cost
centers• HR info systems
Vacation & PTO accruals
Evaluations
Certifications
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Electronic Timesheets
• Web-based systems permit employee entry of time record & supervisor review & authorization
• Many adapted to phones & tablets• Outsourced options increasing
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Automated PR Cost Allocation
• Electronic timesheets facilitate collection of time and effort data
• Sophisticated programs use time & effort info to allocate salary & benefits
• Set-up and training key to success
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HR Info Systems
• Complete sortable database of employee info -speeds reporting & analysis
• Includes ticklers for evaluations, certifications, etc.
• Vacation & PTO info – available via internet portal
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Internal Audit Tools
• Sortable CDs of all bank transactions
• Sortable A/P Vendor files• Vendor/Payroll/Other database
cross-reference tools
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Data Security Challenges
• Smartphones• Laptops & tablets• Donor/ customer data• Client data• Employee data
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Data Security Risks
• Client, donor, employee data shared inappropriately
• Data systems compromised for fraud
• Malicious hacking• Inadvertent data alteration or loss
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Basic Security Tools
• Passwords:o Must be complexo Must be changed frequentlyo Cannot be shared or stored where
others may use• Kill switches: disable access to
servers for lost or stolen laptops, phones, tablets, etc.
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Adapting Controls to Electronic Realities
• Double signature requirements• Authorization for transactions• Meaningful transaction review• Read-only access to bank info• ACH filters & blocks
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Compliance Tools
• Automated HR tickler systems• Cross tab of client & employee
data• Automated Procurement systems
with triggers for review• Client database – triggers &
ticklers
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Cost Benefit ???
• Will new tool/process improve:o Timelinesso Accuracyo Controlo Audit trail o Analysis
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More Cost Benefit ???
• Full cost of current systemso Direct labor o Supervision, corrections, reviewo Inadequate or delayed infoo Hardware & software, storage
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Still More ???
• Full cost of new tools:o Analysis and procuremento Set-upo Staff training- fiscal & programo Authorization & review functions
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OMB Super Circular
Encouraging Wordsfor nonprofits with federal funds
• Electronic storage of records is now permitted and encouraged so long as electronic record cannot be altered. § 200.335.
• Effective for awards beginning after December 26, 2014
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Your Next Steps???
• Review current systems & processes
• Discussions with current bank(s)• Identification of options• RFP for banking services• Cost benefit analysis