Fraud experts have long known that “dark web” sites provide information, support and illicit goods to hackers and other criminals. But security company Terbium Labs recently published a report analyzing a treasure trove of fraud guides for sale on shady sites. These “educational” publications provide crooks with detailed instructions on exploiting security weaknesses to hack networks, obtain financial information and steal identities.
Although Terbium found that most of the guides it downloaded were relatively useless, there were still plenty that provided effective tips on compromising networks and disrupting antifraud procedures. The guides cover everything from account takeovers to phishing to counterfeit documents to stolen credit cards. Often, they discuss specific companies. For example, a “Bank Drop Creation Guide” provides detailed instructions on how to create a fraudulent bank account at nine specific financial institutions.
Some of the most dangerous information contained in these fraud guides tells would-be hackers how to use social engineering to breach companies’ security. Using the above example, a guide might contain a script crooks can follow to persuade a bank employee that a fraudulent account is legitimate.
Terbium’s analysis of the guides found that certain types of personal information were particularly prized by thieves. Email addresses, which enable phishers to personalize their come-ons and track down a target’s full name and social media accounts, led this list. Passwords, not surprisingly, were a close second. User names, Social Security numbers and dates of birth were also highly sought after.
Among financial data, hackers prefer payment card information — though they show a clear preference for credit cards over debit cards. Card numbers are considered easy to obtain (millions of card numbers are available on the dark web), so the guides provide tips on maximizing profits before fraudulent purchases trigger alarms with the victim or card company.
What can you do?
Given the number of fraud perpetrators and wealth of information available to help them commit crimes, you may wonder how you can protect your personal financial or business’s customer data.
Individuals can reduce their risk by ignoring suspicious emails and disclosing financial information only on sites that provide SSL certificate authentication and encryption. Also, they should share even innocuous-seeming information, such as email addresses, only when necessary. Businesses need to work with experts to build a data security system that addresses their specific risks — and to update it religiously. Also, be sure to implement policies and procedures that prevent employees from inadvertently assisting fraud perpetrators. Contact us for help creating internal controls that will reduce your company’s fraud vulnerabilities at 205-345-9898 and email@example.com.
© 2019 CovenantCPA
A common estate planning mistake that people make is to own property jointly with an adult child or other family member. True, adding a loved one to the title of your home, bank account or other property can be a simple technique for leaving property to that person without the need for probate. But any convenience gained is usually outweighed by a variety of negative consequences. Here are four:
1. Higher gift and estate taxes. Depending on the size of your estate, joint ownership may trigger gift and estate taxes. When you add a family member’s name to an asset’s title as joint owner, for example, it’s considered a taxable gift of half the asset’s value. And your interest in the asset — including any future appreciation — remains in your taxable estate. These taxes usually can be minimized or even eliminated by transferring the asset to an irrevocable trust.
2. Higher income taxes. Generally, property transferred at death receives a stepped-up basis, allowing your heirs to sell it without incurring capital gains tax liability. But if you add an heir to the property’s title as joint owner, only your interest in the property will enjoy this benefit. Any appreciation in the value of your heir’s interests between the date he or she is added to the title and the date of your death is subject to capital gains tax.
3. Exposure to creditors’ claims. Unlike property transferred to a properly designed trust, jointly held property may be exposed to claims by the joint owner’s creditors (and also claims from a former spouse).
4. Loss of control. A joint owner has the right to sell his or her interest to an outside buyer without your consent and the buyer may be able to go to court to force a sale of the property. In addition, when you die, the entire property will go to the surviving owner(s), regardless of the terms of your will or other estate planning documents.
If you currently jointly own property with a family member, contact us at 205-345-9898 and firstname.lastname@example.org. We can suggest alternative estate planning techniques to ease any gift, estate and income tax liability, and limit your exposure to creditors’ claims.
© 2019 CovenantCPA
Imagine giving your company’s retirement plan a report card. Would it earn straight A’s in preparing your participants for their golden years? Or is it more of a C student who could really use some extra help after school? Benchmarking can tell you.
Mind the basics
More than likely, you already use certain criteria to benchmark your plan’s performance using traditional measures such as:
- Fund investment performance relative to a peer group,
- Breadth of fund options,
- Benchmarked fees, and
- Participation rates and average deferral rates (including matching contributions).
These measures are all critical, but they’re only the beginning of the story. Add to that list helpful administrative features and functionality — including auto-enrollment and auto-escalation provisions, investment education, retirement planning, and forecasting tools. In general, the more, the better.
Don’t overlook useful data
A sometimes-overlooked plan metric is average account balance size. This matters for two reasons. First, it provides a first-pass look at whether participants are accumulating meaningful sums in their accounts. Naturally, you’ll need to look at that number in light of the age of your workforce and how long your plan has been in existence. Second, it affects recordkeeping fees — higher average account values generally translate into lower per-participant fees.
Knowing your plan asset growth rate is also helpful. Unless you have an older workforce and participants are retiring and rolling their fund balances into IRAs, look for a healthy overall asset growth rate, which incorporates both contribution rates and investment returns.
What’s a healthy rate? That’s a subjective assessment. You’ll need to examine it within the context of current financial markets. A plan with assets that shrank during the financial crisis about a decade ago could hardly be blamed for that pattern. Overall, however, you might hope to see annual asset growth of roughly 10%.
Keep participants on track
Ultimately, however, the success of a retirement plan isn’t measured by any one element, but by aggregating multiple data points to derive an “on track to retire” score. That is, how many of your plan participants have account values whose size and growth rate are sufficient to result in a realistic preretirement income replacement ratio, such as 85% or more?
It might not be possible to determine that number with precision. Such calculations at the participant level, sometimes performed by recordkeepers, involve sophisticated guesswork with respect to participants’ retirement ages and savings outside the retirement plan, as well as their income growth rates and the long-term rates of return on their investment accounts.
Ask for help
Given the importance of strong retirement benefits in hiring and retaining the best employees, it’s worth your while to regularly benchmark your plan’s performance. For better or worse, doing so isn’t as simple as 2+2. Our firm can help you choose the relevant measures, gather the data, perform the calculations and, most important, determine whether your retirement plan is really making the grade. Contact us at email@example.com and 205-345-9898 for more!
© 2019 CovenantCPA
We’ve reached the middle of the calendar year. So how are things going for your business? Conversationally you might say, “Pretty good.” But, analytically, can you put a number on how well you’re doing — or several numbers for that matter? You can if you choose and calculate the right key performance indicators (KPIs).
4 common indicators
There are a wide variety of KPIs to choose from. Here are four that can give you a solid snapshot of your midyear position:
1. Gross profit. This figure will tell you how much money you made after your manufacturing and selling costs were paid. It’s calculated by subtracting the cost of goods sold from your total revenue.
2. Current ratio. This ratio will help you gauge the strength of your cash flow. It’s calculated by dividing your current assets by your current liabilities.
3. Inventory turnover ratio. This ratio will warn you ahead of time if certain items are moving more slowly than they have in the past. It also will tell you how often these items are turned over. The ratio is calculated by dividing your cost of goods sold by your average inventory for the period.
4. Debt-to-equity ratio. This ratio will measure your company’s leverage, or how much debt is being used to finance your assets. It’s calculated by dividing your total liabilities by shareholder’s equity.
KPIs aren’t limited to widely used ratios. You can make up your own and apply them to any area of your business.
For example, let’s say the company’s goal is to improve its response time to customer complaints. Its KPI might be to provide an initial response to complaints within 24 hours, and to eventually resolve at least 80% of complaints to the customer’s satisfaction. You can track response times and document resolutions and eventually calculate this KPI.
As another example, say your business wants to improve its closing rate on sales leads. Its KPI could be to convert 50% of all qualified leads into customers over the next six months with the goal of raising this percentage to 60% next year.
Notice that these KPIs are both specific and measurable. Just saying that your company wants to “provide better customer service” or “close more sales” won’t produce a sound KPI.
Midyear is the perfect time to stop, take a breath and objectively assess your company’s performance. This way, if things are really going well, you can determine precisely why and keep that momentum going. And if they’re not, you can figure out how you’re ailing and adjust your budget and objectives accordingly. Our firm can help you choose the KPIs that will provide the information you need, as well as help you apply that data to good business decisions. 205-345-9898, firstname.lastname@example.org.
© 2019 CovenantCPA