Category: The Weekly Spiff!

Posts related to The Weekly Spiff!

By Marilou C. Vroman, CPA, CFE

Most dealers and their personnel in financial management roles are quite familiar with the fundamental requirement to reconcile cash balances with the bank.  Many of our clients perform daily reconciliations in addition to a full monthly reconciliation to ensure all transactions have been captured, and the GL is an accurate representation of the dealer’s cash position from one day to the next.  Because of the inherent risk in cash, is common for an outside auditor to request copies of bank statements and the related reconciliations to ensure proper cash controls are in place.  However, is viewing a reconciliation which balances to zero and ties out to the bank and GL balances sufficient to know your cash is properly controlled?

We often examine bank reconciliations and supporting statements, but from a different perspective.  We know bank reconciliations are usually expected by the controller or CFO and are likely reviewed.  However, [...]

By Marilou Vroman, CPA, CFE

CSI, SSI, Customer Satisfaction… you hear about it all the time and know how vital these terms are for dealership success and profitability.   How each dealership approaches its CSI is very different.  In visiting many stores, and being a dealership client myself, I’ve observed many different practices in place and how these potentially impact customer satisfaction.   Interestingly in the most complex CSI initiatives, there is one simple thing that your employees can change today that can easily increase client satisfaction.

While recently visiting one of my clients for internal audit field work I took notice to how the employees of the dealership were treating their guests, and me.  Believe it or not, auditors don’t always receive a warm welcome in dealerships, in fact, some auditors are intentionally placed an uncomfortable work space, such as a cold room with no windows and employees are instructed to not provide any more information [...]

By Courtney Becton

Over the years, the Axiom Advisors team has had the opportunity to work in many areas serving the retail automotive industry, including working directly in dealerships and for CPA Firms. In these years, a common trait observed about dealership owners and executives, is their plates are always full. Work-life balance seems nearly impossible and getting burned out is more likely, which in turn, increases the margin for error and key operational details can be overlooked. The financial aspects of typical dealerships are unique, highly intricate and can be stressful to maintain. Often-times, owners are wearing multiple hats and haven’t been able to relinquish control over responsibilities to the appropriate personnel. Often, there isn’t sufficient headcount, or the right skill set to effectively delegate all the work that needs to be done.

Having worked in dealerships for many years, I grew to believe that outside help was very limited or even non-existent. After [...]

By Phil Villegas

Last year GM was the first of the major manufacturers to cease reporting sales on a monthly basis and shift to quarterly reporting. Ford followed suit early this year and FCA announced earlier this month to do the same.  Prior to GM making the initial move, the only other mainstream manufacturer to not report monthly but rather quarterly was Tesla. The move essentially allows the manufacturer some latitude in having to explain monthly spikes and/or drops that can be seasonal or tied in with fleet sales, allowing them to gain better control of the message when reporting quarterly.

I agree with the move of getting away from monthly reporting and opting for quarterly, I can only wish this move could trickle its way to dealers moving to quarterly financial reporting.  I believe that similar to manufacturers, for dealers, monthly sales reporting is somewhat of an inefficient and non-representative financial picture of the [...]

By Marilou C. Vroman, CPA, CFE

A dealer and his loyal CPA and family attorney typically form a bond over the years in a relationship that has potential to last for decades provided that level service and value for the price paid both remain high.  I believe that this relationship is important and should be respected by other CPA, consulting and advisory firms.  However, a dealer may have specific needs that require the skills of a specialist.  Is it OK to explore and engage the use of more than one firm to address a dealer’s highly specialized operational needs?

Accountants and attorneys, like doctors, often specialize in a practice area.  While every doctor knows that exercise and proper nutrition will lead to a healthier body and every CPA knows how to properly keep the financial records, and most attorneys know contract law, not every doctor knows how to perform heart surgery, nor does every accountant [...]

By Phil Villegas

Several years ago, there was a great cartoon I came across from Leo Cullum.  At the time it truly resonated with me since I was working with a CPA firm and could clearly see firsthand the differences between “accounting” and “accountability”.

While most CPAs, will go to great lengths to tell their clients a reviewed or audited financial statement is not designed to uncover fraud, most dealers will simply hear the word “audit” and will get a false sense of security that all of their transactions are being analyzed.

For a CPA to provide an opinion on a financial statement, they need to ensure that it’s not materially misstated.  The term “materiality” is a cornerstone of most engagements.  Materiality is the maximum amount by which auditors believe a statement could be misstated, by known [...]

By Marilou C. Vroman, CPA, CFE

On April 15th there tends to be some nervous energy around.  It is Tax Day.

Whether you choose to file your tax return by April 15th or file for an extension, your personal tax obligation is still due on this day.  Ever since my first real job and learning the rules of federal withholding, I was the one who thought that it was better to withhold a little extra along the way, than to get hit with a large tax bill and have to write a painful check.  However, not all employees are so conservative and some, may go to any length to beat the system.

Dealership’s have a wide array of personnel with varying tax situations.  From individuals claiming complete exemption from federal income tax withholding, to those who claim zero allowances and, well, let’s just go ahead and request some additional withholding while we are at it.  [...]

By Marilou C. Vroman, CPA, CFE

A recent article surfaced regarding a dealership embezzlement where a service department employee was allegedly taking cash collected from service customers for their service work and subsequently pocketing the funds.  The scheme was perpetrated by manipulating the repair orders after the customer had paid for the work.  The repair order would initially be customer pay, and once the funds were collected, the repair order would be changed to a warranty repair. At times, the VIN and actual repairs performed would be altered to create what appears to be a valid warranty claim in an attempt to recover the stolen funds from the manufacturer.   We often see repair orders voided or labor hours discounted in order to cover up the theft of cash.   In this case however, the employee likely realized the technicians still need to be paid for the hours flagged as per the original repair order and would [...]

By Phil Villegas

As internal auditors and forensic accountants, we always approach most operational and accounting reports with a degree of skepticism because we ultimately know the impact that human behavior can potentially have on these reports.  To emphasize how important it is for us to know the reports and data we are looking at are pure and unaltered, it is standard protocol for us to require our clients to provide us system access in most of our engagements.  We will seldom, if ever, rely solely on client reports if the reports have not been run by one of our associates.  While this can often create increased workload for our team, it’s fundamental to what we do.

The recent story below, which is true will highlight the importance of this.

One of our analysts, who was not as well versed with the UCS as he is with other DMS systems, had requested a copy of [...]

By Marilou Vroman, CPA, CFE

Buying a dealership can be an exciting and stressful proposition.  Working with manufacturers, lenders, attorneys and accountants all in the interest of getting past the closing table to run your new automotive retail venture.  Many of the hurdles of acquiring a dealership can be overcome, but one area that can create a significant amount of stress between buyer and seller is negotiation and interpretation of the asset purchase agreement (“APA”) which governs the sale of the dealership assets.

For those contemplating their first acquisition, the APA will typically highlight what will be purchased (e.g. inventories, fixed assets, goodwill etc.) and the method of valuation of each type of asset.  The interpretation of the “what is being sold and for how much” can put a dealership transaction at risk if left until the date of closing to be discussed between buyer and seller.  For example, an APA will typically include new [...]

Back to top