The SBA admits that EIDL fraud is rampant, and other accounting news you may have missed


  • In fintech, JP Morgan Chase is laying down the gauntlet for Square with fast payment product QuickAccept, while PayPal looks to catch up by finally welcoming cryptocurrencies.

  • The SBA’s pandemic loan-related headaches continue as Bloomberg reveals mind-blowing levels of EIDL fraud, and large companies complain about the agency’s loan necessity questionnaires looking into those $2 million+ loans.

  • A survey indicates that more companies have come round to remote work since the pandemic started. That’s just as well, because it looks like remote working has inspired 14 million Americans to plan moves to more affordable areas.

On two recent episodes of the Cloud Accounting podcast, we look at the latest developments in the ever-evolving fintech space. PayPal and JP Morgan Chase have their sights set on Square, with the former finally bringing cryptocurrency on board, and the latter introducing a rival payment platform with some interesting incentives. Too little too late?

Only schadenfreude connoisseurs will be happy with the PPP news. The SBA has quietly been asking companies that received loans of over $2 million to fill out questionnaires assessing whether they actually deserved them, without indicating if certain answers could mean no loan forgiveness. 

Meanwhile, the agency has admitted that fraudsters scammed their way into millions of dollars worth of Economic Injury Disaster Loans (EIDL), one $10,000 check at a time.

Plus, we look at the impact remote work could have on the demographics of the country as it pushes millions to move (or at least plan to). And how many retiring accountants do you know?

💳 JP Morgan Chase squares off against Square with rival payment product

Since 2009, streamlined payment platform Square has been making handing over your money to small businesses easier than ever. And now, big banks are finally ready to enter the battle for our payments. 

JP Morgan Chase’s new rival product QuickAccept comes with some tantalizing extra incentives. Like Square, QuickAccept will allow customers to pay businesses instantly through a mobile app or a contactless card reader. Each card payment costs a processing fee of 2.6% plus 10 cents, in line with Square and other competitors. Unlike Square, the funds will be instantly available at no extra cost, and Chase will automatically throw in a business checking account.

The bottom line: Imitation is the most sincere form of flattery, but that’s not much consolation when you’re at risk of being outdone at your own game. Especially when the big banks went after Square in the early days, claiming the technology wasn’t secure. 

Square has an 11 year head start, but JP Morgan Chase’s irresistible benefits and existing customer base could see them catch up fast. And it’s incorporated said customer base into its plans. CEO of the Chase Business Banking unit, Jen Roberts, told CNBC that the bank plans to automatically transition most of its small business customers over to QuickAccept, which means they don’t even have to market it. Square’s market dominance could be pear-shaped.

₿ Cryptocurrency is coming to PayPal

In the ongoing contest between banks and fintech, PayPal took a step ahead for the latter team when it announced that it will finally embrace cryptocurrencies. Before the end of 2020 (which may feel like years in the future but is actually only a few weeks away), U.S. PayPal users will be able to buy, sell and hold Bitcoin and other cryptocurrencies in their PayPal wallets, Reuters reports

From early 2021, these users will also be able to make payments using their crypto, and PayPal plans to roll these capabilities out to users in other countries and to its mobile payment platform Venmo in the first half of the year too.

The bottom line: PayPal is playing catch up to other fintech companies like Square and Robin Hood, which embraced cryptocurrencies a while ago. But it’s definitely the Goliath to their Davids, and it’s not clear that the outcome of this fight will follow the Biblical plot line. 

PayPal has a network of 26 million merchants and 346 million active accounts. It processed $222 billion in payments in the second quarter of 2020. That kind of reach could make its rivals’ head starts meaningless in the long run. 

On the bright side, PayPal’s embrace of cryptocurrencies is a reminder that fintech companies are at least a decade ahead of most banks. And if a company as large and influential as PayPal is ultimately able to leave traditional banking systems behind in favor of crypto, how long will those banking systems even be relevant?

📗 QuickBooks introduces insurance and another Salesforce connection

There is a smattering of new QuickBooks features, big and small. On the more notable side is QuickBooks Insurance, which is supported by “a handpicked list of insurance providers,” according to the QuickBooks blog, and designed, unsurprisingly, to tailor policies for small businesses. 

QuickBooks is also introducing a couple of third-party connectors. Power BI users will be able to connect dashboards to their QuickBooks data. And there’s now a Salesforce connector to help small businesses manage their money on the platform. 

Finally, the Reclassify Transactions feature, which previously used to be available only in QuickBook Online Accountant will now be available on QuickBooks Online Advanced.

The bottom line: QuickBooks continues its march towards becoming a one-stop-shop for small business owners. It’s particularly good to see the Salesforce connector back on their agenda, as it’s something the company has tried to do multiple times before with limited success. Third time’s a charm!

🎲 Accounting Seed hopes its game can make learning accounting... fun?

If your only issue with a four-hour game of Monopoly is that it doesn’t delve deeply enough into the truly technical aspects of money management, you (and maybe only you) will appreciate Accounting Seed’s new board game

The Accounting Game is free to download and can be played alone or with other players (assuming you can find some.) The intention is to make learning accounting as fun and accessible as possible for people who are either studying accountancy or need to know the basics as part of their job.

The bottom line: No one thinks the Accounting Game is going to be the next Monopoly. This isn’t the kind of game you break out after a big holiday meal. It’s not so much a game as a training exercise. It’s very clear that it’s sticking with the basics, primarily focusing on debit and credit transactions. The simplification extends to the point of creating the head-scratching portmanteau “Liabequities.” 

That said, founder and CEO Tony Zorc and his mascot Buddy the plant-human hybrid bring a level of enthusiasm to accounting that may just make concepts like accrued expenses, deferred revenue and accumulated depreciation stick better than any textbook.

📱 Turn your political ad pain into your strategic gain

American voters weren’t the only ones feeling jittery in the lead up to Election Day: our phones were too. The MIT Technology Review reported that one pre-election estimate had political campaigns from both sides of the aisle sending a total of three billion texts to potential voters. 

Don’t expect that to decrease in the next election cycle. (Good luck in January, Georgia voters.) Not only is it perfectly legal thanks to a loophole with the Federal Election Commission (FEC), but it’s easy thanks to bulk messaging apps; cheaper than TV ads; and has a higher open rate than emails (70 to 98% compared to 20 to 30% on a good day.)

The bottom line: You can’t beat them so join them. These campaigns have proved that where emails can be filtered or ignored, people will read short messages on their phones whether they want to or not. Accountants should be using the same tactic as politicians — in this instance, anyway — whether that’s shooting clients a text about that paperwork they’ve been waiting on, or sending out mass texts to find new leads. And although there are plenty of apps that allow you to text many people at once, there’s a gap in the market for an app that specifically does this for accountants. Turn that headache into a head start.

🧾 SBA asks companies that got $2m+ in PPP loans to retroactively prove they deserved them

In April 2020, large companies including Ruth’s Chris Steak House and Shake Shack found themselves tumbling out of the searing pan and into the fryer when it was revealed that they’d applied for and received forgivable PPP loans worth over $2 million. Seven months later, Politico reports that the Small Business Association (SBA) is quietly asking companies that received these large loans to prove that they really needed them, via a nine-page “loan necessity” questionnaire. Failure to fill out said questionnaire may give the SBA ammunition to rule that the loan was ineligible.

The bottom line: There was bipartisan backlash to the news that these large companies received loans supposedly intended for small businesses. But this retroactive attempt to address that backlash is, unsurprisingly, proving unpopular with companies. 

Spare a thought for the accounting departments handling these huge business’s vast demands. They’re the ones that have to make sure yet another form matches everything they’ve already filled out for the program, lest they be accused of intentional fraud. Adding even more uncertainty into the mix, the SBA hasn’t made clear what the repercussions would be for filling out the forms in a way it deems unsatisfactory. However, many companies are assuming it could mean that they will be denied loan forgiveness.

💸 EIDL program defrauded by scammers from Chicago to Nigeria

With Congress still unable to reach an agreement on more federal aid, people have taken matters into their own resourceful hands. A Bloomberg investigation revealed that the SBA’s Economic Injury Disaster Loans (EIDL) program has been the subject of massive fraud. 

All people had to do to get the $10,000 grant within days was claim to own a business with 10 employees. Entire residential buildings in Chicago and Miami, as well as professional scammers in Russia and Nigeria, quickly got in on the scheme, with claimants teaching each other how to game the process. According to NPR, the SBA’s Inspector General Michael Ware admitted that the agency had sent as much as $78 billion of loans to potentially fraudulent or ineligible applicants.

The bottom line: Bloomberg’s interviews with external fraud investigators and temporary SBA workers reveal that this was a case of less speed, way too much haste. 

After getting heat for not moving fast enough to approve loans early on, the SBA switched to a rapid-fire approach. It used speedy mortgage company Quicken Loans’s rapid decision-making tools, which don’t have the ability to check if someone actually owns a business, and claim assessors were only given 15 minutes to determine each case’s eligibility. 

The SBA says that it’s referred 80,000 cases for criminal investigation, but it’s unlikely that those will go anywhere. Unlike those long-gone $10,000 checks.

💼 Brush off your resume: companies are looking to refill lost positions

Staffing agency Adecco has published a tentatively optimistic poll on hiring plans in the accounting industry and beyond, reported on Accounting Today

Of the more than 1,000 hiring decision-makers and managers surveyed, nearly 70% that had laid off or furloughed employees said they planned to backfill those eliminated positions (i.e. hire new people, not bring back previous employees.) And 86% said they planned to do this within a year, while 61% planned to do it in under six months. 

Among accounting and finance firms specifically, nearly 50 percent were looking to backfill eliminated positions, with about half looking to do it in four to six months, and nearly a third in seven to 11 months.

The bottom line: Employment in the accounting and finance sector has remained relatively stable compared to other industries, which may explain why the proportion of accounting and finance firms looking to refill those lost positions is lower than the average. Tax season is now a glimmer on the horizon, which may create a need to ramp up hiring in the first quarter. With unemployment numbers seemingly rising every week, any news of rehiring is a reason to be hopeful.

💻 The pandemic has convinced more companies to try remote hiring

In the early stage of the pandemic, many companies chose to postpone hiring rather than take the process remote. But a survey by staffing firm Robert Half indicates that eight months in, more companies have accepted that they need to fill vacant jobs remotely. 

According to the survey, 75% of companies represented had conducted remote interviews since the pandemic, compared to 12% pre-pandemic. The percentage of companies advertising fully remote jobs has increased 49%, from 12% pre-pandemic to 61% during the pandemic. 

The bottom line: Despite initial resistance to doing things remotely, more companies are adapting to it, potentially for the better. The survey also found that 60% of respondents felt that hiring remotely shortened the process overall, and that same percentage said that they’d expanded their employee hunt to other areas in the hopes of pulling from a larger pool of candidates. One side perk of holding remote interviews is that it shows quickly whether someone really is as technology-savvy as their resume promised.

🏡 Over 14 million people plan to relocate 

Companies that are still resisting the shift to remote work may be pushed into it by employees. A survey of over 20,000 American adults by employment experts Upwork determined that 14 million to 23 million Americans are planning to move, partly thanks to the wider acceptance of remote work. To give you an idea of just how far they’re willing to go, the survey found that 54.7% want to relocate beyond regular commuting distances, moving two hours or more away from their current location. 

The bottom line: This is all hypothetical at the moment. But as remote work transitions from temporary solution to expected employment option, it opens up possibilities for people who would traditionally have been tied to one particular area. It’s no coincidence that 20.6% of those who want to move live in major cities, which have more job opportunities but also come with higher costs of living. If you can take your job anywhere, you can move somewhere with more economically accessible accommodation. 

And take note CPAs: According to CNBC, the most in-demand remote work category is computer and mathematical occupations, followed by those in business and financial operations. Time to start remote house hunting.

🎈 Buy ‘Congratulations on your Retirement’ cards in bulk this year

Your budget for office-related niceties has probably stayed relatively untouched in 2020, which is just as well because a large chunk may well be going on retirement gifts. An exposure draft published in 2015 estimated that 75% of AICPA members would be eligible for retirement in 2020. The draft was specifically arguing the case for adding a retired CPA status to the Uniform Accountancy Act (UAA), similar to the inactive CPA status used to account for CPAs who have let their qualifications lapse.

The bottom line: The article on Going Concern doesn’t say whether the AICPA really can expect to bid goodbye to three quarters of its members this year. If so, it looks like more jobs are about to open up. It might also suggest that CPAs tend to be on the grey-haired side of the age spectrum: or that younger CPAs are choosing not to join the AICPA. But undoubtedly the most pressing question it raises is, can you buy retirement cards in multipacks?

Thanks for reading! Did you enjoy this news roundup? Join my newsletter to get these updates sent directly to your email inbox. And listen and subscribe to the Cloud Accounting Podcast, the #1 accounting and bookkeeping podcast in the world.

Source: blakeoliver

The SBA admits that EIDL fraud is rampant, and other accounting news you may have missed