Accounting Class-Action Filings Jumped 47% Last Year

Accounting Class-Action Filings Jumped 47% Last Year

The study, by Cornerstone Research, found that accounting settlements represented the majority of the number and dollar value of total settlements. After two years of relatively low activity, 69 new cases were filed with accounting allegations, compared with 47 in 2013 and 45 in 2012.

At 70 percent, the proportion of settlements involving accounting cases was at its highest level in four years. The share of total settlement dollars attributable to accounting cases rose from 25 percent in 2013 to 85 percent in 2014, returning to a more typical level.

In 2014, more than one in four accounting case filings referred to an Securities and Exchange Commission inquiry or action—the highest level in five years. Last year, 18 accounting case filings involved an SEC action compared to five in 2013.

“The surge in accounting-related securities class actions is particularly notable given the lack of change in the overall level of securities class action filings in the past year,” said Elaine Harwood, a vice president of Cornerstone Research and head of the firm’s accounting practice, in a statement. “The increase appears to be, at least in part, a result of the SEC’s heightened focus on accounting-related fraud as demonstrated by the substantial growth in accounting case filings that refer to inquiries or actions by the SEC.

Cornerstone’s results also show that accounting case filings involving restatements of financial statements reached their highest level in the last seven years—both in terms of the number and as a percentage of total accounting cases.

“The increase in filings of cases involving restatements is consistent with our finding of a relative increase in negative stock price movements surrounding restatement announcements in 2014 as compared to recent years,” said Cornerstone Research senior advisor Laura Simmons. “Overall, the relative increase in stock price drops surrounding restatement announcements may have encouraged plaintiffs to file these cases.”

The number of accounting case filings with announcements of internal control weaknesses was higher than in any of the previous five years.

The Disclosure Dollar Loss Index for accounting case filings with restatements increased to its highest dollar level since 2005. (Disclosure Dollar Loss measures the decline of market capitalization at the end of the class period.)

The energy sector emerged in 2014 as the highest contributor to total settlement value, while accounting case settlements associated with financial firms waned.

The number of accounting case settlements involving Chinese reverse merger cases also declined in 2014, reflecting the fact that filings of these cases dropped substantially beginning in 2012.

Cloud Accounting: Side by Side

Our comparison guide to the leading Web-based accounting and finance packages

Technology moves fast, and if you want to keep your clients, you’d better be able to keep pace with change. Just a few years ago, everyone was struggling to make sense of, and define, the “cloud.” Today, a few years later, your clients (and hopefully your firm) have stopped worrying about defining it, and instead, have started using applications and storage based on cloud technology.

Various forms of social media, along with backup, are probably the most common cloud applications that companies and individuals use. But bookkeeping and accounting are also popular and becoming more so every time you look.

This is by and large for the best. For years, the offerings from accounting vendors shrank from year to year as companies offering software were acquired by others. Many of the founding members of personal computer-based accounting have vanished. State of the Art, Great Plains, BPI, and many others are just history. And along with companies being subsumed into accounting software behemoths, choices have narrowed.

Cloud-based accounting has reversed that trend, especially in the bookkeeping/entry-level area where much of the action is taking place. Choices are better than ever, and there’s a pricing plan to meet almost every need, from free for a single service-oriented operator, to hundreds of dollars a month for enterprise-level companies with sophisticated requirements. What’s really exciting about the applications detailed in the charts (and those from vendors we weren’t able to include) is the depth of features and capability, even in very reasonably-priced products.

The accompanying charts detail some of the major features in offerings from eight vendors. We’ve segregated the information into features that will be most germane to your clients, and those that will be of interest to you in working with the clients that decide to adopt bookkeeping or accounting in the cloud .

In examining the charts, keep in mind that the products listed vary in capability from basic bookkeeping to sophisticated ERP. In many cases, this is reflected in the price, and many of these vendors offer versions with basic capabilities for little or no money, and paid versions with additional features. In all cases, these cloud-based applications are priced using a subscription model, with payments due on a monthly or yearly basis. For many of your clients, this will be an added bonus, as it doesn’t tie them into long-term contracts, or additional charges for support and/or upgrades, and obviates the need for huge expenditures in capital equipment. In fact, with many of the products appearing in the charts, a smartphone or tablet is all the equipment needed (other than possibly a printer) to perform and access all of the features and capabilities of the application.

We’ve endeavored to make the accompanying charts as accurate as possible, verifying the entries with each vendor. But keep in mind that all of these applications are works in progress, and that a feature that wasn’t available at the time the chart was being prepared may have been added in the interim, so double-check with the vendor if you feel that an application is almost perfect for one of your clients. (As an example — when we originally compiled the tables, Xero did not have inventory, but they released it just last week.)


The bottom line …

Accounting Power: Cloud-based applications are the evolutionary descendants of Software-as-a-Service/hosted apps, and AccountantsWorld, the provider of Accounting Power, was one of the original pioneers of SaaS. Accounting Power is a write-up system with client bookkeeping capabilities, and is part of a modular cloud-based set of integrated applications that include payroll and document management.

FreshBooks: FreshBooks is very much more oriented toward basic bookkeeping, rather than true double-entry accounting. It has strong invoicing, time and expense keeping, and optional credit card processing for accepting electronic payments. A large number of partnerships let your clients expand FreshBooks’ capabilities into e-commerce, CRM, and other capabilities. There’s a free version of FreshBooks if your client has simple needs.

Intacct: Intacct is based around a core of financial reporting, offering a modular cloud-based system very similar to mid-market and enterprise in-house applications. Intacct has small-business packages starting at as little as $50 a month, but its portfolio of applications, third-party partners, and scalability will make it particularly worth considering for your midsized clients who are growing.

Kashoo: Kashoo’s entry-level plan provides a good level of features including invoicing, bank transaction downloading, and familiar financial reports such as a balance sheet and income statement. Even this inexpensive plan allows your client to track sales taxes and prepare remittance reports (though not to fill in specific official forms). A slightly more expensive plan adds accountant access and multi-company support.

NetSuite: NetSuite is targeted more toward the mid-market and enterprise-sized businesses than it is SMBs. It offers a suite of cloud-based products including ERP, CRM, and PSA (which is a project management offering that contains project planning and management, as well as time and expense management). Also included under the NetSuite umbrella is e-commerce, and vertical versions of the different components are also available.

QuickBooks Online: In the SMB market, QuickBooks is the accounting application with the largest market share. Like the in-house version, QuickBooks Online offers several editions, with more expensive editions offering more features. New to the QuickBooks approach is an inexpensive online edition for freelancers and contractors that eschews many of the features and offers an uncomplicated way to keep track of what expenses are business and which are personal.

Sage One: Sage One offers two different plans — Sage One Invoicing and Sage One Standard Accounting, which includes invoicing. The entries in the chart reflect features found in Standard Accounting. Sage One isn’t meant as anything more than a basic bookkeeping system. Sage has more robust and comprehensive applications available as both hosted and in-house solutions.

Wave: Wave offers a relatively complete set of bookkeeping tools, and for the most part they are free (you do occasionally get hit with ads for products and services from other companies — that’s what pays the bills). Wave offers several products — accounting, invoicing (and invoicing from mobile devices), personal financial management, and receipt management are all free. Wave does charge for its payroll service, as well as the ability to accept credit card and electronic payments.

Xero: Xero offers three plans, starting as inexpensively as $9 a month and rising to as pricey as $70 a month. The least-expensive plan limits your client to sending five invoices a month, paying five bills, and reconciling 20 bank transactions, while the two more expensive plans remove these caps and add payroll (in seven states) for either five or 10 employees, though additional employees can be accommodated for an extra cost. (Note: Xero also now offers inventory; earlier versions of this story included a table that was prepared before this was announced.)

Microsoft Announces Spring ’15 Release of Dynamics CRM

Microsoft announced the Spring ’15 release of Microsoft Dynamics CRM, featuring enhancements in the five areas of productivity, social, mobility, analytics and knowledge.

The specific updates, announced at the Microsoft 2015 Convergence conference:

The productivity enhancements extend from a seamless and deep integration of Dynamics CRM with Office 365. Among the possibilities, the integration enables Excel “what if” scenarios to update as forecasts right within CRM and the use of OneNote in CRM to improve sales team collaboration.

On the mobility front, the user experience will be a “configure once, deploy everywhere” model that allows users to interact with the same sales processes across all mobile devices. Microsoft has also added a mobile SDK so users can extend and create their own mobile apps.

The analytics update relates to the out-of-the-box integration of PowerBI Connectors for Microsoft Dynamics CRM and Microsoft Dynamics Marketing. With this tool, users can analyze data with interactive dashboards and reports in Power BI.

The Dynamics CRM knowledge updates come with the start of Parature’s integration in the Spring ’15 release, bringing knowledge management to users’ daily service interactions.

Additionally, Microsoft announced that the Dynamics CRM tablet app can now be managed through secure mobility solution Good Technology, providing a container for local data, a secure data tunnel, and the ability to manage secure email and web links from the app. While enabling employees to access the Dynamics CRM tablet app, organizations can now enforce central policy management with tools like device wipe and password management.

Microsoft expects the Spring ’15 release to be available to customers by the end of the second quarter of 2015.