Jeff Stark, Audit Partner, Sensiba San Filippo

Many of us have heard the saying, “If you don’t know where you’re going, you probably won’t get there.” When it comes to building value in a company, this couldn’t be more true.

“Building a successful business — one that yields the greatest value to stakeholders — is hardly a random event,” says Jeff Stark, audit partner at Sensiba San Filippo. “It is the result of careful planning by business owners who understand which factors truly create value.”

Smart Business spoke with Stark about five critical factors for successful companies to create value.

Business owners have a clear plan, which they relentlessly pursue.

In order to maximize value, successful businesses must have stakeholders who are ‘one-minded.’ Business is very much a team effort, and a clear goal will help focus everyone’s energies.

Building consensus is very much a top-down process. It is important to determine which strategic track your company is on. For example, building a company for acquisition is a very different process than building a business to hand down to the next generation. Stakeholders need to know where they are headed so they can make smarter, better-informed decisions. Maintaining consensus is not always easy. Businesses can often be crippled by ‘analysis paralysis.’ Without clear, agreed-upon goals, decisions are often second-guessed, and the company must expend time and energy to get everyone back on the same page.

Stakeholders buying into your plan will give you the confidence to succeed in selling your value to customers. Consensus creates value at all levels, from making better hires to collectively working to overcome setbacks.

The business correctly values its products and services.

A second way of increasing value is making sure products and services are sold for their true value. Value is too often defined as how much it costs a company to produce the product or provide the service. Successful companies critically evaluate how much their products and services are actually worth to their customers.
Every company must have someone who can get in front of a customer and explain why a product or service is valuable. Asking for and getting the value of the product or service as it relates to the customer is critical to the process of generating value.
Many companies have a culture that takes a lesser view toward salespeople. Successful companies foster a sales culture and help employees recognize the value of the products and services they provide.

The company is in the business of relationship management.

Relationship management encompasses all of the relationships outside of the employees or customers of the business. These include vendors, bankers, attorneys and others who are essentially on the company’s business team. These relationships add value to the business. These ‘outsiders’ can give you valuable perspectives that you wouldn’t be able to get from people more intimately connected to the business.

Companies should focus on building solid relationships and not be overly concerned with ‘chiseling down the fees.’ The company should consider fees in light of the greater value it receives from key relationships.
Developing key relationships brings value to organizations. Oftentimes, simple acts, such as paying invoices on time or providing reports to lenders as promised, can make their lives easier, ensuring that the relationship will bring value when needed most.

Things must be written down and must be easily retrievable.

Documentation of key business activities can add significant value to a company. This is important for two reasons. In acquisitions, documentation often increases the value of target companies. When key business practices are written down, the acquiring company has more certainty that the institutional knowledge is safe. On the other hand, there are countless cases where lack of documentation has led to the collapse of an acquisition.
Businesses can also create value through operational improvements. Processes are refined and improved, but without documentation, value is often lost. When things are written down, they become real. There is suddenly tangible proof that can be accessed by internal personnel, outside accountants, the IRS, or anyone else who needs it. This becomes invaluable from an operating perspective, not to mention situations of disaster recovery.

The company must have an attractive, well-defined culture.

Culture means different things to different companies, but all companies should take the creation of a responsible business culture very seriously. Building a culture often starts with setting the tone at the top. When you build a culture that is open and honest, you have a better situation than one that is closed and secretive.

While some things need to be kept secret, sharing of information is almost always beneficial for the company. Business leaders should share the firm’s goals, challenges and successes with their teams. When everyone is aware of the target and how to meet it, more team members become involved in helping to reach goals.

Creating an attractive culture can improve performance, foster creativity and lead to greater contributions toward innovation. Companies should develop a culture that can adapt and take advantage of new ways of doing business. If a culture is stagnant, there can be missed opportunities for making the business run smoother and more efficiently.

This leads to a larger point about the nature of high-value businesses: The business may belong to you, but it is dependent on other people helping you achieve your goals.

Jeff Stark is an audit partner at Sensiba San Filippo, a regional CPA firm based in the San Francisco Bay area. Stark specializes in increasing values of venture-backed technology firms. At SSF, he has helped prepare companies for acquisitions upwards of $100 million. Reach him at (408) 286-7780 or jstark@ssfllp.com.

At Sensiba San Filippo, we have one of the largest 401K practices, serving clients across Northern California.

Our 401K audit team brings over twenty-five years combined experience, delivering superior client service, ensuring consistency with your engagement team, a highly focused project timeline and proactive communications throughout the engagement. 

Sensiba San Filippo (SSF), a leading Northern California-based CPA and business consulting firm, has earned AccountingWEB’s 2011 Fittest Accounting Firms honor for firms with more than 51 employees. 

AccountingWEB selected the 2011 Fittest Accounting Firms winners based on criteria that included fitness activities offered within the firm, wellness programs and coaching offered to employees, firm-wide encouragement of fitness activities during the workday, reimbursement programs for fitness/wellness activities, firm-wide team sports, fitness incentive programs, and availability of ergonomic furniture/equipment.

“We strive to create a culture that supports wellness and empowers employees to make healthy choices,” said John Sensiba, managing partner of Sensiba San Filippo. “Promoting wellness initiatives provides a more positive work environment and healthier employees. Healthier employees can be more passionate about serving clients and providing a superior level of client service. ”

Sensiba San Filippo offers several fitness options and flexible work arrangements to ensure employees have time to commit to their health and fitness goals. The comprehensive wellness program provides employees with discounted fitness classes, gym memberships, or the option to go to one of the two on-site gyms at the firm’s Bay Area offices.

The firm brings in outside training sources on a regular basis for yoga, Pilates, stress management, nutrition sessions, and on-site chair massages during busy tax season. In addition, the firm participates in softball tournaments, group bocce ball, bowling, golfing events, and group walkathon fundraisers.

Contacts:

Infinite PR
Gus Nodal, 415-732-7825
gnodal@infinitepr.com
or
Sensiba San Filippo LLP
Elisabeth Au-Yeung, 925-271-8700
eauyeung@ssfllp.com

Sensiba San Filippo LLP (SSF), a leading regional public accounting, tax and consulting firm has been honored as a regional leader on Accounting Today’s list of the top regional firms (West). The list was compiled based on net revenue, increases in revenue, and growth in staffing.

Accounting Today publishes annual lists of accounting and tax firms to recognize leaders in the U.S., dividing the country into 10 geographic regions. All regions saw growth in 2011, falling into three groups: those with extremely high growth, those with decent growth, and those with a small amount of growth. The western region fell into the second group, with 28 firms were recognized as leaders, experiencing 4.61 percent revenue growth.

 “We are extremely proud to be recognized as a leading firm for the third year in a row,” said John Sensiba, managing partner of Sensiba San Filippo. “Being passionate about serving our clients and hiring exceptional talent are the keys to our continued success. We have aggressive growth plans in 2012 and beyond, and through our unwavering commitment to delivering superior client service, are confidant about our future as a great firm!”

Accounting Today reported that a tough economic landscape and evolving regulatory oversight continue to change financial reporting, bookkeeping, and tax consulting, creating more demand for experienced accounting, auditing and tax firms. Increases in demand for services by clients such as nonprofits, health care facilities, real estate and construction, law firms, and doctors’ offices contributed to firms’ overall growth.

Contacts:

Infinite PR
Gus Nodal, 415-732-7825
gnodal@infinitepr.com
or
Sensiba San Filippo LLP
Elisabeth Au-Yeung, 925-271-8700
eauyeung@ssfllp.com

Sensiba San Filippo (SSF) is pleased to announce that partners Stephanie Tsiagkas and Wonsun Shin Willey have been selected to receive the 2012 YWCA Silicon Valley Tribute to Women Award (TWIN), and senior associate Sara Youngs has been selected to receive the 2012 YWCA Silicon Valley Emerging Leader Award. All three will be recognized at an awards program to be held at the San Jose Fairmont on May 10, 2012.

The YWCA TWIN Award honors women who exemplify excellence in executive-level positions and the companies who employ them. The Emerging Leader Awards category, in its first year, honors women early in their careers who show evidence of leadership capabilities, demonstrate a pattern of leadership progression, take steps to engage others in their profession, and contribute to the success of their organization.

“We are thrilled that Stephanie, Wonsun, and Sara have been recognized for their leadership and unparalleled commitment to client service and their support of our local communities,” said Managing Partner John Sensiba.

Ms. Tsiagkas, an Audit Partner with Sensiba San Filippo, brings over 12 years of experience working with venture capital funds and privately held and emerging companies with an emphasis on the software and semiconductor industries.

Ms. Willey, a Tax Partner with Sensiba San Filippo, brings over 15 years of financial accounting and tax experience to her client base, comprised primarily of closely-held businesses and their entrepreneurial owners.

Ms. Youngs, an Experienced Senior Associate, has been with Sensiba San Filippo LLP for over four years and specializes in the construction and manufacturing industry.

Contacts:

Infinite PR
Gus Nodal, 415-732-7825
gnodal@infinitepr.com
or
Sensiba San Filippo LLP
Elisabeth Au-Yeung, 925-271-8700
eauyeung@ssfllp.com

Ernie Rossi, Audit Partner, Sensiba San Filippo

Savvy business owners know the value of internal controls and the critical importance of reviewing those controls on a regular basis. Effective internal control systems must be adapted to changes in business practices and the global economy. So how do today’s top businesses keep up?

Smart Business Magazine spoke with industry expert Ernie Rossi on the prevention and detection of internal fraud. For almost 20 years, Rossi has educated clients on maintaining effective internal controls. As an audit partner at Sensiba San Filippo, Rossi teaches clients best practices for establishing internal controls and keeping them in step with the times.

What kinds of businesses need to protect against fraud?

No company is 100 percent immune to fraud. However, certain types of companies are at greater risk. Small companies tend to have limited resources, meaning they have employees who perform multiple duties. This is a problem because small businesses cannot easily separate what a good internal control structure would call ‘conflicting tasks.’ Properly separating tasks forces perpetrators of fraud to conspire in order to steal, and collusion is more difficult than acting alone.

Larger businesses may be more capable of separating tasks, simply due to having more staff, but over time, they can experience increasing risk of fraud if they become lax in pinpointing loopholes in their systems. Given time, people find weaknesses in the system, and can exploit these.

One common denominator among companies is that few believe they are susceptible to internal fraud. But statistics in this area are clear — most often, fraud is perpetrated by a long-term employee or friend. It is best to have well designed and implemented internal controls that reduce, as much as possible, the opportunities to commit fraud in the first place.

Under what conditions does internal fraud occur?

Internal fraud can be compared to a ‘perfect storm’ in which a motivated perpetrator meets poorly designed or poorly implemented internal controls and little or no monitoring of those controls. It is generally a rationalization on the employee’s part that they are entitled to the fraud. For example, the perpetrator might say, ‘The owner makes way too much money,’ or, ‘I work really hard, and the business doesn’t properly reward me for my efforts.’

You can distinguish between businesses that have poorly designed internal controls and those whose controls are poorly monitored. Internal controls may be in place, but sometimes the business’s culture evolves to a point where controls are allowed to be ignored. One common example: An increasingly busy workplace where checks are signed without thorough review of supporting invoices.

How can companies prevent internal fraud?

Companies that are led by a management team who sets the ‘tone at the top,’ by modeling the greatest degree of integrity, may be at less risk for internal fraud.  Business owners who play fast and loose with tax laws and company assets can expect employees to feel comfortable doing the same. While some business owners recognize the risk of fraud, they are often unsure about the steps required to prevent it. Companies should start small. The first step is to leverage a third party to review the business and uncover potential problems through an assessment of internal controls. This will help identify the areas of biggest risk — the low-hanging fruit.

The second step is to implement controls, such as separation of duties of employees, to shore up vulnerabilities uncovered in the assessment. Next, periodic reviews by internal managers and external assessors will help to keep controls from slipping out of practice.

It’s also important to educate employees about the purpose of the controls. Increased awareness, along with the knowledge that internal controls are a priority, will serve as a strong deterrent. Communicate that internal controls will ultimately protect employees if and when a fraud is committed by allowing them to quickly be eliminated from suspicion.

Financial audits can be helpful, but audits alone cannot replace internal controls or a thorough risk assessment. Audits only test a sample out of thousands of transactions, which are selected at random. So, the audit may catch an error, but it is no guarantee that the error is going to be a result of the fraud.

What qualifies an individual or a firm to assess risk?

Consider hiring a CPA with audit experience. They need not specialize in fraud, but they should be someone with lengthy experience in public accounting. Generally, CPAs with significant public accounting experience are well suited to evaluate controls that currently exist and assist in developing additional or more effective controls.

Basic assessments can be conducted over a few days or weeks, depending on the size of the business and amount of time needed to document the business’s day-to-day practices. The assessment does not need to be done all at once. The business owner should meet with the selected professionals, perform a general assessment, and then design a plan over time to develop and implement a comprehensive internal control system. After controls are implemented, periodic maintenance should be performed. Over time, even good controls will become less effective. Eventually people find their way around the controls, especially if they know they are not monitored regularly.

How does a service provider help clients protect themselves against fraud?

Any service provider should talk with clients about controls frequently, and not just during an annual audit or financial statement preparation. In every meeting, they should listen for key phrases or changes to the business. For example, the phrase, ‘We’re having cash flow problems,’ may indicate a control issue.
In order to truly reduce the likelihood of fraud, education and communication should be top priorities on both sides of the table.

Ernie Rossi is an audit partner at Sensiba San Filippo and may be reached at (925) 271-8700 or erossi@ssfllp.com.

Sensiba San Filippo (SSF), a leading Northern California-based CPA and business consulting firm, will be awarded today with the Business Philanthropy Award by the Pleasanton Chamber of Commerce. The award will be presented during the Chamber’s 49th Annual Community Service Awards Gala, which honors individuals, groups and businesses who have made significant contributions to the communities in which they live, work and serve.

“It’s a special honor to be recognized by the Pleasanton Chamber of Commerce for our team’s commitment and support of our local community,” said John Sensiba, managing partner of Sensiba San Filippo. “Community service is one of the founding principals of our firm, and is a critical component of our firm’s go-to-market strategy. We are pleased to be recognized for our passion in serving our local communities, and the support they have provided back to us, in our growth in the Bay Area.”

Sensiba San Filippo’s active involvement with local communities is best exemplified by the company’s annual “All Hands Day,” during which all 90-plus employees spend the afternoon volunteering for a local non-profit. In addition, employees give back to a variety of community organizations on an individual basis. Mr. Sensiba sets the bar high as the Audit Committee Chairman of ValleyCare Hospital, an active participant in the local Rotary club, and a veteran coach of youth sports teams.

Sensiba San Filippo will be honored along with five other recipients (Goodguys Rod & Custom Association, Pleasanton Community Concert Band, Bob Athenour, Dahlin Group Architecture Planning, and the Firehouse Arts Center) at an awards program to be held on March 23, 2012 at the Firehouse Arts Center, 4444 Railroad Avenue, Pleasanton, Calif. Complete details and registration information can be found here.

Contacts:

Infinite PR
Gus Nodal, 415-732-7825
gnodal@infinitepr.com
or
Sensiba San Filippo LLP
Elisabeth Au-Yeung, 925-271-8700
eauyeung@ssfllp.com