KKAJ Blog Posts in Santa Clarita Valley

February 22, 2017

Manage Assets for Smooth Operations

As manufacturers look for every opportunity to cut costs, one important area to address is equipment downtime. A breakdown, even for just an hour, reverberates through the manufacturing process. It can slow or halt production, leave employees idle and play havoc with just-in-time delivery schedules.

If you're like some manufacturers, your approach to equipment maintenance and repairs is reactive: "If it ain't broke, don't fix it." In contrast, top manufacturers use enterprise asset management and perform predictive maintenance 70 percent of the time on average. In return, they average 96 percent machine availability. 
Basic asset management involves electronic gathering and interpreting of data for the purpose of keeping plants humming. It includes making an inventory of all property and equipment, monitoring its use, logging and analyzing maintenance and repairs, setting up maintenance schedules to prevent breakdowns, forecasting when to replace parts and keeping contracts, warranties and service agreements. 
Having a sound asset management system is like having a crystal ball. You'll know a machine's performance well enough to predict when to schedule maintenance. By doing so, you can prevent a breakdown or detect signs that parts are wearing out before they actually go. 
Unfortunately, that crystal ball has been out of reach for many manufacturers, primarily due to the heavy initial investment of capital and labor required. Another deterrent has been the difficulty of building an integrated system out of a smorgasbord of specialized software products from multiple providers. It is nearly impossible to find a provider that offers a total package. 
These issues are being addressed by software manufacturers, which should make asset management more accessible. For example, at least one vendor of plant automation software is offering modular, scalable systems so that you can begin modestly by monitoring one critical piece of equipment and add modules as your budget allows. In addition, the system is based on an open standard, which gives you flexibility to add compatible products from other software providers
January 24, 2017

Tax Fraud Awareness: How to Protect Your Identity and Assets

The IRS, taxpayers and tax preparers share a common enemy: identity thieves. We all have a part to play in the fight against tax-related identity theft. Your role starts by learning the mechanics and warning signs. From there, taxpayers can take proactive steps to protect their data online and at home.

Understand How Tax Fraud Happens

Dishonest individuals may steal taxpayers' personal and financial information from sources outside the IRS, such as social media accounts where people tend to share too many details or bogus phishing emails that appear to come from the IRS or a bank. Once they obtain an unsuspecting taxpayer's data, thieves may use it to file fraudulent federal and state income tax returns, claiming significant refunds. 

Paperless e-filing facilitates these scams: Thieves submit returns electronically, based on falsified earnings, and receive refunds via mail or direct deposit. Sure, the IRS maintains records of wages and other types of taxable income reported by employers, but they don't usually match these records to the information submitted electronically before issuing refund checks. By the time the IRS notifies a victim that it's received another tax return in his or her name, the thief is long gone and has already cashed the refund check. 
In addition to refund fraud, thieves may use stolen personal information to access existing bank accounts and withdraw funds — or open new ones without the taxpayer's knowledge. Criminals are becoming increasingly sophisticated and their ploys more complex, making identity theft harder to detect. 
Recognize the Warning Signs
Taxpayers are the first line of defense against these scams. The IRS lists the following warning signs of tax-related identity theft:
Your electronic tax return is rejected. When the IRS rejects your tax return, it could mean that someone else has filed a fraudulent return using your Social Security number. Before jumping to conclusions, first check that the information entered on the tax return is correct. Were any numbers transposed? Did your college-age dependent claim a personal exemption on his or her tax return? 
You're asked to verify information on your tax return. The IRS holds suspicious tax returns and then sends letters to those taxpayers, asking them to verify certain information. This is especially likely to happen if you claim the Earned Income tax credit or the Additional Child tax credit, both of which have been targeted in refund frauds in previous tax years. If you didn't file the tax return in question, it could mean that someone else has filed a fraudulent return using your Social Security number. 
You receive tax forms from an unknown employer. Watch out if you receive income information, such as a W-2 or 1099 form, from a company that you didn't do work for in 2016. Someone else may be using the phony forms to claim a fraudulent refund. 
You receive a tax refund or transcript that you didn't ask for. Identity thieves may test the validity of stolen personal information by sending paper refunds to your address, direct depositing refunds to your bank or requesting a transcript from the IRS. If these tests work, they may file a fraudulent return with your stolen data in the future.
You receive a mysterious prepaid debit card. Identity thieves sometimes use your name and address to create an account for a reloadable prepaid debit card that they later use to collect a fraudulent electronic refund.
If you suspect foul play, contact your tax preparer immediately. He or she can help determine whether you're a victim of tax-related identity theft and identify steps to remedy the situation. 
Take Preventive Measures
You may wonder how many taxpayers file electronic vs. paper returns. "There are 150 million households that file federal and state tax returns involving trillions of dollars…. More than 90% of these tax returns are prepared on a laptop, desktop or even a smartphone — whether they're done by an individual or a tax preparer. This is a massive amount of sensitive data that identity thieves would love to get access to.… With 150 million households, someone right now is clicking on an email link they shouldn't, or skipping an important computer security update, leaving them vulnerable to hackers," said IRS Commissioner John Koskinen in a recent statement about the Security Summit Group. (See "IRS Creates Security Summit Group" above.)
How can you actively safeguard your personal data online and at home? Here are four simple ways to thwart tax-related identity theft:
1. Keep your computer secure. Simple, cost-effective security measures add up. For example, use updated security software that offers firewalls, virus and malware protection and file encryption. Be stingy with personal information, giving it out only over encrypted websites with "https" in the web address. Also back up computer files regularly and use strong passwords (with a combination of capital and lowercase letters, numbers and symbols).
2. Avoid phishing and malware scams. Be leery of emails you receive from unknown sources. Never open attachments unless you trust the sender and know what's being sent. Don't install software from unfamiliar websites or disable pop-up blockers.
3. Protect personal information. Treat personal information like cash. Don't carry around your Social Security card in your wallet or purse. Be careful what you share on social media — identity thieves can exploit information about new car or home purchases, past addresses, vacations and even your children and grandchildren. Keep old tax returns in a safe location and shred them before trashing. 
4. Watch out for scammers who impersonate IRS agents. IRS impersonators typically demand payment and threaten to arrest victims who fail to ante up. The Federal Trade Commission recently issued an alert about police raids on illegal telemarketing operations in India that led to the indictment of dozens of IRS impersonators. Remember: The IRS will never call to demand immediate payment, nor will they call about taxes you owe without first mailing you a bill.
Another simple way to prevent someone from filing a fraudulent return is simply to file your return as soon as possible. The IRS begins processing tax returns on January 23. If you file a tax return before would-be fraudsters do, their refund claims are more likely to be rejected for filing under a duplicate Social Security number. 
Join the Fight 
The deadline for filing your 2016 return is fast approaching. The IRS expects more than 70% of taxpayers to receive a refund for 2016, and it's on high alert for refund fraud and other tax-related identity theft schemes. You can help the IRS in its efforts to fight tax fraud by watching for these warning signs and safeguarding your personal and financial information.
IRS Creates Security Summit Group
In 2015, the IRS formed the Security Summit Group, a collaboration of federal and state tax agencies and tax practitioners to find new ways to protect taxpayers and safeguard the tax system. In 2016, Security Summit Group efforts led to a 50% reduction in the number of new reports of stolen identities on federal tax returns compared to 2015.
One example of the new-and-expanded safeguards for taxpayers is the introduction of a Form W-2 Verification Code. Starting this tax season, certain payroll service providers will have to supply this 16-digit code to help the IRS validate wage and tax withholding information. The code is expected to appear on approximately 50 million W-2s in 2017, up from 2 million forms in 2016.
If your W-2 contains the code and you file taxes electronically, make sure your tax preparer enters it on your 2016 tax return. The IRS will still accept your tax return without the code. But including it could help speed up your refund and reduce requests from the IRS to provide additional information to verify your identity.
September 30, 2015

Guarding Intellectual Property

Your company probably has security systems in place to prevent theft of computers, machines and products, yet you may not be doing enough to safeguard your customer lists, new product designs and marketing strategies. Manufacturers rank second only to high-tech companies as targets of intellectual property theft. 
"American companies and the U.S. Government spend billions on research and development. The benefits reaped from these expenditures can easily come to nothing, however, if a competitor can simply steal the trade secret without expending the development costs."
- Senator Arlen Specter, upon passage of the Economic Espionage Act
Businesses need to make protection of trade secrets a high priority. The potential loss in terms of competitive advantage, market share and revenue can be staggering.
Intellectual property thieves can include employees, former employees, on-site contractors, vendors and foreign and domestic competitors. Hackers operating from remote locations are a threat, but the greater risk comes from people who know your business and are physically present on the premises -- especially employees who steal information and sell it to competitors, either while they're still working for you or after they leave their jobs.
In many environments, access to information can be ridiculously easy. For example, employees may have passwords taped under their keyboards or tacked on their bulletin boards. Others may divulge information to personable service technicians who come to repair office equipment. And perhaps no one questions a stranger who walks authoritatively into an empty conference room and plugs into a live Ethernet jack, gaining access to the company's network, and walks out with a stash of financial information. 
When intellectual property theft occurs, it may be months before your company discovers it. One company's nightmare started when a contract computer programmer not only stole their new product design, but also trashed computers in an attempt to sabotage development. The act set the company back a year and the information ended up in a competitor's hands.
Many people who steal trade secrets get away with it. Prior to 1996, it was difficult to prosecute such cases, but in that year, Congress passed the Economic Espionage Act. One provision (Section 1832) addresses the theft of a trade secret related to, or included in, a product. The punishment is harsh. A convicted individual can be fined up to $500,000, sentenced to up to 10 years in prison, or both.
Under the law, a trade secret is broadly defined. It includes all types of information that the owner has taken reasonable measures to keep secret and that has independent economic value. For example, financial, business, scientific, technical, economic, or engineering information; including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs or codes. 
Here are just a few tips for protecting intellectual property: 
•Perform a risk assessment for intellectual property, just as you would for real property. 
•Enlist the help of all employees to watch out for suspicious activity. Role-playing possible scenarios, such as someone plugging into an Ethernet jack, can be instructive. 
•Carefully screen new employees and contract workers, and require them to sign confidentiality agreements. 
•Require delivery people to show more than one form of identification -- for example, a company ID and a driver's license. 
•Encrypt files and folders so that only authorized people have the "keys" to unscramble the data. That way, if a thief steals a laptop computer, the information would be meaningless. 
•Establish levels of access to files and folders. For example, whoever handles the company's financials determines which people or work groups need access to that information, and can restrict their ability to modify or delete information. 
March 25, 2013

SCVEDC Releases Q4 Economic Snapshot

The Santa Clarita Valley Economic Development Corporation recently released the Economic Snapshot for data through December 2012. As a member of the SCVEDC Board of Directors, I welcome the opportunity to discuss any of the information provided.