Category Archives: Profession

CPAs across the country are required to sit through various amounts of ethics training every two years. I sat thought mine on Friday. Inevitably during these sessions, the question comes up, “Can ethics be taught?” My own answer to this question has fluctuated since it was first posed to me as a graduate student. Could more effective ethics training have prevented the major accounting failures of the last 10 years?

I am, by nature and temperament, somewhat melancholic and a realist. (That probably also describes 80% of the accounting profession). If you need an upbeat pep talk, I’m probably not the guy you want to call. This tendency in my own makeup caused me in the past to answer the title question with a resounding “No.” If people are going to lie, cheat and steal, it’s in their nature and all we can do is work to limit opportunity.

You remember the fraud triangle.

If you have never seen this chart, it’s really useful when thinking about the elements that drive people to commit fraud. Individuals have external and internal events (divorce, gambling problems, greed, sick child, etc.) that create pressure. This pressure, when strong enough, leads to rationalization: “They won’t really miss the money. I’m underpaid anyway. In fact, I deserve it. I’m just borrowing it, and I’ll pay it back.” The last step, opportunity, is the only one that management can control. If the three are present together, misappropriation of assets or fraudulent financial statements are soon to follow.

I have always been pessimistic of individuals’ ability to resist these temptations. Will a single mother with a mountain of debt really not take the cash when it’s sitting right there? Will a controller facing earnings pressure really be able to say no to backdating a journal when the company’s future is on the line?

When the question of whether ethics can be taught was posed on Friday, a participate gave such a good answer that I think he may have actually succeeded in changing my mind. (A small miracle, no doubt). I’m paraphrasing but they said something to the following effect.

“Ethics is the framework by which individuals make decisions. Frameworks and situations can be taught, so that when they are encountered in real life, individuals have already had a chance to decide what they would do in advance. This increases the likelihood they will act ethically.”

I liked this so much, that a colleague and I looked at each other, surprised, and she said, “That’s the best answer to that question I’ve ever heard.” So ethics training, when done correctly, is really a role playing game in your mind. You get to visualize yourself as the criminal without committing the act and resolve not to make the same mistakes. So, kudos to that participant, whoever he was, for wording his answer so well that he changed my mind on an issue that is ever present in our profession.

You may have noticed the blog posts have been in short supply since last year. Well, frankly, it’s because I’ve been a lot busier and the nature of my work has changed significantly. Instead of spending hours debugging code and writing the perfect formula in Excel, I’m now delegating responsibilities and managing people. This has been an exciting and different world for me.

As far as my plans for this blog, I’m still going to post the odd technical tip as projects come up, but I may shift some focus to current accounting news and people management since that’s where I am spending my time these days. (Write about what you know?) Thanks for hanging with me and continuing to visit.

Much of the discussion surrounding the Occupy Wall Street protest movement has turned towards the rising costs of higher education. This is likely because many of the protesters are young, college educated and saddled with enormous federal debt.

The Los Angeles Times had a piece this weekend discussing the issue. It was good article, but I’ve noticed something missing in all the coverage. Something that colleges, students and even parents don’t seem to want to talk about.

Not all college degrees are created equal.

Have you noticed that almost all of the protesters interviewed have undefined liberal arts degrees? Where are the chemical engineers or the nurses or the accountants? Working, that’s where. The stark reality is there are more college majors than fields with actual paying jobs.

I never heard this when I was 18. Like most, I was led to believe that just having a college degree was enough. But it’s not. I had to figure it out on my own through a series of missteps and major changes. However, I was fortunate to see the reality before it was too late.

I’m not saying it’s the protesters’ fault.

The higher education system is primarily run by people with liberal arts degrees so it’s natural they give high regard to these fields. However, colleges are doing students a disservice by leading them to believe that simply by graduating with any degree, employers will be knocking at their door. Employers are looking for marketable skills. They don’t care what you know; they care what you can do.

Colleges need to do a better job of informing students about job prospects in their chosen fields. “Oh, you chose electrical engineering. The next four years are going to stink, but you can afford to live on your own when you graduate. Oh, you chose Irish literature. Hope your parents have a spare bedroom.” It sounds harsh, but I wish someone had been that frank with me as an 18 year old. It would have saved me from stumbling around until I found a field I liked AND actually paid a salary.

A friend recently shared this career planning Venn Diagram. It’s funny, but also wise in its simplicity. I think the protesters angry about their student loan debt are well-intentioned but misinformed. As students, we are are told to follow our passions and find our calling, but we are told to ignore money. As these protesters are finding out, that is bad advice. College is an investment, with returns that can be measured. It’s time we started doing a better job informing students about life after graduation.

I received this same advice from a senior auditor in a performance review four years ago. It is some of the best career advice I’ve ever received.

When you’re not sure what to do or how to proceed, don’t start with a blank slate and ask for help. Instead, start with what you do know, state your intended direction (and rationale behind it) and then get the buy-in or feedback of your manager. I’ve suggested this before, but here’s an example of how it could work:

Meet Jonathan, a young analyst at an accounting firm. Jonathan was working on building out financial projections for a start-up business and he was stumped. Jonathan didn’t have good information for making revenue growth or profit margin assumptions. It would be easy for Jonathan to get frustrated and just call up his boss and ask him what to do.

But if I’m Jonathan’s boss, I don’t want to do the legwork for him to figure out what he should do. I want him to come to me with an opinion. I want him to put a stake in the ground and give me an idea of what he thinks he should do. I want him to lay out his argument for or against going in a certain direction or using a certain set of assumptions, and then get my feedback or opinion on whether that’s the right course of action.

“I believe managing is like holding a dove in your hand. If you hold it too tightly you kill it, but if you hold it too loosely, you lose it.” -Tommy Lasorda

There is an art to managing well. I’ll be the first to admit I am still learning. As I have been given positions of leadership, one of the things I’ve tried to do is look back on leaders I admire for traits to emulate. Below is a short list of the qualities I have valued most in team leaders. It’s by no means comprehensive, but it’s not a bad place to start.

1) Intelligence – You’re the boss. Employees expect you to know more than they do about the company, your job and their jobs. If you’re senioring an engagement in public accounting, staff are going to ask questions and they expect you to have the answers. I know. I was one of those staff that asked a lot of questions. The mark of a great manager is not just having the answers, but the skills to pass that knowledge on to others.

2) Availability – Nobody likes the boss who gives short answers, vague requests, and brushes off direct reports as lesser beings. Nobody. Fortunately, in my career so far, I have been blessed to work for managers who make time for questions, even when they are balancing competing priorities. The best managers listen well and are approachable. There are times to close the door, but that should be the exception not the rule.

3) Staying Calm – News flash, accounting is a hard job. If anyone told you otherwise, they were lying. Numbers don’t tie, systems break down, the auditors won’t leave you alone, the client won’t give me what I need, we aren’t making budget. The list goes on. One of the marks of a great manager is the ability to stay cool under pressure. If your employees see you freak out, you’ll instantly lose about 100 respect points, and those points are hard to earn back. I have a habit that has served me well in this area: I take a walk. This may seem silly, but whenever I feel overwhelmed, stepping away for just a moment is often the best thing you can do. I come back, turn on some music, and get to work.

I make no pretense to have even this small list mastered. There have been many times when I have failed at all of these things, but these are the three I always come back to. What’s on your list of good leadership traits?

Listened to a podcast this afternoon from “This American Life” entitled “Return to the Giant Pool of Money”. The series’ first episode contains the best explanation of last fall’s financial meltdown I have heard. The “return” was equally informative.

While the podcast contained interviews with many different players, the most interesting character, in my opinion, was Glen. Glen was a mortgage company sales manager during the boom. He stated in the first part of the series that during the good times he was netting upwards of 75-100K per month in income. Not per year. Per month.

However, within a year, he had lost it all. Glen is open about his fall and recognizes the irony of his situation. The interviewer makes the observation that he “sounds like a man on the verge of a major life change”. In one of the interviews most poignant moments, Glen starts to get emotional and says he is ashamed of what the money did to him. He “should have done more” to help people when he had the money, but he didn’t. Glen only cared about Glen. “I’m driving a car with no paint on it, and I used to think that it mattered….but it doesn’t.” The moment reminded me of Schindler’s List when Oskar Schindler recognizes at the end of the film, that people, not things, are most important. Sometimes it takes a fall to learn life’s fundamental truths.

Take a listen. It’s a good one.

It is always nice to read an article like this about your profession. Robert Half International has come up with these salary estimates for the following accounting/finance positions in 2008.

• Internal auditor. National average starting salaries for internal audit managers at large companies (more than $250 million in sales) are expected to climb 6.7 percent in 2008, to a range of $81,500 to $109,500 annually.
• Senior accountant. The greatest gains in starting compensation for senior accountants are expected at midsize companies ($25 million to $250 million in sales), with starting salaries projected to rise 5.4 percent over 2007 levels, to between $49,250 and $63,000 per year, on average.
• Hedge fund accountant. Professionals who possess three to seven years of experience in fund administration or investment management will see starting salaries rise 6.5 percent, to a range of $46,250 to $64,500.
• Financial analyst. Base pay is forecast to jump 5.8 percent for managers with large companies to between $74,750 and $99,000. Average starting salaries for entry-level professionals at large companies are expected to rise 6.9 percent, to between $38,250 and $47,500 annually.
• Public accountant. Average salaries are projected to increase 7.7 percent to between $88,250 and $129,250. At small firms (up to $25 million in sales), professionals with one to three years of experience can expect a 7.7 percent increase in average starting salaries, to a range of $44,750 to $53,250.

While most of us aren’t paid like doctors or attorneys these numbers would seem to bode well for the future of the profession. This just proves my belief that the world will always need people with mad ten-key skills.

I enjoy numbers. I like adding them and subtracting them, moving them around and finding patterns. This is a blog about that.

I am a CPA so I will occasionally throw in my thoughts on the profession. Hopefully it will be somewhat insightful and not completely narcissistic. Happy reading.