Friday, August 26, 2016

Working in private

Can't believe that this is the first time I logged in this year. I guess I just didn't need this kind of therapy anymore. Anyone got any questions about the other side, i.e. the post-audit life? I can tell you one thing - it is significantly better.

Sunday, November 8, 2015

Internal audit

Can you give a more robust description of an internal auditor? What he/she primarily works with/for? 

IA essentially is in charge of ensuring that all operations across the company have set processes and controls for each process. They ensure that there is a solid segregation of duties for all these processes. They then are in charge of walking through these processes and testing our internal controls around these processes and ensuring that they are effective.

The auditors expect that IA's walkthroughs and control testing would be enough to rely on a sample of them. They also want IA to know all of our walkthroughs and controls inside-out, because that, in theory, is their job.

In the instances that I've been exposed to, both in audit and in private, it's really not feasible for IA to know these processes inside out. Most IA groups aren't really that big, so from a process perspective,for them to know all the nuts and bolts of a company would be hard (unless the IA group is really built out to handle or the company is really small).

If you ask someone in IA, their job is more than just reviewing processes, and testing controls. It's about various legal dealings, company structures, feasibility studies, etc.

One thing I can tell you - they don't work late, and there's decent travel involved if the company has various locations. Also, while they aren't despised like the external auditors, we're still not picking up the phone in a hurry every time they call.

Can't believe I was an auditor

My interactions with our current auditors always helps reinforce in me that my decision to leave was the right decision, but it actually takes it further - it makes me wonder - how the heck did I survive for so many years in audit. When I hear their questions, many of which are purely for PCAOB documentation purposes, I just want to walk away because I'd rather waste my time watching paint dry than answer such non-value added questions. 

I even frequently ask them why they continue to stay in audit. And from what I hear in my old firm, life's still the same. People constantly complaining, the Firms saying that things will change, but it isn't really. And life goes on. Factory model.

Look, auditors add value, don't get me wrong. But there's a lot of non-value add in what they do. I get it, it's not their fault, it's the system and the regulation board. But man - can't believe I used to do that.

Sunday, July 26, 2015

Was it worth getting the CPA?

Was it worth getting the CPA? 

If you want to stay in accounting, or even go into finance for that matter (after a stint in accounting), get the CPA. If anything, it's a must-have to be considered for hire in most places. Many companies tell the recruiters that it's a pre-requisite. 

At the same time, I've seen people in private move up the corporate ladder without their CPA - but these are the exceptions, they were really smart and could pick up accounting concepts pretty immediately. So am I glad I have it? Well, I guess because I haven't done a 180 career path wise, yes

So for those of you out there looking to leave public, get your CPA. If you can't, there's still companies willing to overlook based on your experience, but if you do, it's a pre-requisite you've met, meaning there's more opportunities. It's a hot market right now.

Best way to deal with your client

I think your blog has been very helpful to all of us working on Auditing (whether Big4 guys or not), for the prospects on the practice or even for all those interested on understanding how things work in Audit firms and how to work hand in hand with auditors when asking us for additional work when auditing the companies we work for. 
I would really appreciate if you could share with us the insights (or at least some tips) on how to deal with them based on the experience on this new stage on you career.

If I'm reading this right, is the question on how to deal with clients now that I've seen both sides? The best way to do it is to prove to them that you're adding value. This means that when they ask you an accounting question, you make that your top priority and get them the answer. If it means running it up the chain, that's what you'll do.
You'll also want to only ask for the support that's necessary to get you the answer you want. Also, make sure you understand what you're asking for. And be polite. Listen, it's client service, so you can't go around like you run that place. And then when they run into an issue, work with them to get to a mutually beneficial answer that is both something you can live with as an answer and something that's not too painful for the client. It's a delicate relationship, but you need to get them to trust and respect you, and the way to do that is through helping them come up with answers to dealing with accounting issues. Yes, there's independence issues, etc, but all you're doing is helping them interpret guidance.This will certainly help as you progress in your careers.

Oh - and if you can shoot the shit with them, and they are willing to do the same with you, by all means do so. What also helps is if you take them out to lunch or dinner once in a while - doesn't always have the C-suite, can even be the senior accountants or managers at your clients. Goes a long way.

Sunday, June 21, 2015

How do I view auditors now?

When I was in Public, I always noticed that the toughest ones to deal with where the individuals with Big 4 experience - they thought they knew everything and so decided to tell us how audits should really be done and what we really need to get it done - i.e. a lot of what we were asking was superfluous.

When I first started - I certainly felt more sympathy towards the auditors than the rest of my group, and was very nice to them, helping them along the way. Now, I've switched gears -and I am now the kind of person who tells the auditors what they don't really need and that it's a waste of time. I'm well aware of this switch - and I can't help it. For the most part, auditor questions don't really add value (was aware of this on the other side too) so I don't really care much for it and either ask them to go to someone else or tell them why it's irrelevant. You sometimes expose the auditors too - by challenging them on why they need certain things. If it's the usual "because we received it last year" or "it's in our procedures", we tend to go after them so they don't repeat this again. There's always 1-2 people on every audit team that knows what they're doing, and those are the individuals who add value - since they can help you conclude on an accounting issue.

Where do I stand now? I don't really like wasting time dealing with them, but when I get requests/questions, I'm happy to give them what they need to get them to their conclusions - even if it's a painful request, with the caveat being that I understand why they need it. If I don't believe it's necessary, then I'm in the mood for an argument as long as it saves me time on the back-end. I do believe that there is some value to audit - I just don't want to be wasting my time on the non value-add part.

Life on the other side

There were a significant number of positive responses w/ re: to blogging on how it is on the other side after a long stint in Public - so I'm going to try and blog once in a while. I had a lot to talk about during my senior associate years, but it has since dwindled. So I wouldn't expect to be logging in significant blogging time.

The biggest change is that you move from a revenue center to a cost center - and for those that started directly in Public, you don't really notice some of the benefits of being in a revenue center as opposed to a cost center. In Public, we are the revenue-generating assets. Without us, the Firms do not make any money. We effectively ran the Firms (well - the partners and senior leadership did, but they were all accountants and know what it's like). In Private, our only representative in the strategy team is usually the CFO. Even then though - the interests of the Accounting group doesn't play much of a role - we're just in charge of figuring out how the numbers should look based on performances from other groups. For example, software is run by engineers who design and update this software (with a sales team trying to sell this software - but they wouldn't exist without the engineers). Financial services is run by the bankers (the "deal" makers), and on it goes. The only real revenue-generating accountants are the ones in Public, the ones who've set up their own CPA firms, and the various tax groups that help figure out how to file/minimize taxes for a fee.

 So what does all of this mean? Strategic decisions for the Firms are made without much regard to the Accounting Groups - we're just G&A, we're no longer operating expenses. So when we reach out to the revenue generators with questions (since we need to account for all their decisions), they effectively look at us as "accountants" - a cost center, a nagging and bothersome but necessary evil. Thankfully, I'm at a Company that's been doing a great job at making sure the other groups understand why our group is important -but I know this isn't the case at various companies.

One can ask - what's the difference - our clients in Public also looked at us as a necessary evil who they hated dealing with. Well that's true, except we would still get a lot of what we wanted at the end of the day, we just had to deal with more difficult personalities since they openly didn't like us. And the clients also needed our blessing to issue financials, so at the end of the day, we got what we wanted. We could force the Companies to implement change too - always had that in our hands.
In private - not so much, unless you're the CFO.