Categories
Toronto

Big Four and Mintz again part of Top GTA Employers list

The Toronto Star has released the 2008 edition of their Greater Toronto’s Top 50 Employers list, and it is no surprise that accounting firms are well represented once again.

All four of the largest accounting firms, the Big Four, made the list, along with a local single office firm, Mintz & Partners.

The reasons why they made the list are similar, with most touting days off to study for the UFE, personal days on top of regular vacation, support for families and volunteering, and matching RSP contributions.

Still no mention of 20% time for personal projects though.

Categories
Profession

Professional 2.0: beacon or buzzword?

Rick Telberg is conducting a survey of CPAs about their thoughts on the future of the profession and what they see as some challenges and issues facing professionals. He shares a few early responses in a recent post:

“An increasing number of young people do not want to seriously work toward the accounting professional status of CPA.” I wonder if there was any evidence provided to back that up, because Rick isn’t sharing (yet). It did make me question why I’ve been reading so many articles about how exciting and even sexy being an accountant had become post Sarbanes-Oxley. Am I not sexy anymore?

Others cited the shortage of new talent coming on the scene, or the barrage of regulations and complexity as their top concerns as they look to the next decade and beyond. The talent thing will sort itself out in the long run, and the worst of it is probably past us. Regulations and complexity will reward those that go the extra mile to stay educated.

“CPA 2.0” and “Profession 2.0” are used to describe the ultimate direction of the profession by a final respondent, as he suggests that it will shift into more of an industry. “Systemization will be the buzz word for the next five years. CPAs will really begin to run their firms like a business.” I don’t agree.

There will be successful entrepreneurs that can take some aspects of the services provided by accounting firms today and “systemize” them, gaining efficiencies and making a tidy profit. But the profession will endure. In many respects it will thrive because of the opposite of systemization: By differentiating based on service, by pricing based on value, and by upholding the ethics and integrity required of a professional.

If you’re interested, take part in the survey.

Categories
Marketing

Develop a corporate blogging policy

There are few golden examples of corporate blogging policies that provide employees useful and necessary guidance on what they can blog about and how they should do it as it relates to company information.

Sun Microsystems logoSun Microsystems stands out as a company that actively encourages their employees to engage each other and the wider tech world in conversations about Sun’s products. They also lay their blogging policy out in clear, understandable language.

Common sense at work here; it’s perfectly OK to talk about your work and have a dialog with the community, but it’s not OK to publish the recipe for one of our secret sauces. There’s an official policy on protecting Sun’s proprietary and confidential information, but there are still going to be judgment calls. […] There are all sorts of laws about what we can and can’t say, business-wise. Talking about revenue, future product ship dates, roadmaps, or our share price is apt to get you, or the company, or both, into legal trouble.

I recommend reading the full policy. It’s not just a list of restrictions. Sun has also provided helpful tips to any employees interested in getting started blogging, but not really up to speed on the phenomenon.

IBM logoContrast Sun’s policy with IBM’s and Sun’s starts to look mighty folksy. IBM’s is much, much longer, less easily read and understood, and probably more difficult to follow for employees. If I were IBM, I would simplify. The best blogging is concise and to the point, and so should any policy governing it.

Some more examples:

The IBM policy is interesting though since IBM is now a consulting company and they handle client information as well as their own proprietary data, much like accounting firms.

Protect IBM’s clients, business partners and suppliers. Clients, partners or suppliers should not be cited or obviously referenced without their approval. On your blog, never identify a client, partner or supplier by name without permission and never discuss confidential details of a client engagement. It is acceptable to discuss general details about kinds of projects and to use non-identifying pseudonyms for a client (e.g., Client 123) so long as the information provided does not violate any non-disclosure agreements that may be in place with the client or make it easy for someone to identfy the client. Furthermore, your blog is not the place to “conduct business” with a client.

Accounting firms should be proactive about setting a blogging policy, and encourage their knowledge workers to embrace the medium.

Categories
Profession

The best place to launch a career

I’m knee-deep into my third year working as an auditor, and that means I’ve nearly met my experience requirements to call myself a CA. By my calculations I’ll qualify somewhere around January.

Over those 2+ years I’ve gained valuable experience working with clients in many different industries. The opportunity to learn is literally limitless, and it’s probably the best thing about the profession.

Each year BusinessWeek ranks the best companies for new college graduates, and this year the top three spots were occupied by three quarters of the Big Four. Deloitte is tops, followed by PricewaterhouseCoopers and Ernst & Young. KPMG finished a surprising 11th. Grant Thornton also made the list (73rd).

They are among the first to rethink how to recruit college grads, keep them happy on the job, or just keep them at all. Ernst & Young uses Facebook to let prospective employees talk freely with real ones. Deloitte will show a rap video about office life—made by interns—to give students a realistic view of the company. And PwC requires some bosses to get a second opinion on their evaluations of new hires to make sure the feedback is clear enough, the goals ambitious enough for kids who are uncomfortable with ambiguity.

Using Facebook to recruit better doesn’t necessarily make a place a solid career launch pad, nor would a rap video. (I think Facebook works a bit better. The video will probably alienate more people than it attracts.) Clear feedback and ambitious goals will make PwC a great place to launch a career because it will help new graduates get used to the work environment compared to university.

But it is the experience of working with a wide range of clients that is most valuable in terms of launching a career.

Categories
Auditing

Sucks to be Seidman

By now, the verdict in the BDO Seidman lawsuit has been covered by all the major industry blogs. All the heavyweights have registered their opinions in this great swirling mass known as the blogosphere. The mainstream media has tossed it around this way and that. There is near unanimity amongst all commenters: Sucks to be them.

I don’t disagree completely. For failing to detect a fraud perpetrated at E.S. Bankest LLC, Seidman is on the hook for $170 million in actual damages and a whopping $351.7 million in punitive damages. The combined amount of $521.7 million is the value of accounts receivable E.S. Bankest fraudulently reported in their financial statements, which were audited by BDO.

Naturally a lot of speculation has focused on whether the firm will be able to survive, assuming their appeal doesn’t reduce the damages. Big Four Blog does the math:

The WSJ says, “Testimony and evidence presented showed that BDO had profit distributable to partners of more than $170 million for its 2006 fiscal year, which ends in June, and a net worth of about $40.5 million. […] Among 250 partners works out to about $700,000 payout per partner. The $521 million damage is equal to three years of current year earnings. […] Can BDO Seidman effectively handle such a large amount of payouts, without losing its current structure? This is serious money for a medium sized firm.

It’s serious money, period. Jack says:

Even for the Big Four, $522 million is a lot of scratch. Recall that the Department of Justice fined KPMG $450 million in its tax shelter travails. That caused outsiders to wonder if it would interfere with KPMG’s equilibrium. This is not the way BDO Seidman would like to join the big leagues.

Just how much scratch a half billion really is for either a Big Four firm or a mid-tier one is not crystal clear. Francine asks the question:

When will the SEC and PCAOB start encouraging all the firms to be more transparent about their ability to continue to weather all of these high payouts? It seems we only hear there’s a problem with covering the liability when the firm is about to go under.

E.S. Bankest was part-owned by the plaintiff in the lawsuit, Banco Espírito Santo (Get it? E.S.!), and Bankest Capital. BES relied on “faulty audits showing that Bankest Capital’s income had nearly tripled from 1995 to 1996” when deciding to start the venture!

The entity was involved in factoring, which is when a third party buys accounts receivable from companies at a discount (to improve cash flow for the original company), collects the receivables and keeps the profit. Needless to say, the accounts receivable assets of a factoring company should be a main focus of a properly conducted risk-based audit.

Another interesting bit is how quickly the jury decided the firm had been negligent. One hour. Gross negligence. The evidence must’ve been pretty convincing.

The best evidence of the existence and accuracy of receivables is the confirmation. This is where the auditor takes a sample of receivables outstanding at year end and sends a letter to the customer asking them if they agree with the amount owed. If they agree, it is confirmed. If they disagree, they typically provide what they believe the balance was, and the two must be reconciled.

The strength of the confirmation should be obvious. Evidence coming from a third party is stronger than other procedures performed on AR like vouching to invoices and shipping documents, which are client-prepared.

The problem is that most confirmations are not returned. In my experience, I’ve gotten as few as 6 of 20 back, although it really depends on the organization and industry. I’ve heard that some companies or the management have a policy of not returning confirmations. Either way, when confirmations are not returned, the auditor has to fall back on alternative procedures, which are less persuasive.

Another typical procedure is the analysis of the aging of receivables. The longer a receivable has been outstanding, the less likely it will be collected. An auditor will identify larger receivables that have been outstanding for longer than 60 or 90 days, and discuss the situation(s) with management to assess whether the receivables are collectible.

Details regarding the failed audits have been unsurprisingly scarce, but it’s a good bet that the two areas above played a significant part.