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One of the areas that I encountered in my career as an auditor is this animal know as CAATS. It’s not the meow-meow animal we all know and love but CAATs is an acronym to refer to Computer-assisted audit techiques or audit tools.

ACL and IDEA
Starting out and now continuing in my career as a Certified Public Accountant (Non-practising) and Certified Internal Auditor, I came to understand and make use a generalised audit software known as ACL or Audit Command Language back in the mid 90s. This allowed me to understand a bit more about data and how to analyse relationships between certain financial figures and transactions and to zoom in on suspicious transactions.

If you are a CPA or aspiring CPA and CIA to be, it bodes well if you are open to Information Technology and can make use of at least one type of CAATs be it Excel spreadsheets or more sophisticated tools such as ACL or IDEA.

Leveraging on IT is arguably one of the most common things you would need to do as a CPA or CIA and in this technologically changing world, you cannot be effective in your career as a CPA unless you can harness the power of technology to help you balance your accounts, find interesting trends and relationships between operational data and the financial figures and be able to make use of such tools to put into place fraud mitigation strategies as an auditor.

In my own career, I’ve realised that being a CPA requires diverse skills. Being comfortable with figures is one and the ability to apply accounting and audit knowledge are important basic skills. But other overall corporate career skills such as written expression, oral expression and emotional quotient all help to make you more effective in a corporate setting.

What special super-duper ability do you have to enhance your edge in your own career?

Share with Panzer in the comments section.

Be well and prosper.

Flickr image "Union Station and the Kansas City Skyline" by navycrackerjack74

It’s interesting to note that I have received a couple of emails from readers asking for advice about careers in accounting and the fields of study they should be doing if they want to pursue a career as an accountant.

I thought I’ll write more about it in my series on Diary of a CPA to flesh out the day to day adventures of being an accountant or internal auditor.

Detecting the Right Skills for the Right Job

A CPA can be called upon to be an internal/external auditor, accountant or tax professional. Even within the accountant role there are many different types of jobs that an accountant can do. So how do you detect the right skills for the right job requirement if you are hiring CPAs or would-be CPAs?

I attended an interesting seminar at the Civil Service College by Professor Francis Flynn on “Performance and Talent Management – Insights for Tomorrow’s Workplace”. His talk covered the role of intuition (upsides and downsides) in managerial decision making, and touched on the judgement of talent in organisations.

It was timely because I am in the midst of growing my staff from the small team of 2 (myself and 1 staff) to 3.5 before reverting to a longer-term 2.5 headcount. 0.5 refers to a staff who will be on half-day basis.

It is still a small team but I will be managing 3 direct reports instead of 1 so the people management factor just increased three-fold in a short span of time.

I recruited my 1 staff a few months back and looking back on the recruitment decision, I have to say it could have been done better although my current staff is fitting it.

Interviews and Performance – 0.07

What I learnt during the seminar was that face-to-face interviews are poorly correlated to staff performance at work for most jobs (including internal auditors) but are useful mainly to assess likeability and the general demeanour of a candidate. Thus, recruitment should be based on more factors that just the suitability of the candidate based on the interviews.

The 0.07 reflects how the standard job interview account is able to “predict” around 7% of the subsequent performance by the candidate in the job. Cognitive ability tests (i.e. IQ) gives us around 53% while work sample tests give around 44% validity. This was an eye-opener and made me more aware of how I could consider using work sample tests when the next hiring situation turns up for my team.

In most hiring situations I’ve come across, the grades or academic and relevant professional certifications of the candidate are used for short-listing the candidate. But how I hired my current staff also reflected the prevailing bias exposed by Professor Flynn, i.e. we then tend to disregard the data arising from the results/academic qualifications and rely more on how well the interview went to assess the suitability of the candidate.

This approach is not “wrong”. It just shows that human decision making is that we tend to make use of the information that is available.

Using Work Skills Test and More Structured Interview

An internal auditor needs to be analytical, articulate and approachable and have an eye on improving things. The articulate and approachable factor can be sussed out during the standard job interview. But I realise the analytical part and the eye to detail to improve processes requires a type of mindset that is tough to sieve out during the interview.

Going forward, I will make use of more structured interview questions (i.e. same questions to the candidates) as well as put in a written assignment for the potential candidate to work out based on real world internal audit situations.

How did you manage to clinch your current role in the organisation?

If you are a manager, how did you recruit your staff?

Share with Panzer especially if you are an accountant/auditor.

Be well and prosper.

Flickr image "Clone trooper" by Uhhhlaine

What is your stereotypical view of a Certified Public Accountant?

Someone who is meticulous in figures? Likes to dot every ‘i’ and cross every ‘t’? Someone who is obsessed in ensuring that debits = credits?

Or is the accountant someone who has every won a table-topics trophy at the division level, who has spoken at more than half-a-dozen conferences and seminars and who writes a couple of blogs in his spare time?

A CPA is not a Clone

The reality is that there is no “typical” accountant. It’s all perception. Just as we think all fat people are jolly, not all accountants are people obsessed with numbers and making sure debit=credit. Not all accountants are boring and who don’t like to interact with people and prefer the company of spreadsheets and figures.

People comes in all shapes and sizes, various characters and characteristics. There is no typical type. The audit/tax/accounting related skills that the CPA possess are not necessarily the character traits of his personality. A CPA is as diverse as there are people in the world.

The common thread that binds CPAs together is the shared background of accounting/tax/audit and that we are committed to a sense of professionalism, ethics and integrity that is the hallmark of any professional group.

If you’re considering becoming a CPA

It’s not so much your personality but rather the fit between the skill-sets required by a CPA and the nature of the job that you should consider if you think you want to have a career as an accountant, auditor or tax advisor.

There are also CPAs who do not do traditional accountning, audit or tax role but perform many other corporate functions or business functions. Accounting knowledge is useful across differerent business spectrums and environments.

What are some of the CPAs (accountants, auditors and tax advisors) you’ve met like?

How do you perceive them before you first got to know them?

Share with Panzer in the comments section.

Be well and prosper.

Context of a CPA

So what does a CPA do to earn his daily bread? In general, the accounting profession allows you to move into three distinct areas: accounting, audit and tax. In reality, audit and tax are relatively narrow in focus and you can specialise in these tracks.

Audit Track

I started out in the auditing track as my first job was that of an auditor. My job responsibilities included auditing financial statements as well as the internal controls of an organisation.

In terms of actual tasks, what I did was mainly to prepare the audit plan, carry out the audit steps in verifying figures to source documents, doing counts of inventory, cash or other assets and reviewing the control procedures over financial systems covering payments, purchasing, revenue and collections, fixed assets, investments etc.

The skills I learnt over time were Excel worksheet skills, report writing, interviewing and interacting with clients, peers and supervisors.

Auditing skills are quite useful to any accountant even when they want to branch out into other tracks such as accounting and tax. This is because you tend to learn a bit about all the various financial processes and how these result in the figures you see in the balance sheet and income/expenditure or profit/loss statements.

Is it fun?

Some of you might be asking. Yeah, yeah… I read all about this in the auditing textbooks. But is it fun?

In reality, it is about understanding financial processes and checking how the transactions of the organisation and recorded accurately, completely and in a timely manner into its books, i.e. the financial system. Generally, the process is pretty dry but it’s the people that makes it fun.

Clients can get very defensive over errors or omissions you point out to them. Supervisors can be tough or relaxed. Your colleagues are the ones who make your workday. My overall assessment is that the work initially is challenging as you learn about the various financial systems. But in the end, they tend to be similar with some variation as you gain experience in doing so.

My group of close friends that I still regularly meet and whom is my support beyond family members are all ex-colleagues from my first job as an auditor. While we didn’t work in the same team, we were in some committees together and also met up socially then before we were married and have families.

Accounting Track

The accounting track is more varied as it covers many different roles the accountant can play within an organisation. You can be doing the financial reporting, i.e. manage the general ledger and quarterly or year-end financial reporting. This entails lots of coordination with the accountants in charge of payments/accounts payables, receipts/accounts receivables, fixed assets, investments, tax agent, business units etc.

You could be doing a treasury function, i.e. making sure funds are available for deployment in operations, investments, capital expenditure etc.

You could be a cost accountant. Basically this could cover number crunching how a product/service/process costs the organisation internally and help set prices or fees for inter-company or intra-company transactions.

In short, you could be doing almost anything and everything depending on what the organisation needs you to.

Tax track

I’ve not stepped into a tax role before but for larger organisations, they need people to figure out tax planning in various jurisdictions in which the organisation operates. You could also be figuring out local tax compliance requirements as part of your tax role.

Analysis and Making Sense of Numbers

The best way I can think of to describe what a CPA does is that he or she analyses figures and tries to make sense of the numbers generated by the organisation’s activities for it to make better or more timely decisions.

Hence, you must not HATE numbers if you wish to join the profession. In fact, if you want to eventually become a CEO or C-anything, you must not HATE numbers. Be neutral to them, but you need to UNDERSTAND them.

I hope this has given you a flavour of what being a CPA is all about.

Next, I’ll write about my slight detour in my journey of being a CPA.

Be well and prosper.