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.

One of the interesting search terms that led someone to my blog was “life as an accountant”. This has been floating around the edge of my mind and I thought perhaps it was a way for me to write down my experiences being a CPA or Certified Public Accountant (Non-Practising) in Singapore.

How I ended up earning my daily bread

My path towards becoming a CPA was conventional in some ways and unconventional in others.

It was conventional in that I studied my way from the Primary School Leaving Examinations (PSLE), GCE ‘O’ Levels and GCE ‘A’ Levels before getting myself into the School of Accountancy and Business in Nanyang Technological University and finally graduating with a Bachelor of Accountancy.

What was unconventional was that I studied humanities in Junior College, i.e. Literature, Geography, Mathematics C and Economics were my ‘A’ Level subjects and I scored well enough in them to qualify for Accountancy. My classmates ended up as lawyers, bankers and foreign service officers but I only managed to know of one other classmate who is in Corporate Finance though I don’t think she took the accounting route, likely the finance route.

A word from the wise

Why did I choose accounting? That question has been with me for quite some time and I realise if I pinpoint the exact time when the idea struck me to go for accounting was some sage advice from my elder brother. He told me that a friend of his took accountancy because it was a direct honours course, i.e. you could graduate with honours without doing an additional year and it was relatively easy to find a job as an accountant.

Thus, it was the practical aspect of accountancy that triggered my journey towards this path of becoming a CPA. It was not that I wanted to uncover fraud, make tonnes of money or that I loved numbers.

It was about the quickest path to a marketable degree.

Having spent 14 years in the profession and looking back with hindsight, I must admit it was a move that has led me to where I am today. My home is fully paid up. I only have a small outstanding car loan and have a decent job that supports my family’s lifestyle. Accountancy is a recognised profession and it’s not too bad to tell people that you are an accountant as opposed to drug dealer or some other less recognised profession.

Your career and financial freedom

What does my little story about being an accountant have to do with financial freedom? Financial freedom is achieved when your passive income from investments, royalties, interest, dividends etc. exceed your lifestyle expenses. To reach this stage, you have to live within your means, save and invest and grow as well as protect your means.

The primary means of growing your income and to live within your means is to generate income that is decent enough to pay the bills and allow you to enjoy life a bit. Your choice of career does impact on how much you get paid. Some careers pay better than others but some careers are more satisfying than others.

Looking back, being a CPA has allowed me to achieve some of my financial goals and allowed me to embark on my own journey towards being financially free. I count myself fortunate to be gainfully employed in the current recession.

When I was 19 years old and thinking of what course to apply for in NUS and NTU, I really didn’t know what I was in for at that point in time. Hindsight shows me that accountancy is a path that offers multiple advantages. Firstly, accountants are generally in demand for audit jobs, finance and accounting jobs as well as jobs that require some degree of analytical abilities and number crunching/scenario planning using statistics.

Secondly, it is useful to know how to read financial statements as an investor and to understand about balance sheets and income statements. Such knowledge can be picked up by most people but you are trained to do so as a profession so you don’t have to pick it up as an additional skill. Though accountants tend to get the reputation of being not good at public speaking which is unwarranted in many instances.

What’s Your Line?

Your choice of career does have an impact on your financial freedom. Tell Panzer what career you are in or intend to be in and why.

Be well and prosper.