Flickr image "Chesire Cat" by fofurasfelinas

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.

Flickr image "Beijing Everhonest Certified Public Accountants" by Ms Jackson

Tools of the Trade
Every professional worth his salt will have to be equipped with the tools of his trade. As a non-practicing Certified Public Accountant (CPA), what are the tools of my trade?

Over my 15 years of doing external, internal and IT audit, I’ve realised that the following tools are very useful for any aspiring CPA who wants to do well in his craft in auditing, taxation or accounting.

Mastering these tools will help increase your level of professionalism in your service to your employer, business or organisation.
Let’s take a look at what are the three (3) essential tools for a CPA.

1) The Calculator
The CPA doesn’t need a fancy scientific calculator all the time, he just needs a reliable 14 digit calculator with big buttons to help him number crunch rows and columns of figures.

It’s not complicated, when you first start out and even as you are managing people than doing the actual accounting, auditing or tax work, there will be times when you need to ascertain if the figures given to you are correct and accurate before you sign off on that piece of work.

In comes your trust calculator. 14 digits works for most instances as it handles up to billion dollar figures. Don’t think you won’t encounter that many zeros in your career. If you work in rupees or rupiah, the chances of using the full 14 digits becomes real.

Whether you are a retiree who’s number crunching the financial statements of your listed company during the annual general meeting or an analyst/accountant in your cubicle crunching out the figures, the calculator will stand you in good stead if you learn to use it proficiently.

2) The Worksheet/Spreadsheet
Some of you who aspire to be CPA cannot even remember that there were computer applications known as Lotus 1-2-3. You were born in the days of Microsoft Excel worksheet and even during the days of Open Office. No matter which flavour you use, the excel worksheet or open office spreadsheet will come very useful for preparing financial, costing and operational statistics to drive your organisation’s information needs.

Worksheets can be used for simple adding and subtracting of figures to form your net worth statement or can be as complicated as financial tools to generate “what-if” analysis and sensitivity analysis. All the present value, future value and cash flow analysis can be generated using the formulas and functions within the spreadsheet.

Mastering the spreadsheet makes you someone who will be very useful to the organisation and to yourself as well.

3) Ability to Communicate in Writing/Speech
The ability to communicate is critical in work-life. For CPAs, it becomes even more important because you are a specialist. Many people will claim not to understand accounting/audit/tax terms and terminologies so it’s critical that you are able to explain it to them in their own language.

Make use of less jargon, explain accounting terms to people in their own words will help both in written and spoken form as you communicate witheveryone about the figures and facts.

What other tools do you think a modern CPA needs to have?

Share with Panzer in the comments section!

Be well and prosper.

Flickr image "aquarium for accountants" by aldask

I was having a seven course lunch at the Marina Mandarin Hotel on 18 April 2009 courtesy of my $160 (including cost of Members’ Handbook CD-ROM containing FRS etc) annual subscription fee and noted that it was the largest gathering of Certified Public Accountants (CPA) in Singapore.

The 520 people there comprised of aspiring CPAs who are provisional members, non-practising CPAs who form the bulk of the profession and practicising CPAs who earn their living from audit related services and who can sign off audited financial statements by virtue of their experience and recognised expertise.

As I was chatting with fellow CPAs, I could not help but think back to how I ended up being a CPA and not a lawyer or a teacher.

Your route towards earning your means
When I was growing up, I would have never thought of being an accountant. There was no accountant in the family. We had plenty of teachers as both my parents were teachers and even my sister is a teacher but no accountants. So how did I end up in my career that spans 15 years in audit and audit-related roles?

A fork in the road
There are times in your life when you look back and you know, you just know that that split second decision you made changed the course of your life dramatically. For me, it was a conversation that I had with my brother prior to thinking about which course I wanted to apply for in university. I was fortunate to do well enough in my GCE ‘A’ Levels to qualify for university. The question was, which course?

You can choose a course based on what you are passionate about or what you think will bring in the most money. I took the practical route although in terms of interest and passion, I wanted to do Law.

But my conversation with my brother left me with the impression that Accountancy was a three year degree program and led to direct honours. In addition, it was relatively easy to get a job once you graduated with a Bachelor in Accountancy. Law was also attractive in that the legal profession still needed lawyers but it took four years and you had to clear the bar exam to be qualified as a advocate and solicitor.

Thus, my decision then led me to where I am now. A non-practising CPA who has experienced external, internal audit and IT audit and security.

The profession

The accounting profession is still attractive because audit, accounting and taxation are the key functions that most organisations have to manage for their success. It’s quite challenging to run a business or organisation without having qualified people performing work in these areas.

Currently, there is still a barrier to entry for accounting as you need at least 3 years experience to qualify to be a non-practicing CPA. However, you can obtain CPA status now in more ways by taking up a relevant accounting degree that is recognised by the Institute of Certified Public Accountants of Singapore or take up ACCA and then follow-up with the post-qualifying experience. There are also mutual recognition programs with other accounting bodies e.g. CPA Australia.

Deciding on your path
I’ve encountered people who switched from engineering to accounting when they were in their late 20s / early 30s. The risk of doing that is to start at entry level again. I interviewed one candidate who moved from engineering field to accounting in his late 20s. He told me it was his interest but I didn’t really understand it as the interview was too short to go into more details behind his motivation.

Your career is likely to be your main income earning means when you first graduate from polytechnic or university or ITE/JC. Thus, it’s helpful to define clearly what you’re interested in so as to identify the relevant career where you will do well. Doing well in your career tends to translate into more or higher income but of course individual results differ. The more you earn, the more you can save and invest IF you can control your spending and not succumb to lifestyle inflation, i.e. your living expenses going up to match your income.

A career in accounting, audit or tax

If you’ve come to my post and are considering a career in accounting, audit or tax, you have to first be comfortable with numbers. You don’t have to fall in love with them but at least be comfortable. Being detailed is good when you are first starting out because entry level jobs in audit, accounting and tax typically involves preparing schedules containing figures and analysing or extracting and summarising figures that make sense to business management for decision making. As you gain in seniority and experience, you will tend to have more people management opportunities depending on the size of your organisation.

As in any career, besides your accounting, audit and tax skills, soft skills such as communication, public speaking, presentation and negotiation are useful to navigate the terrain of the corporate world.

Looking back, I would never have imagined the path I would take 15 years ago to become a CPA. The route has been fairly rewarding and I’ve learnt also to break out of the traditional mould of a CPA, i.e. to be someone fixated by figures and reports and doesn’t like to interact with people. That’s an anarchronism that doesn’t fit in now.

To be able to survive in the organisations and businesses is to be able to get along with people you like and with people you don’t. The emotional quotient part needs to be developed even as we continue to hone our intelligence quotient part dealing with the domain knowledge and professional accounting, audit and tax related knowledge.

How did you come into your own career or job?

Was it planned, fate or a combination of both?

Share with Panzer in the comments section.

Be well and prosper.

Over my 15 years of doing external, internal and IT audit, I’ve realised that the following tools are very useful for any aspiring CPA who wants to do well in his craft in auditing, taxation or accounting.

Mastering these tools will help increase your level of professionalism in your service to your employer, business or organisation.

Let’s take a look at what are the three (3) essential tools for a CPA.

1) The Calculator
The CPA doesn’t need a fancy scientific calculator all the time, he just needs a reliable 14 digit calculator with big buttons to help him number crunch rows and columns of figures. It’s not complicated, when you first start out and even as you are managing people than doing the actual accounting, auditing or tax work, there will be times when you need to ascertain if the figures given to you are correct and accurate before you sign off on that piece of work.

In comes your trust calculator. 14 digits works for most instances as it handles up to billion dollar figures. Don’t think you won’t encounter that many zeros in your career. If you work in rupees or rupiah, the chances of using the full 14 digits becomes real.

Whether you are a retiree who’s number crunching the financial statements of your listed company during the annual general meeting or an analyst/accountant in your cubicle crunching out the figures, the calculator will stand you in good stead if you learn to use it proficiently.

2) The Worksheet/Spreadsheet
Some of you who aspire to be CPA cannot even remember that there were computer applications known as Lotus 1-2-3. You were born in the days of Microsoft Excel worksheet and even during the days of Open Office.

No matter which flavour you use, the excel worksheet or open office spreadsheet will come very useful for preparing financial, costing and operational statistics to drive your organisation’s information needs.
Worksheets can be used for simple adding and subtracting of figures to form your net worth statement or can be as complicated as financial tools to generate “what-if” analysis and sensitivity analysis. All the present value, future value and cash flow analysis can be generated using the formulas and functions within the spreadsheet.
Mastering the spreadsheet makes you someone who will be very useful to the organisation and to yourself as well.

3) Ability to Communicate in Writing/Speech
The ability to communicate is critical in work-life. For CPAs, it becomes even more important because you are a specialist. Many people will claim not to understand accounting/audit/tax terms and terminologies so it’s critical that you are able to explain it to them in their own language.
Make use of less jargon, explain accounting terms to people in their own words will help both in written and spoken form as you communicate with everyone about the figures and facts.

What other tools do you think a modern CPA needs to have?

Share with Panzer in the comments section!

Be well and prosper.