Twelve percent of business executives said they had too many employees, up four percentage points from last quarter. Some 38% said they have too few employees, but the percentage who said they were hesitant to hire because of economic uncertainty increased from 14% to 16%.

We trust this means we won’t hear any griping about the talent shortage from corporate finance departments going forward then.

Two quarters ago, 46 percent of decision-makers surveyed believed they had the right number of employees, up 1 point from the first quarter of 2023. Hesitancy to hire saw a 6-point jump to 17% in Q2, and 26 percent of respondents had plans to boost their workforce, a decrease from 33% in the first quarter. In Q3, half of respondents said their organizations have the right number of employees, so a four point jump from Q2.

Other key findings of the Q4 survey:

• Expansion plans fell slightly from 50% to 48% this quarter
• Business executives less optimistic about their own company’s prospects over the next 12 months (43% vs. 45% last quarter), although they are still ahead of where they were a year ago (35%).
• Some 28% of business executives said they expected their companies to raise prices by year end, down from 37% last quarter. Sixty-three percent said they expected no change, while 2% said they anticipated decreases.

“We’re seeing some softening on the hiring front and IT spending, which are classic areas of belt-tightening in uncertain times,” said Tom Hood, the AICPA & CIMA’s executive vice president for business engagement and growth. “At the same time, business executives’ expectations for their own organization’s prospects over the next year are down just a bit from the third quarter and ahead of where they were a year ago. So, there’s a lot of mixed signals right now on the economy.”

Business Executives’ Mixed View on Economy Reflects Continued Uncertainty, AICPA & CIMA Survey Finds [PR Newswire]

The post Making the Jump to Industry Might Be Harder to Do Next Year Per This CPA Survey appeared first on Going Concern.

The headline: Inflation no longer the top challenge for CPA decision-makers, survey shows

Whew, finally.

45 percent of respondents are optimistic about their business, up from 35 percent in the last survey. Almost a third (29 percent) are optimistic about the US economy, a huge jump from 14 percent last quarter. Respondents’ outlook on the global economy remains a bit low but improving; 17 percent of respondents are optimistic, up from 11 percent last quarter.

Increased optimism about the economy aside, concerns about inflation and interest rates are influencing a “measured approach to hiring.”

Half of respondents say their organizations have the right number of employees, up four percentage points from the second quarter. One-fourth say they plan to add workers, and 14% say they would like to hire but are hesitant to do so, down from 17% who expressed that hesitancy in the second quarter.

One obstacle in leaders’ hiring plans is finding workers. Availability of skilled personnel is now the No. 1 challenge leaders face — moving up three spots from the second quarter and knocking inflation out of the top spot, which it held for seven consecutive quarters. The rest of the top five challenges this quarter are inflation, domestic economic conditions, employee and benefits costs, and staff turnover.

Compare this to last quarter’s JofA write-up:

Views on hiring have shifted slightly since last quarter, too. Forty-six percent of respondents believe they have the right number of employees, up 1 point from the first quarter. Hesitancy to hire saw a 6-point jump to 17%, and 26% have plans to boost their workforce, a decrease from 33% in the first quarter.

This is the first time in more than a year that inflation has not been the biggest concern for these decision-makers.

The post Talent Retakes the Top Spot as the Biggest Concern for CPA Decision Makers in AICPA Survey appeared first on Going Concern.

Deadline reports that Netflix has found a new CAO, hopefully this one can stick it out longer than the last one.:

Netflix has hired PayPal veteran Jeffrey Karbowski, 45, as VP and Chief Accounting Officer.

The staffing move follows a somewhat unusual sequence in 2022. Karbowski’s predecessor was Ken Barker, who joined the company after a 19-year run at video game maker Electronic Arts, only to resign last September after only three months in the job. An SEC filing at the time said the departure was due to personal reasons.

Karbowski will report to Netflix CFO Spencer Neumann, who had been heading up accounting pending a search.

What does Chief Accounting Officer at a struggling streaming service pay anyway?

Netflix said in an SEC filing it is paying Karbowski an annual base salary of $2 million, a one-time signing bonus of $400,000 and $1 million in annual stock options.

Netflix has had a rough go in the last year — its difficulty finding and retaining a CAO notwithstanding — getting sued by shareholders last spring for making “materially false and/or misleading statements” and failing to “disclose material adverse facts about the company’s business, operations, and prospects.” Shareholders claim that Netflix and its leaders “employed devices, schemes and artifices to defraud [investors], while in possession of material adverse non-public information,” in a suit filed in federal district court in San Francisco (Pirani v. Netflix Inc et al., No. 22-cv-02672, U.S. District Court, Northern District of California). This on top of the actual subscriber loss and some internal culture issues that persist to this day.

Related: here’s a Hill opinion piece from some guy who wants you to get off his lawn about why Netflix deserves to die a slow death after successfully rotting all of our brains.

According to LinkedIn, Karbowski did time at EY, starting in audit in 1999 and leaving as a capital markets senior manager in July 2008. From there he went to Skype, then Microsoft, then PayPal and now ending up at Netflix.

Best of luck to him.

Netflix Hires PayPal Vet Jeffrey Karbowski As Chief Accounting Officer, Replacing Short-Tenured Predecessor [Deadline]

The post Netflix Picks an EY Alum For Its Next Chief Accounting Officer, Replacing the Last Guy Who Dipped After Three Months appeared first on Going Concern.

Of the 27 industry jobs we analyzed, 23 have pay that, on average, will likely be higher next year than what LHH predicted for 2022. Of the four roles with base pay that is expected to be lower in 2023, two of them are C-level positions: chief accounting officer and CFO.

In both salary guides, LHH provided salary data for employees in three tiers based on experience:

• Low: Zero to two years of experience in that position or one similar.
• Medium: Three to 10 years of experience in that position or one similar.
• High: Ten or more years of experience in that position or one similar.

Below are the projected base salaries for each of the 27 industry jobs in LHH’s 2023 salary guide, listed by experience, with a comparison of LHH’s 2022 projected salaries (2022 -> 2023) to see which roles’ pay is expected to increase or decrease next year:

Staff accountant

• Low experience: $56,744 -> $57,937 (2.1%)
• Medium experience: $67,061 -> $71,406 (6.5%)
• High experience: $77,378 -> $85,922 (11%)

Average increase: 6.5%

Staff accountant, Big 4 experience

• Low experience: $61,902 -> $70,076 (13.2%)
• Medium experience: $70,156 -> $82,824 (18%)
• High experience: $77,378 -> $95,265 (23.1%)

Average increase: 18.1%

Senior accountant

• Low experience: $77,378 -> $79,107 (2.2%)
• Medium experience: $90,790 -> $96,797 (6.6%)
• High experience: $113,487 -> $126,181 (11.2%)

Average increase: 6.7%

Accounting supervisor

• Low experience: $77,378 -> $76,650 (-0.9%)
• Medium experience: $88,774 -> $87,939 (-0.9%)
• High experience: $110,614 -> $116,487 (5.3%)

Average increase: 1.2%

Accounting manager

• Low experience: $87,695 -> $83,065 (-5.3%)
• Medium experience: $105,233 -> $99,678 (-5.3%)
• High experience: $129,909 -> $137,320 (5.7%)

Average increase: -4.9%

Accounting manager, Big 4 experience

• Low experience: $88,817 -> $104,598 (17.8%)
• Medium experience: $100,716 -> $118,611 (17.8%)
• High experience: $134,282 -> $176,479 (31.4%)

Average increase: 22.3%

Accounting director

• Low experience: $118,646 -> $114,074 (-3.8%)
• Medium experience: $149,597 -> $160,511 (7.3%)
• High experience: $194,893 -> $233,361 (19.7%)

Average increase: 7.7%

Chief accounting officer

• Low experience: $152,693 -> $132,552 (-13,2%)
• Medium experience: $197,024 -> $162,524 (-17.5%)
• High experience: $245,788 -> $192,659 (-21.6%)

Average increase: -17.4%

Chief financial officer

• Low experience: $195,993 -> $193,875 (-1.1%)
• Medium experience: $270,634 -> $254,387 (-6%)
• High experience: $514,248 -> $459,321 (-10.7%)

Average increase: -5.9

Controller

• Low experience: $113,487 -> $116,579 (2.7%)
• Medium experience: $185,706 -> $212,888 (14.6%)
• High experience: $257,925 -> $329,964 (27.9%)

Average increase: 15.1%

Assistant controller

• Low experience: $95,303 -> $94,434 (-0.9%)
• Medium experience: $121,741 -> $134,619 (10.6%)
• High experience: $152,692 -> $188,424 (23.4%)

Average increase: 11%

Cost accountant

• Low experience: $72,219 -> $72,810 (0.8%)
• Medium experience: $77,378 -> $81,354 (5.1%)
• High experience: $82,536 -> $90,496 (9.6%)

Average increase: 5.2%

Senior cost accountant

• Low experience: $87,695 -> $90,882 (3.6%)
• Medium experience: $103,170 -> $111,502 (8.1%)
• High experience: $128,963 -> $145,352 (12.7%)

Average increase: 8.1%

Cost accountant manager

• Low experience: $113,487 -> $112,253 (-1.1%)
• Medium experience: $128,963 -> $142,353 (10.4%)
• High experience: $144,438 -> $177,923 (23.2%)

Average increase: 10.8%

Financial reporting accountant

• Low experience: $77,378 -> $84,461 (9.1%)
• Medium experience: $82,536 -> $93,952 (13.8%)
• High experience: $87,695 -> $104,103 (18.7%)

Average increase: 13.9%

Senior financial reporting accountant

• Low experience: $87,695 -> $84,461 (-3.7%)
• Medium experience: $98,012 -> $98,443 (0.4%)
• High experience: $113,487 -> $118,871 (4.7%)

Average increase: 0.5%

Financial reporting manager

• Low experience: $113,487 -> $113,603 (0.1%)
• Medium experience: $128,963 -> $129,095 (0.1%)
• High experience: $149,597 -> $159,198 (6.4%)

Average increase: 2.2%

Financial reporting director

• Low experience: $180,548 -> $209,745 (16.2%)
• Medium experience: $196,023 -> $254,130 (29.6%)
• High experience: $206,340 -> $298,525 (44.7%)

Average increase: 30.2%

Internal auditor

• Low experience: $61,902 -> $64,623 (4.4%)
• Medium experience: $72,219 -> $78,624 (8.9%)
• High experience: $82,536 -> $93,707 (13.5%)

Average increase: 8.9%

Senior internal auditor

• Low experience: $82,536 -> $87,206 (5.6%)
• Medium experience: $92,853 -> $102,311 (10.2%)
• High experience: $103,170 -> $118,551 (14.9%)

Average increase: 10.2%

Internal audit manager

• Low experience: $94,916 -> $99,399 (4.7%)
• Medium experience: $107,185 -> $112,247 (4.7%)
• High experience: $133,425 -> $145,714 (9.2%)

Average increase: 6.2%

Internal audit director

• Low experience: $110,549 -> $126,146 (14.1%)
• Medium experience: $155,889 -> $185,506 (19%)
• High experience: $178,647 -> $221,698 (24.1%)

Average increase: 19.1%

Vice president of internal audit

• Low experience: $144,438 -> $140,916 (-2.4%)
• Medium experience: $170,231 -> $185,339 (8.9%)
• High experience: $207,875 -> $252,569 (21.5%)

Average increase: 9.3%

Tax accountant

• Low experience: $60,870 -> $67,312 (10.6%)
• Medium experience: $66,029 -> $76,147 (15.3%)
• High experience: $82,279 -> $98,953 (20.3%)

Average increase: 15.4%

Senior tax accountant

• Low experience: $69,124 -> $72,994 (5.6%)
• Medium experience: $85,526 -> $90,314 (5.6%)
• High experience: $111,523 -> $122,814 (10.1%)

Average increase: 7.1%

Tax manager

• Low experience: $98,012 -> $109,161 (11.4%)
• Medium experience: $113,697 -> $126,631 (11.4%)
• High experience: $148,363 -> $184,401 (24.3%)

Average increase: 15.7%

Tax director

• Low experience: $130,380 -> $115,583 (-11.3%)
• Medium experience: $172,126 -> $152,591 (-11.3%)
• High experience: $228,451 -> $226,009 (-1.1%)

Average increase: -7.9%

ICYMI, seven of the 11 public accounting roles highlighted in LHH’s 2023 salary guide are projected to have higher salaries in 2023 than in 2022, with four of those seven expected to have double-digit increases.

You can find all of our content previewing public accounting salaries for 2023 here.

The post Industry Accounting Salary Outlook for 2023 is Not Horrible appeared first on Going Concern.

Stanley Black & Decker Inc. has eliminated a large portion of finance jobs as part of an effort to cut up to $200 million in costs by year’s end amid high inflation and slowing demand.

The New Britain, Conn.-based maker of power tools and lawn equipment this week cut about 1,000 finance roles, according to two people familiar with the matter. The finance team cuts are part of broader layoffs within the company that have affected thousands of workers around the world, current and former employees said.

The reductions come as Stanley Black & Decker announced ambitious cost-cutting plans in July, including $1 billion in costs by the end of next year and $2 billion in the next three years. The company, whose brands include DeWalt and Craftsman tools as well as Cub Cadet riding lawn mowers, said it is simplifying its structures and processes, reducing certain spending and streamlining operations.

The WSJ article noted that Stanley Black & Decker had been handing out a significant amount of pink slips across different parts of the organization since July, including in its finance and IT departments. This included eliminating a large portion of a global analytics team with about 200 employees in early August. The company didn’t comment about the layoffs in the WSJ article.

But a few days later, Stanley Black & Decker’s PR machine broke its silence, telling CT Insider that the WSJ was wrong about the number of jobs being cut, but unlike Boeing, SB&D wouldn’t say how many people were being shown the door:

A Stanley Black & Decker spokesperson on Tuesday described a Wall Street Journal report as “inaccurate,” stating that the company is cutting 1,000 finance jobs across its operations — but declined to provide information on how many job cuts were included in an initial round the company’s CEO said last month would be largely complete by the first week of October.

[…]

The Wall Street Journal based its reporting on information from multiple current or former employees, without identifying them by name. On Tuesday, Stanley Black & Decker spokesperson Debora Raymond declined comment on any possible job actions in Connecticut or globally, but said the report’s jobs figure was incorrect. The effect of any layoffs in Connecticut remains unclear.

The payment news website PYMNTS speculated that the layoffs at SB&D were because the robots had taken over the finance department:

Automation and streamlining accounting functions may have played a part in the company’s decision to target the finance team for layoffs. PYMNTS research shows that CFOs are prioritizing investment in software solutions that automate various finance processes.

[…]

A recent PYMNTS survey found that 74% of CFOs at large companies see payment operation digitization as “very” or “extremely” important to their business goals. Meanwhile, 62% of CFOs of large companies said that digitization contributes to cost reduction.

Some of cost cuts are achieved by automating finance processes, which sometimes allow a company to get away with employing fewer people. And as labor shortages persist and inflation continues to rock markets, we are likely to see more companies automate their financial processes and reduce their workforce.

Since Oct. 4 when CT Insider published its article, things have been eerily quiet regarding the finance layoffs at Stanley Black & Decker. Discussion sites like TheLayoff.com and Reddit have acknowledged the WSJ and CT Insider articles, but aside from people bitching in the comment section about the quality of SB&D tools nowadays, no one has come forward to confirm exactly how many people were let go or if they were a victim of the cost-cutting.

We’ll update this article if anything new is reported.

Photo credit: Grindstone Media Group/Shutterstock

The post Layoff Watch ’22: Stanley Black & Decker is Giving Out Pink Slips to Finance Pros, But How Many? appeared first on Going Concern.

The Seattle Times reports:

Boeing told nonunion corporate staff in an all-hands virtual meeting this month that it will begin outsourcing finance and accounting jobs to Tata Consultancy Services of India.

Boeing said Tuesday that about 150 jobs nationwide will be cut in the first batch of layoffs, with more to come next year and thereafter. The first layoff notices will go out in October.

“The Finance team is planning for lower staffing levels as it simplifies processes, improves efficiency and shares select work with an outside partner,” Boeing said in a statement, adding that it “will assess future impacts as the process continues in the coming years.”

A still-employed senior finance employee at Boeing who spoke to the Times on condition of anonymity said: “It was kind of a shock the way they rolled it out. They had the all-hands enterprise meeting and then four days later everyone was moved into new organizations with new managers.”

Managers at Tata began consulting with Boeing finance and accounting managers this week to identify the work they’ll take over and once that’s done, Boeing will start letting people know if they’re laid off. This includes some management employees, Seattle Times said. And before they leave, the soon-to-be-let-go employees are expected to train Tata personnel in Boeing procedures “to smooth the handover of the work.”

The planned layoffs are part of a broad and concerted Boeing effort in recent years to cut nonunion corporate jobs.

“Several of our corporate functions, including Information Technology and Finance, have implemented changes to streamline their operations, resulting in lower staffing levels” in those areas, Boeing said Tuesday.

That push began with moves to get rid of IT work that could be done more cheaply elsewhere and was not seen as central to Boeing’s business.

Tangentially related: you can find several threads on Fishbowl comparing Tata and Big 4: a Deloitter asking for opinions, a KPMGer who wants to know about working for TCS (“Friend has been working there for a few weeks and still doesn’t have a laptop so going pretty well”), and a PwCer asking about the difference between Big 4 and Indian IT firms like Tata, Infosys, and Wipro (or the “WITCH” firms), among others.

The post Boeing Starts Layoffs in Finance and Accounting, Will Outsource the Work to India appeared first on Going Concern.

No words… pic.twitter.com/cV6kzUCZ6s

— The Wet Bandits (@ChaseJones11) August 1, 2021

Happy Monday, everyone.

Related article:

Let’s All Have a Good Laugh at WeWork’s Stupid ‘Community Adjusted Ebitda’

The post OK Which One of You Has This Yacht? appeared first on Going Concern.

How would I navigate the professional and business challenges of a new job with the added complications of the coronavirus? How would I understand office dynamics or company culture without ever meeting my team face to face? Was I crazy to take on a vital new role in this unprecedented time?

Several months later, we are still working remotely, and the business challenges COVID presents keep coming. From revenue and supply chain issues to managing cash and liquidity positions, I’ve been tested in more ways than ever before. But I also have some key learnings and silver linings to share.

Seek data and increase transparency

COVID-19 changed the way our business operates and our processes needed to adapt and allow for quick decision making in this rapidly changing environment.

To shorten our financial close process, I focused on controlling what I could—and understanding that remote work called for increased transparency. I first tried to understand what the leadership of our business needed from our monthly reports. I asked questions like: Why is this information important to you? What decisions does this information help you make? Understanding how the information is used allowed me to distill the numbers in new ways and feed critical data back to management in a format that both informs and is easy to consume.

Recognizing how the information we produce is used became the foundation of conversations with my new team, and our regular Zoom meetings frequently focused on these high-level perspectives. I relayed to the group what information was getting presented to management and how it was utilized. They began to see how the individual pieces they supply fit into the larger picture.

Surface the stories behind the numbers

Today, with a new understanding of how the information is used, we are changing the way we report information—for example, providing keener insights to where revenue opportunities are greatest, allowing us to accelerate achieving our mission. We have started connecting business activity drivers to our close process and have a much better understanding of our cost structure and what impact COVID has had across the organization. Sharing this information and how it trends allows our operations teams to make better decisions.

Giving the accounting team insights into how the numbers they generate are used by leadership has had an additional benefit: my team now routinely asks questions and looks beyond the numbers to help our team present information in new ways. I have to think we now have a more excited, curious, and engaged workforce that will benefit us far beyond the pandemic.

Automate wherever possible

I am lucky that I joined an organization that has invested in best-in-class technology. I found that the pandemic provides an opportunity to leverage those investments and automate processes even further. Automation gives us the ability to spend less time booking entries and more time looking into the stories behind those numbers.

One downfall of having great technology is that teams expect it to solve all issues. Unfortunately, systems are only as good as the processes that go into them. One of the advantages to working remotely is that we now have more uninterrupted time to get to the root cause of problems. We can step back and ask ourselves: Is this truly a system issue or is there a process that needs to change? We have recently finalized an end-to-end analysis of procure-to-pay and identified changes that will be useful not just for accounting but for the business as a whole. By identifying efficiencies, we are giving time back to the organization.

Reviewing our processes also helped us realize we were still sending paper invoices to customers and paying vendors with manual checks during a time when few people, if any, were in offices to receive them. Focusing on automating these processes has improved our cash flow, and our customers and vendors were more amenable to these changes now than they might otherwise have been.

Though the challenges of starting a new position during a pandemic have been myriad, I wouldn’t change a thing. Adapting the way I work has enabled me to get up-to-speed faster, understand how my team can become more efficient and build a useful, complete picture of our business. This approach of engaging the finance team, even when implemented remotely, allows the company as a whole to become more successful.

The world is changing faster than ever now, with COVID driving some of these changes. Still, we as finance leaders can leverage data to make meaningful changes in advance of oncoming craters or take advantage of the highs of a post-pandemic world.

About the author:

Annie Thompson is controller at CorneaGen, a mission-driven organization devoted to transforming cornea care and eliminating corneal blindness worldwide by 2040.

The post I Started a New Controller Role During a Global Pandemic and Found Silver Linings appeared first on Going Concern.

As we mentioned last Friday, Markopolos called GE “a bigger fraud than Enron.” In his 175-page report, he accused the company of failing to take adequate reserves to cover huge current and future losses in its long-term care insurance business and violating U.S. accounting rules (the ones Seidman used to oversee) by failing to book a big writedown on its Baker Hughes GE energy unit.

The report, which culminated an investigation into GE’s accounting practices in which Markopolos was paid by an unidentified hedge fund to produce and publish, sent the company’s stock plummeting 11% on Thursday, its biggest drop since April 2008. But GE’s stock rebounded the following day after CEO Larry Culp bought nearly $2 million worth of the company’s stock. Its stock was down slightly this morning.

On CNBC’s “Squawk on the Street” Thursday morning, Markopolos said, “GE is losing $5.27 for each dollar of premium income they are taking in. Those losses are unsustainable and growing at an exponential rate. For 2018, they grew at a 60% rate. It’s growing exponentially and it’s going to make this company probably file for bankruptcy.”

So later that afternoon, on its show “Closing Bell,” CNBC had Seidman on to get her take on Markopolos’ report. Seidman, who “eats nails for breakfast,” one GE insider told Fortune magazine, did exactly what CNBC wanted her to—she put her “GAAP Expert” hat on and took a dump on the report:

“When I saw the report this morning and had a chance to just flip through it, my initial reaction was that I thought it was full of misleading, inaccurate, and inflammatory statements. That report does not reflect the GE that I know.

“I’ve been on the board for about 18 months now and I’ve been chair of the audit committee since April, and my experience of being a director at GE is that I’m working with a great team of people and a great set of director colleagues, and our No. 1 objective is to ensure the market views our financial reporting as full of integrity and that we’re providing complete and accurate financial information.

“So I think that the basis on which the report was developed is questionable at best. I don’t recognize some of the accounting practices that he describes as GAAP. Given my background at the Financial Accounting Standards Board, I’m in a unique position to know when I see somebody who understands accounting and somebody who doesn’t.”

When asked why can’t the word “fraud” be applied to GE’s accounting practices, which have been under investigation by regulators for years, Seidman said:

“Fraud is such a strong and inflammatory word, meaning intent to willfully deceive. We are in full compliance with accounting standards in the U.S. We prepare them with a rigorous process. I as the chairman of the audit committee have full access to the people and books and records at GE and I stand behind the financial reporting of this company. Speaking for my colleagues, we take this really seriously, and there is no basis for an allegation of fraud here.”

When asked if GE has its arms around the accounting for its long-term care insurance business, Seidman said:

“Yes. We have taken steps within the last year or so to bring in new talent to manage the operation. We have gone through a robust process with respect to the loss recognition test and the processes we go through to estimate the liability. As part of our normal course of operations, we’re going to be performing a current loss recognition test in the third quarter, which is a normal part of GAAP accounting. So I think we do have our arms around the accounting, and I think that the amount at which we state the reserves currently is fair and in accordance with GAAP.

“I think the report is full of opinions, and this is one of those cases where I’m not sure that the author of the report really understands the accounting in this area. We can question is it because of incompetence—he doesn’t understand the accounting standards here? Or is there some other motivation? It’s not acceptable under GAAP to just say, ‘Let’s make the liability bigger’ or ‘Let’s take the statutory basis and book it for GAAP.’ That’s not how this works.”

You can watch the full interview with Seidman below:

https://www.youtube.com/watch?v=oSHv7zmp9tQ

The post Leslie Seidman Wants Everyone to Know That GE’s Financials Are A-OK appeared first on Going Concern.

A UPS spokesperson told the newspaper that the package delivery company is outsourcing transactional finance and accounting work in order to let employees “do more strategic work that can make a greater impact on our business and provide them with enhanced career opportunities.”

Unfortunately for the accountants, this would only apply to the employees who, ya know, still have a job at UPS, which reported second-quarter net income of $1.69 billion, or $1.94 per share, compared with $1.49 billion, or $1.71 per share, a year earlier.

In a letter to the Texas Workforce Commission, UPS said the job cuts will begin in October and continue into January 2020. It said the impacted employees will be offered severance pay. The company also told the Dallas Morning News that “we are assisting employees who part with the company to find new employment.”

Since May, outsourcing has cost accountants their jobs at United Airlines in Houston and Walmart in Charlotte, NC.

The post Layoff Watch ’19: Outsourcing Dooms Accountants at UPS In Texas appeared first on Going Concern.

Retail giant Walmart Inc. will lay off hundreds in Charlotte starting later this year as it outsources its finance and accounting operations.

The retailer filed a Worker Adjustment and Retraining Notification with the N.C. Department of Commerce this week, stating a permanent closure of a Walmart division in Water Ridge will result in about 569 layoffs. Walmart signed a 12-year lease in 2015 to occupy the full 107,545-square-foot building at 2118 Water Ridge Parkway, where it operates several units, including finance and accounting.

The work that was being done in Charlotte is going to be outsourced to Genpact, a professional services firm that opened a digital innovation hub last year in Bentonville, AR, the city where Walmart is headquartered, according to CBJ.

Layoffs in Charlotte are expected to begin in September and continue until early 2020.

A Walmart spokesperson told the CBJ that all impacted employees will get a severance if eligible and a retention payment if they stay on until the end of their transition period. Walmart also will provide resume and skills training, job fairs, and opportunities to apply for other positions within the company.

All employees who are losing their jobs have been notified, the WARN letter states.

The Walmart layoff announcement comes almost a month after United Airlines said it will cut about 100 accounting jobs in Houston in July and outsource that work instead.

The post Layoff Watch ’19: Walmart Accountants and Finance Workers In Charlotte, NC appeared first on Going Concern.

The biggest job cuts will be felt among the higher ranks of the automaking giant. Ford CEO Jim Hackett said in an email to employees on Monday that “we will have reduced management structure by close to 20%.”

While accountants were not mentioned specifically in the numerous reports about the layoffs that were published yesterday (although layoffs in finance was mentioned by the Associated Press), a May 13 report in the Detroit Free Press confirming the pending job cuts did hint that accountants would be among the casualties:

Salaried workers in accounting, administrative support and other areas at Ford World Headquarters in Dearborn are reportedly being let go, sources close to the situation confirmed to the Free Press. In addition, the information technology team in China has reportedly seen reductions.

It is not known how many Ford accountants were given pink slips. The Detroit News reported this morning that the first of 500 Ford salaried employees are expected to be notified in meetings today that they’re being let go.

Ford said in the U.S. about 2,300 jobs will be cut through buyouts and layoffs, according to the Associated Press. About 1,500 have left voluntarily or with buyouts, while another 300 have already been laid off.

All employees will receive severance packages.

Another Fortune 100 company, United Airlines, announced on May 17 that it will cut about 100 accounting jobs in Houston in July and shift the work to a contractor.

The post Layoff Watch ’19: Accountants Said to Be Among Casualties In Ford Bloodbath appeared first on Going Concern.

United Airlines says it will cut about 100 accounting jobs in Houston in July and shift the work to a contractor.

The airline reported the layoffs in a letter this week to the Texas Workforce Commission. It did not identify the contractor that will handle accounting of revenue from passengers.

A United spokeswoman said Friday the airline is providing job-search help.

According to the ABC News affiliate in Houston, United employees were notified of the transition in July 2018 and that the airline has spent the past year providing career-assistance services, such as resume writing and interview skills, to those who will be laid off.

The post Layoff Watch ’19: United Airlines Is Axing 100 Accounting Jobs in Houston appeared first on Going Concern.

During Nike’s early days, Knight wrote that he wanted to surround himself with bright people, so he seemed to hire “nothing but accountants and lawyers” because they have “sharp minds.”

“That was our priority, and accountants and lawyers had at least proved that they could master a difficult subject. And pass a big test,” Knight writes. “Most also demonstrated basic competence. When you hired an accountant, you knew he or she could count. When you hired a lawyer, you knew he or she could talk.”

Knight was right, you guys do have sharp minds and you guys do know how to count. Good move on his part.

However, while you guys are known for your smarts, you aren’t known for your great fashion sense. Knight should’ve known this, as he used to be one of you. So why Knight asked an accountant to design Nike’s first line of clothing is kind of a head-scratcher. And, as you can imagine, it turned out to be not so good:

In 1978, Nike was gearing up to launch its first apparel line. Knight tapped Ron Nelson, an accountant, to develop it. He reasoned that apparel, when compared to footwear, was easy.

“There wasn’t any technology or physics involved,” Knight wrote.

It turned out to be a disaster. Unfortunately, according to Knight, Nelson had no sense of style and came up with a line of clothing that resembled “soiled workout shorts, ragged T-shirts, wrinkled hoodies — each putrid item looked as if it had been donated to, or pilfered from, a dumpster.”

Knight transferred Nelson to the production department and tapped eventual Nike president Bob Woodell, who did his “typically flawless job.”

In fiscal year 2018, Nike pulled in $14.86 billion in sales in North America, $4.9 billion of which was in apparel.

Lesson (obviously) learned.

The post Protip: Don’t Ever Ask an Accountant to Design Your Latest Line of Apparel appeared first on Going Concern.

Dave Morton joined the company in early August after a stint as CFO of Seagate Technology. The day after Morton joined Tesla, CEO Elon Musk tweeted that he was thinking about taking the company private and buying out investors at $420 a share, which definitely wasn’t a reference to weed because Elon Musk is a grown-ass man and not a greasy-haired burner at the skate park, right?

Am considering taking Tesla private at $420. Funding secured.

— Elon Musk (@elonmusk) August 7, 2018

He claims he based the number on math, not stoner lore. “It seemed like better karma at $420 than at $419,” he said in an interview with the New York Times following the controversial tweet. “But I was not on weed, to be clear. Weed is not helpful for productivity. There’s a reason for the word ‘stoned.’ You just sit there like a stone on weed.”

A little more than a week after the tweet, the SEC issued a subpoena into this whole privatization thing.

Just to keep things interesting, Musk appeared on Joe Rogan’s podcast last night and got blazed on a big fat blunt.

Surely, none of this has anything to do with the chief accounting officer noping on outta there after barely a month of service.

“Since I joined Tesla on August 6th, the level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations,” Morton said in a Tesla SEC filing, which indicated he resigned on Sept. 4. “This caused me to reconsider my future. I want to be clear that I believe strongly in Tesla, its mission, and its future prospects, and I have no disagreements with Tesla’s leadership or its financial reporting.”

Man, talent shortages are real y’all.

The post Tesla’s Chief Accounting Officer Nopes on Up Outta There After Just a Month on the Job appeared first on Going Concern.

Investors filed a securities class-action lawsuit against Exxon Mobil, former CEO Rex Tillerson, and several other executives in November 2016, accusing the company of failing to properly account for the impact of climate change to its business and making public statements and financial disclosures that caused its share price to fall. Exxon Mobil tried to get the lawsuit dismissed, arguing that the investors failed to state a claim for the civil action. But a Texas judge on Aug. 14 rejected Exxon Mobil’s motion to dismiss the lawsuit, thus allowing it to proceed, according to Reuters.

In his ruling, Judge Ed Kinkeade of the U.S. District Court for the Northern District of Texas said the lead plaintiff, Greater Pennsylvania Carpenters Pension Fund, “sufficiently pleaded” securities fraud claims against the company on behalf of the investors.

Kinkeade wrote:

In mid-2014 oil and gas prices began to fall worldwide. Other oil and gas companies were forced to write off or abandon more than $200 billion worth of oil and gas reserves because the cost of production was higher than the profits. ExxonMobil did not write off or abandon assets but instead repeatedly reassured investors that ExxonMobil had superior investment processes and project management that allowed it to continue operating without writing down any assets. Pension Fund alleges these representations were materially misleading because ExxonMobil knew it could not survive the historic drop in oil and gas prices without writing down assets.

As Law.com points out, Tillerson—who thought it was a good idea to leave Exxon Mobil in late 2016 to become President Trump’s secretary of state, a relationship that lasted until March 13, 2018, when Tillerson got the finger-point and the “You’re fired” from his boss—“signed off on SEC filings and was well aware of internal differences in the cost calculations of government-mandated carbon assessments related to global warming.”

The judge wrote:

The Amended Complaint contains numerous allegations to support Pension Fund’s contention that Defendant Tillerson, Chairman of the board and Chief Executive Officer, had knowledge of ExxonMobil’s alleged fraudulent activity. Defendant Tillerson was on the Board of Directors and the Management Committee, both of which allegedly received in-depth briefings on and actively engaged in discussions on ExxonMobil’s financial position and risks of climate change. Defendant Tillerson also allegedly had motive to maintain ExxonMobil’s AAA credit rating by using a lower, internal proxy cost and not recognizing asset impairment so as to receive sufficient funds to pay the shareholder dividends. Also, Defendant Tillerson signed the allegedly materially misleading Form 10-Ks while aware of their misleading statements.

Exxon Mobil contends that the investors’ complaint is “meritless” and the company “will vigorously defend ourselves from these baseless claims,” spokesperson Scott Silvestri told Reuters.

The attorneys general in New York and Massachusetts also are investigating whether Exxon Mobil’s public statements about climate change misled investors.

Exxon Mobil tried to block the states’ investigations in court, saying they were politically motivated, but a federal judge dismissed the lawsuit in March 2018, saying, “Exxon’s allegations that the AGs are pursing bad faith investigations in order to violate Exxon’s constitutional rights are implausible,” according to the New York Times.

The Accounting News Roundup newsletter is back! Every Friday you’ll get a recap of recent content posted on Going Concern, On This Date in Going Concern History, list of hot remote and hybrid accounting jobs, and more. Sign up here today.

Image: iStock/zodebala

The post Exxon Mobil May Have Escaped an SEC Penalty Over Climate-Change Accounting But Not a Class-Action Lawsuit appeared first on Going Concern.

If that sounds appealing, FloQast may have a position for you. The company is looking to hire an Accounting Technology Consultant for its office in Sherman Oaks, Calif.

FloQast is close management software made by accountants for accountants and is growing wildly popular in accounting departments across every industry.

We sat down with Lilith Karageuzian, head of customer success at FloQast, as well as two current senior accounting technology consultants, Alex Nordin and Debbie Byrne, to get the full scoop on this opportunity.

A senior what now?

The work you’ll be doing as part of the Customer Success team will push your accounting and communication skills to exciting and unexpected places.

As an Accounting Technology Consultant, you’ll join FloQast’s small but growing Setup team. You’ll work with controllers, accounting managers, and CFOs from a wide variety of industries–everything from professional sports teams to real estate to technology. You’ll help these accounting professionals identify their needs and develop a plan for integrating the FloQast application into their existing accounting systems.

“Since we’re a small team, you’ll get the chance to shape where we’re going and what we want to work on. You can have a big impact on the company,” Nordin says.

You’ll then train clients on how to use the system, answer any questions they have, and troubleshoot any problems that occur during the setup process. Once setup is complete, you’ll pass the client over to the Account Management team, who will handle ongoing maintenance, retention, and upsell.

“We are the power users of FloQast,” Nordin says. “We have to get an understanding of the client’s environment and show them how they’ll use FloQast to complement their process. So it’s important to have the accounting knowledge and the knowledge of FloQast.”

Knowledge of the FloQast software isn’t a prerequisite to get the job, however. You’ll need some general tech skills, but if you’re willing and eager to learn, your teammates and managers will work with you so you can master the software quickly.

Startup lifestyle at an established company

FloQast has been around for five years, and at its current level of growth and development, it won’t be going anywhere any time soon. But while it offers the stability and prestige of an established company, FloQast prides itself on maintaining the flexibilities of the startup culture.

“We do have a startup lifestyle; however, we don’t have the initial risks of most startups,” Byrne says. “We’re growing at a steady rate and I feel confident in the direction that we are going.”

Working at FloQast also offers you the opportunity to influence the shape and trajectory of the company in ways you wouldn’t be able to at other businesses.

“We have an ever-evolving process in place,” Karageuzian says. “Our employees can create change and new ideas are encouraged.”

And like at any good startup, it doesn’t have a strict dress code and is light on formalities.

“We have an open office workspace. If you’re looking for that startup vibe, this is definitely a good fit,” Nordin says.

Charting your own career

The Accounting Technology Consultant role exposes you to many different industries, introducing you to the challenges and language of each. You can use the knowledge you gain and the contacts you make at this job to send your career on just about any path you want it to go.

“Three years ago, what I was doing at FloQast is totally different from what I am doing now,” Karageuzian says. “I’ve been able to build out my career the way I’ve wanted at a company I believe in.”

If you’re dedicated to a strict, level-by-level promotion schedule like you’ll find at the Big 4, this may not be the job for you. But if you’re someone who wants to chart your own course, this is a great role to break you out of the rigors of public accounting.

“I make the joke that I lost my 20s to the Big 4,” Byrne says. “Now I’m done with the 80-hour workweek and all the mundane tasks that come with public accounting. But I can still keep the prestige of my CPA license.”

Helping people

The biggest advantage the Accounting Technology Consultant job at FloQast offers over traditional accounting work may be this: You get to help real people, not just their books.

“Clients love to hear from us. They reach out to us to help them with questions all the time. You’re helping people versus in the accounting or auditing world where you’re bugging them for audit support,” Karageuzian says.

Interact with clients from virtually every industry. Live the startup lifestyle without the startup risks. Gain the flexibility to send your career on a variety of paths. And truly help people instead of just their balance sheets.

If those last few sentences sound like the qualities of your ideal job, click the link below to apply for the Accounting Technology Consultant position at FloQast now.

Apply for the Accounting Technology Consultant position at FloQast

Understand what FloQast can do for your close in one minute. You can read more about Going Concern’s partnership with FloQast here.

The Accounting News Roundup newsletter is back! Every Friday you’ll get a recap of recent content posted on Going Concern, On This Date in Going Concern History, list of hot remote and hybrid accounting jobs, and more. Sign up here today.

The post Get an Accounting Job with Startup Perks–Minus the Startup Risks appeared first on Going Concern.

According to a Bloomberg News report, Exxon Mobil received a letter from the SEC on Aug. 2 that said it would take no enforcement action against the company. In an email to Bloomberg, Exxon spokesman Scott Silvestri said, “We are confident our financial reporting meets all legal and accounting requirements.”

The probe, which began in 2016, examined “whether Exxon has for decades failed to alert investors about potential climate-change risks for a company with annual sales that could rival the world’s top 50 national economies,” Bloomberg News wrote.

The SEC also looked at why Exxon Mobil hadn’t written down the value of its oil and gas reserves since the price of oil started dropping. A Sept. 20, 2016, Wall Street Journal article said the probe may have signaled the start of a “new front of climate-related regulation and enforcement at the SEC.”

At the time, Caleb gave props to the SEC for lumping investigations into accounting and climate change together:

If the SEC were just looking into costs related to climate change, Exxon supporters would be screaming bloody murder. But when you’re asking questions about why a company hasn’t suffered any impairment while its peers have been getting crushed, you can’t really be too upset about it. Their concerns seem pretty legitimate! And the CEO explanation of, “We don’t do write-downs,” and, “We hold people accountable,” doesn’t really explain anything! So the SEC wants to look at the details…and figured as long as they were doing that, they’d take a look at the climate change stuff too. It’ll save them a trip.

In its letter to Exxon Mobil, the SEC said the decision “shouldn’t be seen as an exoneration” and “the probe could be reopened later,” according to Bloomberg News.

While the SEC has dropped its investigation for now, the attorneys general in New York and Massachusetts have not. Both states are still hot on the trail of Exxon Mobil—and whether its public statements about climate change misled investors.

Exxon Mobil tried to block the states’ investigations in court, saying they were politically motivated, but a federal judge dismissed the lawsuit in March 2018, saying, “Exxon’s allegations that the AGs are pursing bad faith investigations in order to violate Exxon’s constitutional rights are implausible,” according to the New York Times.

The Accounting News Roundup newsletter is back! Every Friday you’ll get a recap of recent content posted on Going Concern, On This Date in Going Concern History, list of hot remote and hybrid accounting jobs, and more. Sign up here today.

Image: iStock/ClarkandCompany

The post SEC Calls Off the Dogs on Exxon Mobil appeared first on Going Concern.

Accounting Today reported that two popular drug store chains top the list of Fortune 1000 companies with the most operating lease liabilities that will need to be added to their balance sheets under the new standard, which goes into effect Jan. 1, 2019.

The report, from LeaseAccelerator, a provider of lease accounting software, found that Walgreens Boots Alliance, with $32.811 billion in operating lease liabilities, was in first place, followed by CVS Health, with $27.151 billion in second place, and AT&T, with $25.928 billion in third place. They were followed by Amazon ($22.848 billion), Verizon Communications ($20.734 billion), FedEx ($17.874 billion), United Continental Holdings ($16.251 billion), Delta Air Lines ($16.236 billion), Walmart ($15.366 billion) and Bank of America ($14.5 billion), rounding out the top 10.

The top 1,000 U.S. public companies alone have nearly $1 trillion in operating lease liabilities, according to the report.

Although companies in almost every industry have leases, there’s a particularly high concentration of leases in the retail, airlines, and telecommunications sectors. The retail industry is expected to experience the largest proportional balance sheet change from the new standard because it’s common to lease store locations, according to the AT article.

Bill Bosco, a principal at the consulting company Leasing 101, told AT in 2016 that Walgreens had about 8,400 real estate leases, and that was before they acquired Rite-Aid and Alliance Boots.

And real estate leases are pretty complex, Bosco said, because most are “gross-filled leases,” meaning that the lessee pays for not only rent, but also for common-area maintenance, utilities, landscaping, and a variety of other services.

“It’s a full-service bundled lease in most cases. Some leases are triple net leases. The new rules say you only have to capitalize the lease portion. To record a real estate lease, it means you’ve got to get the lease document, you’ve got to read the lease document, you’ve got to find out whether it’s a gross-filled lease or not, you’ve got to go back in time and get the details of the portion of the payment that’s a lease payment or not, and you might have to call up the landlord and get some information. When you transition in 2019, the SEC requires comparative statements, so you’ve got to do a P&L for 2017, 2018 and 2019, and the balance sheet for 2018 and 2019. That means you can’t just start working on it in 2019.”

Good luck, Walgreens.

The Accounting News Roundup newsletter is back! Every Friday you’ll get a recap of recent content posted on Going Concern, On This Date in Going Concern History, list of hot remote and hybrid accounting jobs, and more. Sign up here today.

[AT]

Illustration: iStock/erhui1979

The post New Leases Standard About to Really Blow Up Drug Store Chains’ Balance Sheets appeared first on Going Concern.

So I have to open the interview with THE question. One of those questions you dread asking because the answer is so obvious and self-evident. But you have to ask it to ensure a full, healthy discussion.

I swallow my pride, choke down a sigh, and let ’er rip:

“What is a homebuilder?”

And, like clockwork, Scheiderich responds with THE answer:

“Someone who builds homes.”

Thankfully, she elaborates.

OK, so what EXACTLY does a homebuilder do?

“PulteGroup is a consumer-driven company that builds consumer-inspired homes to make people’s lives better,” Scheiderich says. “We try to build houses to match the way people live and the way they want to live, so they can be a part of the American dream.”

I stop holding my breath and let out that sigh. This is going to be a good interview after all.

Later in the discussion, Scheiderich points to the self-evidence of the “homebuilder” title as a benefit rather than a hindrance.

“Everyone knows what you do when you work for a homebuilder. My dad didn’t know what I did in accounting, but now he gets it. It’s very relatable,” she says.

Making dreams come true

According to Scheiderich, homebuilding is less about boards and nails and more about helping families fulfill the full promise of their lives. If you work at a homebuilder like PulteGroup, you’ll be part of that mission.

And you’ll enjoy a closer level of interaction with your customers than you will in other industries.

“We get to see our customers a lot more,” Scheiderich says. “We get to help them achieve their dreams, whether it’s with the designers who help them pick out what their house is going to be, to our field managers, to our closing coordinators who will finally hand them the keys.”

This stands in sharp contrast to other industries that may seem similar on the surface.

“Homebuilding is a lot bigger in scale,” Scheiderich says. “With real estate and construction, you don’t have that level of interaction with the customers. I get to tour models, pick up design ideas, and so much more.”

The accounting side of homebuilding

So as an accountant or financial professional, what does your day look like at a homebuilder like PulteGroup?

According to Scheiderich, you’ll get a holistic view of the company, with your decisions impacting every aspect of the business.

“You get to understand what the industry is, what things cost,” she says. “You learn why things are affordable in certain areas and aren’t in others. You’ll review the costs of building a house, from lumber to asphalt, shingles, and even land. You really get a soup-to-nuts view of how the industry works.”

Building communities, not just homes

While PulteGroup is a homebuilder at heart, its true vision is larger: building communities that foster teamwork, friendship, and better quality of life.

“At PulteGroup, you get to see how we think about our cities, how we live versus how we should live, and how to make the best use of land,” Scheiderich says. “Most people want to own a home–it’s very relevant to your life. I find it very exciting.”

In short, when customers turn to PulteGroup, they’ll find a partner that’s just as concerned with how they live as where they live. And if you work for PulteGroup, you won’t just be building homes–you’ll be helping families build happier lives.

Ready to be a homebuilder?

PulteGroup is currently looking to hire corporate auditors for its Atlanta office. If you’re searching for a fulfilling position that lets you help people make their American dreams a reality, this might be the opportunity you’ve been waiting for. Click the link below to apply now.

Atlanta, Ga. positions

Corporate auditor

The post What Is a Homebuilder, and Why Should Accountants Work For One? appeared first on Going Concern.

For example, Newell Brands Inc., which makes Sharpie markers and Rubbermaid containers, forecasts that a key measure of its income, what it calls “normalized earnings per share,” could rise as high as $2.85 this year from $2.75 in 2017, Bloomberg Opinion columnist Stephen Gandel wrote. But Newell’s actual earnings under GAAP will likely drop—sales of its Graco strollers have taken a hit due to Toys R Us going out of business.

According to Gandel:

Newell’s management, despite being able to forecast its favored normalized EPS metric as well as operating cash flow, says it’s unable to predict what its actual bottom line could be and even states that doing so would mislead investors. Four Wall Street analysts say Newell’s net income, as measured by GAAP, could fall to $2 a share this year.

Management-adjusted earnings present a clearer picture of a company’s operations than GAAP earnings, executives and accountants say. Public companies are required to report GAAP earnings, but the SEC wants those that also opt to report adjusted results to detail what adjustments were made.

Not so when it comes to forecasts, according to Gandel:

For forecasts, companies are allowed to use management’s preferred adjusted numbers without telling investors what they think their GAAP earnings will be or what adjustments have been made. Those adjustments are supposed to be consistent from quarter to quarter, but even that doesn’t have to be strictly followed. The SEC’s sole requirement is that companies that provide only adjusted forecasts have to state that predicting earnings based on standard accounting rules would be either too hard or too costly, which is exactly what more and more companies are doing.

According to Audit Analytics data, 277 of the companies in the S&P 500 Index currently give non-GAAP guidance in their earnings forecasts, up from 260 two years ago, according to Gandel’s article. Of those 277, 120 give non-GAAP guidance only, while 56 give both GAAP and non-GAAP forecasts but don’t detail how those two forecasts compare.

Companies that use non-GAAP metrics in their earnings forecasts appear to be pulling the wool over investors’ eyes, but as Gandel stated, “If companies continue to make their projections as sunny as possible, investors could react harshly when it becomes clear just how much in the clouds the forecasts have become.”

[Bloomberg]

Image: iStock/vvvita

The post Earnings Forecasts Look Sunnier When You Put GAAP in the Shade appeared first on Going Concern.

Well, yes and no. And yes.

The Big 4 does know that the CMA exists (I’ve included the proof below). Its members have places for CMAs within their companies. And while the CPA is still top dog, there are compelling reasons why the CMA is beneficial even if that’s not the loudest message being sent by the Big 4.

What value does the CMA have in accounting?

The CMA isn’t designed specifically for public accounting the same way the CPA is. It’s better for industry accounting. In fact, it’s the leading credential for management accounting. While the CPA is hot within the Big 4, the CMA is in demand at Fortune 500 companies and those with manufacturing facilities requiring cost and inventory management.

CMAs can work for a range of businesses, but they are especially valued at larger companies, as smaller organizations don’t always need a professional specializing in management accounting and costing.

Both CPAs and CMAs can hold titles like CFO or controller. However, CMAs have the edge when it comes to making high-level management decisions. For that reason, a good number of people in senior management roles for strategic planning, accounting, and finance are CMAs.

What value does the CMA have in the Big 4?

The CMA is a global certification. And as the Big 4 offers many different services to a wide variety of clients, including multinational companies, some Big 4 members have positions available for CMAs. In fact, the Big 4 firms retain a staff of management accountants dedicated to advising large companies on questions related to restructuring and potential tax savings.

Some of the other CMA positions available at the Big 4 include:

• Risk Management Advisory Manager
• Accounting & Reporting Transformation Senior Consultant
• Government & Public Sector Strategy Manager
• Risk Assurance Advisor (Manager)
• International Tax Services Senior Manager
• Risk Transformation Advisory Senior Manager

What value does the CMA have to me?

Geez, do I have to tell you how to do everything?

Well I will, because this information is difficult to Google and you seem like a very nice person. I’m going to give you three really good reasons to earn the CMA. And I doubt the first one will be a hard sell: The CMA can increase your personal revenue.

If you’re a fan of, you know, money, then you should know that dual certification is a great way to get more of it. Dual certification means you have two certifications (duh, I know), and it’s a very lucrative exploit. One of the best certification combinations is CPA + CMA.

For years now, the Institute of Management Accountants salary survey has noted that accountants with both the CMA and CPA make more money than accountants with just one. The most recent survey reports that dual certification accountants earn an average of 59% more than single certification accountants.

When you break down the median total compensation for dual certification holders by age range, you get amounts like these:

• 20-29: $78,000
• 30-39: $122,250
• 40-49: $145,000
• 50 and older: $140,500

I don’t know about you, but that looks like more than enough to pay for all the trouble of earning both certifications.

So, don’t choose between the two—get both and make bank!

My second reason for using the CMA to make your way in the Big 4 is job quality over quantity. Big 4 firms typically offer thousands more CPA jobs than CMA jobs. While you may think those figures demonstrate favoritism, I like to think of it as selectivity.

If you’re fine with being another fish in the sea at a Big 4 firm, the CPA will give you plenty of job options to choose from. But if you’d like to jump straight into a high-quality Big 4 position, get yourself the CMA. According to the IMA, 64% of CMAs say they’re satisfied with their jobs, with their favorite aspects being relationships with coworkers, employee benefits, and salary.

And finally, my third reason for becoming a CMA is the job options you’ll have outside of the Big 4. If the time ever comes when you’d like to say goodbye to your trusty old life at the Big 4 and venture out toward a different destiny (which is not so uncommon, as accounting firms bringing in more than $75 million annually typically have a 17-20% turnover rate), the CMA can serve as your yellow brick road.

The CMA opens doors into the business world and leaves you perfectly equipped to walk in and crush it. This business-savvy accounting certification lets you keep one foot in the finance side of the company while functioning as an important part of the management team.

From there, the CMA empowers you to move up to even bigger and better positions. But I really don’t want to oversell it. The CMA just helps you become like, the CEO, CFO, vice president of finance, or controller. No biggie.

So, if your goal is to advance your career and make more money, and whose isn’t, then the CMA can certainly assist you in getting there. Just ask Hallie D’Agostino, CMA, CPA. She used Gleim CMA Review to pass the CMA exam and enhance her career as an auditor for a top accounting firm.

When you use the #1 CMA exam prep, you’ll have everything you need to pass the CMA exam. To start the process of earning the CMA, learn all about it in this free CMA exam guide.

The post Does the Big 4 Value the CMA Certification? appeared first on Going Concern.

“We understand that all SEC investigations regarding our accounting have been completed,” a [Toshiba] spokesman told Reuters, adding that there was no penalty or censure.

Reuters could not reach the SEC for comment.

If true, that’s good news for Toshiba, because when it comes to its accounting and finances, there hasn’t been much good news the past three years.

Three former Toshiba presidents resigned in late 2015 after it was found that the electronics company overstated operating profits by more than $1.2 billion dating back to 2008, resulting in Toshiba revamping its board and increasing the number of outside directors.

In addition, the accounting scandal led the company to recognize huge cost overruns at its now-bankrupt U.S. nuclear unit Westinghouse and forced Toshiba to sell its prized memory chip unit for $18 billion, according to Reuters.

Toshiba was under investigation by the SEC and the Justice Department over allegations that it hid $1.3 billion in losses at its Westinghouse unit, Bloomberg News reported.

[Reuters]

Image: iStock/tbradford

The post Toshiba Seems to Have Escaped SEC Penalty After Accounting Probe Ends appeared first on Going Concern.

A new report by Audit Analytics revealed that the total number of restatements fell for the fifth consecutive year—from 873 in 2013 to 553 in 2017, according to Tammy Whitehouse of Compliance Week.

She also examined the data regarding reissuance restatements and revision restatements:

Reissuance restatements—those that are serious enough to necessitate withdrawing prior financial statements and issuing them anew—fell to 109 in 2017. That number was down from 128 in 2016 and 152 in 2015. The number has fallen steadily every year for the past 10 years, according to the report.

Revision restatements—those in which companies corrected mistakes without withdrawing reliance on prior financials—fell to 370 in 2017, down from 467 in 2016 and 522 in 2015. That type of restatement crept upward for a few years from 2009 to 2014, but then tapered over three consecutive years.

Whitehouse also noted that more than half of restatements (54%) had no effect on net income, which is down from 59% in 2016.

In addition, there’s been an improvement in the quality of financial reporting among accelerated filers. Whitehouse wrote that after steady restatement increases among accelerated filers from 2011 to 2014, when they reached a high of 351, the numbers have since dropped to a total of 184 in 2017.

[CW]

Image: iStock/stevanovicigor

The post Financial Restatements On the Decline—Again appeared first on Going Concern.

As someone who lives in the Chicago suburbs, I can tell you that Foster has achieved legendary status among Blackhawks fans like myself. Foster, who plays goalie in two recreational “beer leagues” in the Chicago area, was called into action in the third period of the game against Winnipeg after the Blackhawks’ starting and backup goalies left the game due to injuries.

Foster played the final 14 minutes and stopped all seven Jets shots he faced. He was named the No. 1 star of the game.

But other than a post-game interview with reporters, Foster has denied all other media requests, opting to concentrate on his real job as a senior financial accountant at Golub Capital, a position he has held for nearly two years.

But Foster appeared on stage with actor, comedian (I use that term loosely), and hated Chicago sports meatball Jim Belushi during the NHL awards show on June 20 to present the 2018 Vezina Trophy to the NHL’s best goalie.

Anyone—AND I MEAN ANYONE—is funnier than Jim Belushi, and it was pretty lame that he of all people shared the stage with Foster. I guess John Cusack and Vince Vaughn had better things to do. But Foster outshined the has-been actor during his brief time on stage:

From the Chicago Tribune:

“I’m excited to be here,” Foster said, “but I gotta make this quick.”

“Oh, yeah?” Belushi responded, squinting intently at the teleprompter. “I suppose now that you’re an NHL goalie you have to hit the gym and get ready for next season.”

“Nah,” Foster said. “Actually, I gotta get back to work.”

“Do you have any advice for any of these kids out there who dream of following in your footsteps?” Belushi asked.

“Yeah, I sure do,” Foster said. “First, I’d suggest a major in accounting with a master’s in accountancy.”

You can watch a video of Foster with the not-so-funnyman here.

[Chicago Tribune]

The post Accountant Goalie Scott Foster Attends NHL Awards Show, Is Funnier Than Jim Belushi appeared first on Going Concern.

From Accounting Today:

“As management accountants, your work is vital to the financial reporting process,” he said. “You safeguard a company’s integrity when you make well-considered and adequately supported judgments and decisions. As CFOs, controllers, budget analysts, treasurers, and other management accountants, you help drive the information that is ultimately included in many shareholder and creditor communications. These communications, when made with appropriate care and candor, build public trust and help sustain the ability of businesses to raise the capital they need to grow and compete.”

[SHAMELESS PLUG: Learn why some corporate controllers opted to obtain the Certified Management Accountant credential instead of a CPA.]

Bricker also called management accountants “expert historians”:

“Accounting helps others understand the past so that users of accounting information can better understand present circumstances and future possibilities,” said Bricker. … “You provide the critical ‘eyewitness’ account of events and evidence needed to keep and maintain books and records in accordance with the federal securities laws. In accounting and society, we all expect history to be based on evidence and prepared with discipline and diligence so that the historical narrative is reliable.”

After his speech on management accountants, Bricker fielded questions about the revolving door that is the Public Company Accounting Oversight Board:

“I’ve been nothing but consistently supportive of the PCAOB, together with [SEC] Chairman [Jay] Clayton,” he said. “The work of the PCAOB is vital, so as Chair Clayton said we had an opportunity where 80 percent of the board was turning over to assemble a portfolio of skills that collectively at the board level would enable the PCAOB to even further advance its mission, and that was an important set of decisions for the Commission to make in selecting individuals that cover every phase of financial reporting because every phase of financial reporting can impact the quality of audits. That’s where we are. We have the appropriate robust expectations for the PCAOB’s performance to be entirely consistent with their mission.”

The SEC late last year appointed William Duhnke as PCAOB chairman, replacing James Doty who had held that position since January 2011. Also appointed as board members were J. Robert Brown, Kathleen Hamm, James Kaiser, and Duane DesParte, who replaced Steven Harris, Lewis Ferguson, and Jeanette Franzel. Board member Jay Hanson resigned from the PCAOB in December 2016.

And since May, several high-level officials have left the PCAOB, including Martin Baumann, chief auditor and director of professional standards; Helen Munter, director of registration and inspections; and Claudius Modesti, director of the PCAOB’s Division of Enforcement and Investigations.

[AT]

The post SEC Chief Accountant Wesley Bricker Had Nice Things to Say About Management Accountants appeared first on Going Concern.

But while Avalara’s IPO looks hot, it’s overpriced, some analysts say.

Shares of Avalara closed up 87 percent at $44.94 after opening at $35, according to CNBC. Avalara had priced its IPO at $24 per share on June 14, well above its estimated range of $19 to $21, Barron’s reported. The company raised $180 million through its sale of 7.5 million shares.

The stock is listed on the NYSE under the ticker symbol “AVLR.”

According to Accounting Today, Avalara CEO Scott McFarlane said last Friday that the company will continue to do what it’s doing, “building out content, getting more partnerships in the marketplace, looking for opportunities in order to build out adjacent products just like it’s done in the past with exemption certificates, returns and the like.” He called the listing on the NYSE “an honor and a humbling experience.”

But not everyone is on the Avalara bandwagon. In an article for Seeking Alpha, Silicon Valley finance professional Gary Alexander wrote that with only 25% year-over-year growth in the first quarter of this year, and with growth in fiscal year 2017 trailing most other SaaS stocks at just 27% year-over-year, “it’s difficult to declare that Avalara is anything more than average.”

He continued:

It’s difficult to be bearish on recent IPOs because of how they all tend to trade singularly upward. But in my view, Avalara has very limited upside left at its double-digit revenue valuation. If and when the market turns sour again and investors begin to pay closer attention to the high valuations at which SaaS IPOs trade, richly valued stocks like Avalara could see an unpleasant crunch.

And in an article for MarketWatch, David Trainer, CEO of New Constructs, an equity research firm, and New Constructs investment analysts Kyle Guske II and Sam McBride gave Avalara’s stock an “Unattractive” rating.

They wrote:

When we analyze the cash-flow expectations baked into the stock price, we find that Avalara is overvalued, despite what traditional metrics show.

To justify even a price of $20 (the midpoint of the proposed IPO price range), Avalara must immediately achieve 12% NOPAT [net operating profit after tax] margins (average of all software firms with positive margins under coverage) and grow revenue by 21% compounded annually (average of all software firms under coverage) for the next seven years. For reference, Avalara’s NOPAT margin was -24% in 2017 so this scenario implies immediate and drastic improvements in profitability.

In a more conservative scenario, if we assume Avalara can achieve a 4% NOPAT margins (slightly better than salesforce at 3%) and grow revenue by 21% compounded annually for the next decade, the stock is worth just $7 a share today — a 71% downside from the IPO price.

Avalara’s offering is expected to close on June 19.

The post Avalara IPO Has Big First Day of Trading, But Some Analysts Are Skeptical appeared first on Going Concern.

So, I asked a handful of controllers what they thought those expectations are’.

“The audit committee should expect the corporate controller to be knowledgeable, trustworthy, and to keep the audit committee informed,” said Timothy Sangiovanni, CPA, vice president/corporate controller at Coralville, Iowa-based KemPharm Inc. “The corporate controller should be able to answer or quickly research the audit committee’s questions and respond to the inquiry in a timely manner. Trust in the controller is critical. The audit committee should also expect that the controller will keep them informed of matters pertaining to the committee, whether it be new accounting standards, industry trends, or audit findings.”

“The audit committee is looking for strong leadership from the controller on’ accounting, reporting, and control matters,” said Robert Ott, CPA, senior vice president and corporate controller at TE Connectivity, which is based in Schaffhausen, Switzerland. “They want clear, concise, and complete communication on significant accounting, reporting, and control matters. The audit committee wants and needs to be involved in significant decisions.”

Are they right? Are these the qualities audit committees want a corporate controller to possess? To find out, I asked three current and former audit committee members—Otis Baskin, PhD, Wendy Schoppert, and Lynn Turner, CPA—to weigh in.

Based on my conversations with Baskin, Schoppert, and Turner, as well as those with corporate controllers, these five qualities or expectations emerged:

1. Excellent communication. Ott was right; audit committees do want clear and concise communication—both written and oral—from the corporate controller on issues pertaining to the accounting and finance function of the organization.

“While the CFO may be the primary spokesperson for the financial affairs of the firm, the controller will be the primary leader of the accounting team and therefore responsible for communicating organizational goals downward and translating technical and human resource needs upward,” said Baskin, a consultant with the Family Business Consulting Group and a former director and audit committee member for EMRISE Corp. “For example, the ability of the audit committee to respond to a comment by outside auditors that the accounting function is understaffed requires profound process knowledge that only the controller may have.”

Turner, a senior advisor in the Forensic and Financial Consulting Services Group of Hemming Morse LLP who has served on a handful of public company boards and audit committees, said he has always tried to establish a policy of transparency and “no surprises” with the company’s CFO and controller. And it may come as no surprise that “no surprises” is one of the most common requests audit committees ask of a company’s finance leaders, according to a CFO Insights from Deloitte.

“If [the CFO and controller] bring an issue to the audit committee with suggested solutions, then the audit committee is responsible for dealing with it. But if an important issue is not brought to the attention of the audit committee and the committee is then surprised by it, then there will not be a rock large enough for them to hide under,” said Turner, who served as chief accountant of the Securities and Exchange Commission from July 1998 to August 2001, during which time the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees was formed.

He added that there has to be open, two-way communication among the three parties of what the Blue Ribbon panel called the “three-legged stool”—the board of directors, including the audit committee; management; and the external auditor—that supports responsible financial disclosure and active and participatory oversight.

“Without it, the audit committee cannot function,” Turner said.

Schoppert, who serves on the board of directors and audit committees of several public companies, including The Hershey Co. and Big Lots Inc., said she appreciates finance leaders who share with the committee “the top few issues we need to understand, including seeing around the corner on issues that may impact us down the road.”

“I respect [the controller’s] perspectives, coming from the person in the room who is typically closest to the drivers behind the integrity of the financial statements,” she added.

From a controller’s viewpoint, responding to a message from a board member is always considered a high priority.

“If it’s not something that I can respond to same day, I’ll let them know the timing within which I expect to provide a response,” said Brian Harding, CPA, vice president, corporate controller, and principal accounting officer at Wilsonville, Ore.-based FLIR Systems.

David Lloyd, CPA, vice president, corporate financial controller, and treasurer of Greif Inc. in Delaware, Ohio, said he is expected to come to the audit committee with a balanced and objective point of view.

“As controller, I’m expected to be able to provide a fair assessment of when we’ve made ‘middle of the fairway’ decisions on accounting issues and those circumstances where we may have been more aggressive or where something is more of a gray area,” he added.

2. Integrity and honesty. Controllers must have high ethical standards, “with the DNA that compels them to simply do the right thing,” Schoppert said.

Baskin added: “The controller must understand the difference between proper procedures that are sustainable and financial practices that, while legal, may put the corporation at risk. Understanding the difference between keeping rules and doing what is right is a critical quality in a controller.”

And Harding has learned that audit committees don’t want things sugar-coated; they want the controller to tell the truth.

“Be honest about the challenges you face in the organization—whether cultural challenges, internal control gaps or recurring deficiencies, staffing/capacity constraints, or other matters,” he said. “Make sure you’re prepared to state your plan to address these challenges, rather than just dropping complaints without providing a planned solution.”

3. Firm grasp of technical accounting and finance topics. Because more CFOs nowadays have business and operational backgrounds instead of accounting acumen, audit committees expect the controller to be the leading expert on technical accounting matters and related policies.

“The corporate controller must be knowledgeable and well-informed on GAAP, and the worldwide internal controls and accounting systems of the company,” Turner said. “Those systems must be providing management of the company with the information necessary to manage the company on a daily basis, as well as generating the transparent information necessary for investors and for establishing the accountability of all.”

The controller also is expected to stay educated on emerging accounting topics and new standards, like revenue recognition and lease accounting, that may impact the company’s financial statements or disclosures, Harding said.

“Each Big 4 firm has quarterly publications on emerging topics, so it’s always a good idea to brush up on those before each audit committee meeting,” he added.

4. Strong leadership. Besides showing strong leadership on accounting, reporting, and control matters, the controller also must ensure that competent people are hired for their respective jobs in the accounting function, Turner said.

“The controller must exhibit strong team leadership, with the ability to hire the right people, provide them clear direction, motivate them, and hold them accountable,” Schoppert added.

5. Ownership of budgeting. Turner said the controller plays a critical role in the establishment of annual and longer-term budgets, and reporting of actual results against the budget, so as to establish accountability of management.

“It is important to the audit committee and entire board that accountability be established and monitored in a timely fashion,” he added. “The corporate controller should be measuring key performance indicators and reporting on those to management and the board.”

Image: iStock/Eoneren

The post 5 Qualities Audit Committees Want a Corporate Controller to Possess appeared first on Going Concern.

The pitch goes on to say:

Wrought with confusing laws and regulations, steep taxes and countless other financial hoops, the road to a successful cannabis business is anything but easy, leaving CEOs with an abundance of accounting problems that are unique only to this nascent—and partially illegal—industry.

Growers and dispensaries face an ever-increasing list of compliance concerns, banking issues and federal tax limitations, and legally licensed cannabis companies are being shut down, and/or facing large penalties—after having invested hundreds of thousands of dollars—due to poor accounting practices.

Closely watched by the regulators, these companies require complex, accurate accounting in order to remain compliant and audit ready.

That’s where DOPE CFO comes in.

As it turns out, two CPAs founded Bend, Ore.-based DOPE CFO: Andrew Hunzicker, a longtime CFO who has worked in the cannabis industry for the past four years and was runner-up for Portland Business Journal’s CFO of the Year in 2017—the first CFO from the cannabis industry ever nominated for the award; and Naomi Granger, a former Big 4 accountant who has more than 12 years of experience in both public and industry accounting.

According to Hunzicker and Granger, DOPE CFO is a complete do-it-yourself “accounting practice in a box” training program, including templates and tools, designed to teach accounting professionals, such as CPAs, bookkeepers, controllers, and CFOs, how to build a cannabis accounting practice or to add cannabis accounting expertise and services to their existing business.

The training business launched in January 2018 and now has 60 students in 25 states, Hunzicker said.

“DOPE CFO was formed out of a need for cannabis accounting information,” Hunzicker said in an email to Going Concern. “I built my information for the training program—QuickBooks- and Excel-ready chart of accounts, cost accounting workpapers, month-end close tie-out system, etc., from the ground up as big accounting is not in the space. Accountants started coming to me asking for help. I was answering a lot of questions for free and people wanted my information and workpapers.”

Granger added: “Working with Andrew, I discovered that DOPE CFO was more than just an accounting program—it was a movement; it’s a lifestyle. We have spoken to hundreds of accountants and they all want the same thing: freedom. DOPE CFO gives accountants a business that allows them to work remotely and charge what they are worth.”

In an interview with Going Concern via email, Hunzicker and Granger talked a little bit more about their business partnership, what common mistakes cannabis CEOs make, and why the cannabis industry presents a huge opportunity for accounting professionals, among other things:

Going Concern: Did you both know each other before starting DOPE CFO? If not, how did this business partnership happen?

Naomi Granger: We both invested in a high-ticket accounting training program and we met there. Many of the students in that program wanted Andrew’s help with entering the cannabis niche. In fact, we have many students from that course in our program.

GC: What types of clients does your business serve?

Andrew Hunzicker: We have two businesses: Ancor Advisors, which serves cannabis clients in all verticals—lab, farming, dispensary, extract, etc.—and our training business, DOPE CFO, which serves accountants and bookkeepers who want to learn how to launch or grow a highly profitable cannabis accounting firm.

GC: From an accounting and finance perspective, what are some of the unique or challenging aspects of a cannabis company that a cannabis CEO or CFO would have to understand or deal with?

Hunzicker: There are five common mistakes that cannabis CEOs make:

1. Neglecting compliance: Many businesses that have evolved from the black market are going from an unregulated market to one of the most regulated in the U.S. This, combined with the fact that many companies include every vertical (e.g., farming, processing, manufacture, retail), adds complexity and many layers of regulation—from the city, county, state, and federal levels. License requirements and federal law require compliance with all laws or a company can face steep penalties or revoked licenses.

2. Building quality offerings without focusing on building a quality company: High-quality product is only the start. If you don’t have quality accounting, tax, finance, compliance, risk management, and corporate/board/legal practices, your valuation plummets for any investment, loan or exit, and your risk of failure rises.

3. Failing to understand the value of accounting: Big, and many midlevel, accounting firms do not serve the industry while cannabis is federally illegal. Because legal cannabis is the fastest-growing industry in the U.S., there is a significant lack of day-to-day accounting supervision at many companies. Not to mention, the complexity of accounting required by the IRS and states is anything but easy, and most cannabis businesses are using untrained, unreviewed bookkeepers to enter transactions—many of whom are not trained in accrual, GAAP, or cost accounting. Most lack accounting degrees or the CPA designation and simply do not have the knowledge to account correctly for these entities.

4. Ignoring market conditions: For instance, in late 2017, there was a supply glut of flower in Oregon—prices dropped and purchases by dispensaries sharply decreased. As a result, many farms were closed or put on the market at pennies on the dollar. Meanwhile, several grow startups still had plans to invest large sums of money starting from scratch without investigating what might be available for sale. Because cannabis startups go under constantly, CEOs and investors should wait to pick up premier assets on the cheap.

5. Failing to plan for worst-case scenarios: While it’s fairly easy to predict yield or volume, and prices at the top end might stay stable, it’s harder to predict if you can actually sell large volumes of product at good pricing. The field is loaded with competitors, many with the same plan: increase the yields and move lots of product. Though some will be able to, many won’t. CEOs should consider if they are well-capitalized to sustain long periods of low cash flow.

GC: With cannabis companies being so heavily dependent on cash management, and with many financial institutions being reluctant to serve the cannabis industry, is there banking relief for these businesses on the horizon? What are some of the risks they face?

Hunzicker: Yes, cash management is huge, as banking is hard to find. However, many states do have a banking solution. For example, Oregon has Maps Credit Union that banks most cannabis companies in the state. California is working on a statewide banking solution as well.

I’ve already mentioned some of the risks, but compliance is very important: state laws, IRS, and accounting, plus cash and inventory management and management of cash flow, as net margins are razor thin due to IRS Section 280E taxes.

This is on everyone’s radar, including Treasury Secretary Steve Mnuchin, who realizes having this much cash in system promotes fraud and crime, and reduces taxes coming to the government.

GC: There’s a statistic on the DOPE CFO website that zero big accounting firms serve cannabis companies. What do you think is preventing a mainstream public accounting firm from taking on cannabis clients?

Hunzicker: Actually, as of now, I think a couple of non-Big 4, bigger firms have dipped their toes in the cannabis space, but the vast majority, including the Big 4, are waiting until cannabis is federally legal. I’ve been told their insurance carriers will not allow them to serve the cannabis industry until it is federally legal.

GC: Would you advise a CPA who is thinking of starting an accounting practice to focus on the cannabis industry? What does the opportunity landscape look like?

Hunzicker: Definitely yes! It’s the perfect storm: fastest-growing industry in the U.S., thousands of new companies being formed this year and forward, most accounting is not yet in the space, and cannabis accounting is complex within four sub-verticals—farming, chemical manufacture, food production, and retail—plus multi-entity structures; GAAP/accrual accounting and cost accounting; and investor reporting, consolidations, intercompany transactions, and cash/inventory management.

The fact is, you need solid accounting in your corner if you are a cannabis CEO, but most simply have QuickBooks-trained bookkeepers who have very little GAAP or cost accounting knowledge or skills. They had nobody before now to train them in the accounting needed.

GC: Are you worried about the federal government’s intervention into the cannabis industry? What risks does that pose to your business, and how do you manage those risks?

Hunzicker: We follow the AICPA’s guidance, as well as each state’s guidance; each state has an accountancy board where accountants can check information about serving cannabis companies. To date, we know of zero providers to cannabis—electricians, attorneys, accountants, bookkeepers, marketers, plumbers, lighting companies, labs, and on and on—that have faced any trouble simply for serving the cannabis industry. I feel we are rapidly moving to federal legalization; it’s the one nonpartisan issue the politicians and the public agree upon.

GC: DOPE CFO’s website states that legally licensed cannabis businesses are being shut down or are facing large penalties and fines due to poor accounting practices. What have you seen as the main cause or causes of a cannabis business not having its books in order or having messy accounting?

Hunzicker: It takes a year or two for both the states, many of which are understaffed, and the IRS to actually get out and check compliance—both in operations and accounting. But in Colorado, the first recreationally legal state, that is now happening and in Oregon as well.

Cannabis companies can be shut down for many reasons—everything from not paying their excise taxes, to selling to underage minors, to having a fence that is too short at a farm. One company in Bend is being shut down because they only had 30 days of security camera backup instead of the required 90 days. The IRS will be issuing many penalties, fines, interest, etc., and one firm, Adherence Compliance, estimates 70% of cannabis tax returns are incorrect and based on poor or nonexistent cost accounting.

GC: Is there anything else you’d like to add in closing?

Granger: Because of all these issues Andrew has mentioned, our students are in a perfect position to jump into this industry and establish themselves as experts while it is still a new and exciting frontier. You don’t have to be an expert marketer; there is a huge gap that needs to be filled. You can mess up completely and still land a client. You don’t have to be a CPA—both Andrew and I are CPAs and we can tell you, cannabis accounting is not on that exam. You just have to be passionate about accounting, be passionate about helping these companies with their complex needs, and be ready to learn.

Image: iStock/400tmax

The post Why Serving the Cannabis Industry Can Be Dope for Accountants appeared first on Going Concern.

Finance professionals received an average pay raise of 4.3% in 2017, according to a survey from the Association for Financial Professionals.

The survey found chief financial officers got a base salary increase of 5.7%.

Jim Kaitz, president and CEO of AFP, said the results showed the value of continuing education:

“Those who meet the new challenges in today’s treasury and finance field by engaging in more training are being richly rewarded. Treasurers and CFOs know these individuals have the newest skills and freshest insights and knowledge.”

Okay, look, Mr. Kaitz is probably right; if you earn a new certification or become a blockchain wizard or an expert in AI and use these powers for good instead of evil, you’re likely to be paid a premium. But if you’re too busy, or not interested in that stuff, or just plain lazy, you can probably stumble into a better paying job:

The executive tier saw an average increase in base salary of 4.4% last year, up from 2.7% the year before. Management-tier professionals saw a 4.4% increase as well, up from 4.0% the year before. Staff saw a pay increase of 3.5%, up from 3.4% in 2016.

The survey tracked pay trends across twenty different job titles in seven different industries.

“Financial reporting specialists” gained an average pay raise of 6.9% — the largest increase for all the job titles tracked.

In the time that it took you to read this post, someone accepted a new job that will pay them a lot more. Who knows, maybe they even got a signing bonus? Jim Cavezial, what are you waiting for?

Alright, fine. You can do it after the long weekend.

[CFO]

Image: iStock/SeventyFour

The post Accountants: If You Got a Crappy Raise Last Year, Go Land a New Job appeared first on Going Concern.

But one part of their job that aspiring corporate controllers might overlook is meeting with the audit committee. While much has been written about the relationship between the CFO and the audit committee and even the chief audit executive and the audit committee, there really isn’t much said about the relationship between the controller and the audit committee and the role controllers play during audit committee meetings.

Among other things, controllers work with the audit committee chair to set the agenda for each meeting; often lead the management presentation during committee meetings on significant accounting, financial, and internal control issues; review earnings releases; and respond to questions and comments related to forms 10-Q and 10-K prior to filing.

“I enjoy interacting with the audit committee, and the committee is integral to our corporate governance,” said Robert Ott, CPA, senior vice president and corporate controller at TE Connectivity, a Switzerland-based manufacturer of connectivity and sensor products for harsh environments. “The audit committee is a very valuable resource for the management team, and we leverage their diverse experience in financial disclosures, internal control, compliance, and other matters.”

In the spotlight

TE Connectivity’s management team meets quarterly with the audit committee in conjunction with earnings releases, and there are several other scheduled meetings throughout the year, according to Ott. Additional meetings or calls are held as necessary, he added.

As controller, Ott has a significant role during meetings with the audit committee. His responsibilities typically include:

• Assisting in the facilitation of each meeting;
• Reviewing significant financial reporting matters;
• Reviewing and obtaining approval for filing of 10-Qs and Form 10-Ks;
• Reviewing annual SOX scope, plan, and conclusions;
• Reviewing earnings releases and related disclosures; and
• Briefing the audit committee on new or recently issued accounting standards or disclosure requirements.

“It is important to develop a good rapport with the audit committee—seek their input, engage in a meaningful dialogue, and be responsive to their concerns,” he said.

Brian Harding, CPA, vice president, corporate controller, and principal accounting officer at FLIR Systems Inc., a Wilsonville, Ore.-based company that specializes in the design and production of thermal imaging cameras, said preparing for a meeting with the audit committee involves a significant amount of effort and long hours during a very tight window, “from the time we receive preliminary financial information to the time we report to the board.”

“I enjoy the meetings because it’s an opportunity to meet face-to-face with our board members, leveraging their experience in industry and on other boards and gaining insights on their financial and governance perspectives, ultimately driving continuous improvement in my organization,” said Harding, whose primary role during audit committee meetings includes supporting the CFO and providing commentary on technical accounting matters, including answering questions regarding policies, procedures, and internal control considerations.

“It can be stressful to get a question during the meeting that you don’t have an answer for immediately, but once you’ve developed the ability to say ‘I’ll look into it and get back to you,’ it reduces the burden on excessive preparation,” he added.

10 relationship-building tips

According to Timothy Sangiovanni, CPA, vice president/corporate controller at KemPharm Inc., a Coralville, Iowa-based specialty pharmaceutical company, the audit committee/corporate controller relationship is built on the same cornerstones as any successful relationship: trust, communication, and mutual respect.

“While these attributes are not difficult to achieve, very seldom are they recoverable once lost,” he added.

So, if you don’t want to be in the audit committee’s doghouse, consider the following advice from corporate controllers:

1. It’s all about communication. The most important way to build an effective relationship with the audit committee is for there to be open communication—whether about good news or bad. Poor communication can result in the audit committee being caught off-guard when unexpected problems bubble up to the surface.

“Most issues that can arise are easily avoided by open communication. My goal is to never surprise the audit committee,” Sangiovanni said.

In fact, “no surprises” is one of the most common requests audit committees ask of a company’s finance leaders, according to a CFO Insights from Deloitte.

“Establishing a good relationship with audit chairs early on can enhance mutual confidence in tackling difficult issues when they arise,” the report states.

Sangiovanni added that he provided the members of KemPharm’s audit committee with his direct office phone number, cellphone number, and email address, which they can utilize as needed should the committee have a topic for discussion.

“This interaction works both ways, as I have each individual committee member’s contact information and email address as well,” he said.

David Lloyd, CPA, vice president, corporate financial controller, and treasurer of Greif Inc., a Delaware, Ohio-based company that produces and sells industrial packaging products and services, said he finds it extremely helpful to get together with the audit committee chair a week or two in advance of each meeting to set and go through the agenda.

“This ensures that we’re both on the same page about what key issues to cover and the level of detail desired,” he said.

Harding recommended meeting individually with each member of the audit committee, which he said should be done initially when stepping into the controller position or when a new board member joins the committee.

“I like to ask about specific experiences they’ve had in the past that frustrated them or that they found to be challenging in working with other controllers and finance leaders,” he added. “Jot those down for the ‘what not to do’ bucket for future reference.”

2. Understand the preferences of your CFO and CEO first. “In some cases, the CFO or CEO may prefer to be included on all correspondence or meetings with board members,” Harding said. “As a corporate controller, it’s important to be aligned with the certifying officers before proceeding to relationship-building activity with members of the board. In most cases, I would expect the CFO and CEO to be supportive of this initiative, but always consult with them first.”

3. Maximize your face-to-face exposure. “As with any relationship, professional or otherwise, making the most of your one-on-one time is extremely important,” Harding said.

He offered a few ways a controller can build these relationships in person:

• Show up early to meetings, as there often are opportunities for casual conversation in the hall before the meeting or during breaks.
• Seek opportunities to attend dinners with committee members or have lunch with them between meetings.
• Pursue opportunities to have pre-meeting planning sessions or one-on-one introductory meetings in person, rather than on the phone.

4. Educate audit committee members about the business. One of the takeaways from KPMG’s 2017 Global Audit Committee Pulse Survey is that the effectiveness of an audit committee hinges on it understanding the business. Thirty-nine percent of respondents said better understanding of the business and its risks would improve audit committee oversight.

“Education is critical, as most audit committee members want to understand the business at a more granular level. The more information each member has, the better we can all work within our roles to lead the company,” Sangiovanni said. “At the same time, it is critical to ensure any education provided is relevant to their duties and of interest to the members.”

5. Set a regular cadence for meetings throughout the year. “I work with the audit committee chair on this so we’re prepared in advance to cover key topics at certain times of the year—whether that’s the audit plan, pension assumptions, goodwill impairment testing, and cybersecurity and IT updates,” Lloyd said.

6. Get materials to the audit committee as far in advance as possible. “We try to load materials to the board portal at least a week in advance of the meeting, which gives the committee plenty of time to review,” Lloyd said. “That way, we can focus on having a robust discussion on key issues at the meeting itself rather than just doing a page turn of materials.”

7. Get to the point(s). “Time during the audit committee meeting is limited, and there is often a good amount of information to get through. Ensure that you are touching on the three to five key points you want the committee to take away, versus diving into too much detail,” said Donavon Hall, vice president, corporate controller at Apptio Inc., a Bellevue, Wash.-based developer of business management SaaS applications. “Providing a narrative in advance of the meeting will give the audit committee members an opportunity to consider any points they would like additional detail on.”

8. Present a united front. “Being in tune with the needs of the audit committee is crucial to maintaining a good working relationship,” Sangiovanni said. “The audit committee and management should ultimately be on the same page.”

9. Be accountable. “When issues do arise, take ownership of troubleshooting the root cause and developing and communicating a plan to remediate the issue,” Hall said.

10. Dress for success. “This should be obvious, but even if you work in an environment that allows shorts and flip-flops in the office, wear more professional attire to the board meetings,” Harding said. “For me, this means I wear a suit and tie to the audit committee meetings, even though only half of the board members tend to dress business professional. I’d always prefer to be overdressed than to leave the impression that I didn’t take the meeting seriously enough to wear a suit. Treat every board meeting like a job interview—because it technically is.”

In a future article, both corporate controllers and audit committee members weigh in on the expectations audit committees have of controllers.

Image: iStock/STEEX

The post How Controllers Can Build an Effective Relationship with the Audit Committee appeared first on Going Concern.

You must think we’re lying. Every accountant’s month-end diatribe is nearly identical.

Before you start working on the first task, you remember who you’re working with and sigh. Oh, you’re working with THAT person again. Awesome. Because it wasn’t enough fun working with them last month, your boss has stuck you with them again.

Aside from questioning the accounting program of some “accredited” colleges, bad colleagues make you wonder how you’re going to get through another month-end close if something doesn’t change. Hopefully, they change … companies.

Even with capable co-workers, the technical part, of month-end close is a chore. The unstructured, free-for-all environment changes almost every month. You rack your brain, trying to remember how you took care of this one problem last month. And didn’t you document how you resolved the issue? Where in the world is that thing saved?

Then there’s the mind-numbing task of decoding other team members’ spreadsheets and checklists. Do any two accountants think alike when it comes to organizing data? Never mind accountants working on the same team. Seriously, Sally, how does that make any sense?

And then there’s reconciliation. There should be an award for putting all the pieces of that hellacious jigsaw puzzle together. Just don’t ask for a step-by-step guide of how it was completed.

We all know Excel, and for the most part we love it. What self-respecting accountant doesn’t? Formulas, sort and filter functions, and pivot tables; ah, who doesn’t relish a perfectly constructed pivot table?

However, everyone also recognizes there are limitations to the old classic. Sharing a spreadsheet with a team? Ha! And the obvious elephant in the room, getting Excel and your ERP to talk civilly to each other. Or at all.

“I thought you said this story has a happy ending.” There is; an Oscar-worthy tearjerker, in fact.

• What if there was a way to improve team communication? A central place for progress notes that everyone can see. Close your eyes and imagine fewer status meeting and obnoxious email chains. Nice, huh?
• What if you could organize the close process to give you accurate results in less time?
• What if there is a way to integrate Excel with any ERP system?
• What if there is a way to automate the tie-out process?

There is a way. This is the fairytale ending we promised. Our friends at FloQast have lived the nightmare of month end close, and have vowed to put an end to it. Discover the resolution to these recurring issues in your one stop shop resource, the definitive guide to effective close management.

Need more? Check out additional resources from FloQast available on their website.

• Best Practice Month End Close Checklist
• Making the Case for Cloud Accounting Technology and How to Sell it to Your CEO – A Case Study
• Master Month-End: Creating a Culture of Continuous Improvement

The post Whitepaper: The Definitive Guide to Effective Close Management appeared first on Going Concern.

Last week heralded another splashy headline in the WSJ:

Wells Fargo Employees Altered Information on Business Customers’ Documents

Even we’re getting sick of it!

This time, WSJ reported that employees in the wholesale subunit cut corners with data collection — including personal identifying information such as social security numbers — to comply with anti-money-laundering controls. The sloppy rush job was due to the time pressure of a regulatory consent order.

Everyone loves an easy copy-paste task, but rolling forward information — which we as auditors well know — can lead to inaccuracies if you don’t back it up with a direct inquiry to make sure it’s still up to date. The lack of follow-up is lazy.

But, as usual, Wells Fargo brushed it off without much acknowledgment. Per the WSJ, a Wells spokesperson is quoted, “This matter involves documents used for internal purposes. No customers were negatively impacted, no data left the company, and no products or services were sold as a result.”

It’s no secret that Wells struggles with internal controls and has for a long time. In fact, the ongoing saga of control failure dates back more than seven years. As far back as 2011, “Going Concern speculated about potential issues with internal controls at Wells Fargo that prompted the then CFO, Howard Atkins, to abandon ship.” These issues foreshadow the client-impacting drama that broke as newsworthy in 2016.

Granted, compared to this larger misstep that earned them a visit with Elizabeth Warren and some hefty fines, it does seem tame.

In February 2018, Senator Warren expressed her frustration and:

…slammed CEO Tim Sloan over the bank’s “utterly inept” efforts to compensate customers after a series of scandals.

The Wells Fargo spokesperson’s comments cite a “more robust internal processes that reinforce our values” and “swift action” to weed out bad apples. Then-CEO John Stumpf indicated he did some pruning to these same bad apples back in 2016; too bad the company keeps finding more.

We’ll ask again: Where is the external auditor — KPMG — in all of this? It appears, laying low and sticking with the defense that the control failures related to controls over compliance, not financial reporting. Key controls over financial reporting were A-OK.

That didn’t prevent many from urging Wells Fargo shareholders to ditch KPMG as their auditor. They’ve had a long run; KPMG has been auditing the bank since 1931. However, even with high profile pressure, these efforts were to no avail. Shareholders ratified KPMG as their auditor at the annual meeting in April, keeping the streak alive for at least another year.

This Pandora’s box of control failures leaves me wondering: Is it Wells Fargo? Do they have a lackadaisical culture that leads employees to go rogue, either bypassing controls or acting unethically without a checkpoint to stop them?

Alternatively, is all of the scrutiny of Wells Fargo over the last two years causing more findings to shake out? If we dug more deeply and used the same discerning eye and level of oversight, would we find something like this at all banks?

We’ve seen many other banks with internal control blunders that have made headlines in the last decade. In 2012, JPMorgan Chase was the center of a scandal dubbed the “Whale Loss” that arose when a single account manager was “deemed responsible for losses of $6.2 billion on bets in corporate debt markets. Other members of his team—his former boss and a junior trader—were indicted in the U.S. in 2013 for violating securities law by attempting to hide the full extent of the losses from J.P. Morgan management.” The trader who made the $6.2 B bet blames the media for “mischaracterizing” him. Poor schmuck. JPMorgan Chase was found by the Senate to ignore internal controls and manipulate documents as “it racked up trading losses last year [2012], while its influential chief executive, Jamie Dimon, briefly withheld information from regulators.”

In 2014, Citibank received a comment letter from the SEC questioning the bank’s ability to detect fraud with its internal control environment beyond the deficiencies found in a subsidiary, implying the potential for a larger, more systemic issue. As discussed by blogger Derryck Coleman (and as every good auditor is trained to do) this extrapolation was mitigated away with compensating controls, and the materiality of the exceptions was small by comparison to the total number of facilities (and compensating controls) tested (5 of 110,000). The blog goes on to mention the slim chance that an independent audit firm will write up an adverse ICFR opinion, especially in a large, Fortune 500 company. The firm Audit Analytics has found the rate of adverse opinions to decrease over time, with a small increase in 2014, flat in 2015, but back down again in 2016. Of those adverse ICFR opinions, over 70% are blamed on the employees performing the controls, pointing to either bad apples or inadequate training.

Are you an auditor testing controls? Keep a tidy shop and document everything, especially if you’re auditing in the banking sector. Wells Fargo and KPMG are the current scapegoats, but given recent history, all it takes is one scandal for more skeletons to be drug out of the closet.

Image: iStock/RyanKing999

The post Wells Fargo Not Sick of Bad Press Yet appeared first on Going Concern.

In a perfect world, a private company that is planning to go public would take 12 to 24 months before the initial public offering launch date to make sure all of its i’s are dotted and t’s are crossed. But the world we live in ain’t perfect, and certain factors can speed up that IPO timeline.

For example, a significant foreign acquisition, with operations in Germany and the Philippines, was completed just prior to the IPO process starting at Microtune Inc., which resulted in the company going public sooner than anticipated, according to Michael Bodwell, CPA, an audit partner in the Dallas office of public accounting firm Whitley Penn, who was corporate controller at Microtune when it hit the stock exchange in August 2000.

Members of accounting and finance departments discuss every angle of the IPO process. Read more.

“Preparation for Microtune’s IPO took about six months,” he said. “The foreign acquisition, which increased the size of our operations, made the IPO possible. The timeline would have been longer if the acquisition wasn’t completed, as it would have taken more time to grow the company’s operations to a size that an IPO made sense.”

Bryan Graiff, CPA/ABV/CGMA, CVA, CFE, CM&AA, also was corporate controller for a company that went public earlier than planned. He was hired by the supplier in the aerospace defense industry in spring 1998 and the plan was for the company to file the IPO before the end of the year. The company ended up going public in late July 1998.

“I was hired [as controller] because of my experience auditing public companies. Because of the [Securities and Exchange Commission] reporting structure, the CFO recognized that the company needed a controller with SEC experience that could help coordinate all the audit requirements,” said Graiff, who currently is partner in charge of the Transaction Advisory and Litigation Support group at St. Louis-based public accounting and business advisory firm Brown Smith Wallace. “If I remember correctly, we had to undergo a three-year audit with a Big 4 firm. This was a lot of work, but it really helped set the stage for our accounting team. After the audit, they had a better understanding of the public company reporting requirements and what it would take for the company to adhere to them going forward.”

Regardless of the timeline—whether 24 months, 12 months, or six months—an important job of the corporate controller is to make sure his or her accounting team is prepared to tackle the IPO head-on. But if the team is not running like a well-oiled machine, the IPO may be in need of a tune-up.

“I think we were able to complete our IPO in a timely manner because we had a great team working on the project,” Bodwell said. “The importance of having a great team in place to work on an IPO cannot be understated. If any team member—internal or external—cannot do their part to prepare for an IPO in a timely basis, the entire IPO process can fall apart.”

Steps controllers took to get their teams IPO-ready

Bodwell shined a spotlight on two steps that were taken to make sure Microtune’s finance function was ready for the IPO experience.

“The first step from a finance perspective was to make sure we had good historical audited financial statements, including the foreign operations we had recently acquired. This took about six months and took a lot of effort by multiple people, such as myself who was hired in anticipation of preparing for the IPO,” he said.

“Second, we added a couple of other key members on the accounting side as we prepared for the IPO,” Bodwell continued. “For almost six months on the finance side, the CFO, U.S. controller, German controller, Philippines controller, U.S. assistant controller, and myself dedicated almost all of our time to prepare for the IPO, including many long workweeks. We also kept our auditors very busy over that six months, including having the U.S. audit senior manager fly over to Germany and the Philippines with our team to oversee the audit work being done in those countries, to ensure U.S. accounting and auditing standards compliance. We knew it was important to have the historical financial statements ready, but we also needed to ensure we had a team and good internal processes that would allow us to prepare accurate and timely financial information during and after the IPO.”

When JetBlue Airways Corp. was in the preparation stage for its IPO, the accounting team was busy ensuring that the low-fare airline’s accounting and financial reporting was up to par, as well as drafting the Form S-1 registration statement or prospectus, according to Holly Nelson, CPA, CGMA, who was JetBlue’s corporate controller and chief accounting officer when it went public in April 2002.

“We were able to accomplish that in six months with our existing staff and did not hire any consultants other than the underwriters and our SEC counsel,” said Nelson, who is currently CFO at Silver Star Brands Inc., an Oshkosh, Wis.-based direct marketer of consumer gifts and household products. “You really can’t do that post-Sarbanes-Oxley, as now you need to ensure that you have all the appropriate controls, processes, and documentation in place. That alone adds a minimum of six months, if not a year, to the process as you need to ensure your controls are working effectively and do not result in significant deficiencies or material weaknesses after the company is in the public markets.”

Nelson shared the following three steps she and her team took to prepare for JetBlue going public:

1. Evaluated accounting policies. “We reviewed our current accounting elections and ensured that they were appropriate for our industry,” said Nelson, who also held financial leadership positions at Frontier Airlines, Virgin America, Eos Airlines, and Northwest Airlines. “Part of the process would be to assess if our election would be acceptable to the SEC. We would also assess our policies against our primary competitive set in the hope that when our results were compared by the analysts, they were comparable as they could be.”

2. Benchmarked reporting, including key performance indicators, to determine what JetBlue’s reporting would be as a public company. “The process would include all the key financial statements—income statement, balance sheet, cash flow, and stockholders’ equity,” she said. “Using the appropriate set of comparative companies, we would survey what line items they utilized, as well as what footnotes they presented and in what order. That would give us data to determine what would be appropriate for our company. An airline’s key performance indicators are its operating statistics. Even though operating statistics were already being reported in monthly traffic releases, it was a good exercise to perform to validate we were happy with the current presentation. For an airline, that is something to do very early on in the process.”

3. Ensured the monthly review process resulted in accurate accounting. “We made certain that the monthly close process was robust enough to ensure that the income statement made sense by investigating variances to budget, prior month, and prior year. That would be followed by the balance sheet account review process that included preparation of proper account reconciliations and then independent review. Appropriate management review was required for areas of judgment and high degree of estimation. These were also usually identified as critical audit areas by the independent auditors,” Nelson said.

IPO preparation isn’t easy

But getting the company’s financial house in order before the IPO is filed isn’t an easy task for controllers and their teams. They often have to face—and overcome—several challenges during their IPO preparations. Bodwell, Graiff, and Nelson were no exception.

“Our biggest challenge was to have the historical operations for the foreign company we had just acquired converted to U.S. GAAP financial statements, including having the financial statements audited by our public accounting firm,” Bodwell said. “First, we had to identify the differences between the foreign basis of accounting and GAAP. Next, we went back three years and adjusted the separate foreign financial statements for the multiple differences in accounting that were identified, which was a substantial effort. We also kept the auditors in the loop as changes were being made so they could complete their audit quickly once we were done.”

The largest challenge Graiff and his team faced was improving the close process so they could report earnings by the SEC deadlines, he said.

“This is something that most privately-owned companies do not have to worry about,” he said. “When I started at the company in April, the year-end books were still not closed. We had to process map the closing tasks to identify the bottlenecks slowing down the process and speed up the tasks that were dependent on subsequent tasks to keep everything flowing quickly. In the end, we improved the closing process from the usual 45 days to around 10 days, which provided valuable time to reconcile the accounts and perform our analysis to assist with earnings releases.”

Another challenge was reporting accuracy, according to Graiff. “We had to restructure our group to focus on timely account reconciliations and analysis,” he added. “We had a good assistant controller and one general ledger accountant. We also had an accounting graduate working in accounts receivable. We beefed up our general ledger team by moving her into general ledger and hired someone to replace her in accounts receivable. This ensured we had adequate staff to complete all our account reconciliations on time and accurately.”

A significant challenge for Nelson and her team at JetBlue was gaining consensus on financial statement and prospectus language, she said.

“The best way to overcome this was to put together a schedule to set expectations and when reviewers were expected to submit their comments,” Nelson said. “It also helped to have one person managing comments and making decisions on which comments to take. If there was disagreement or one was unable to determine the best option, meetings would be scheduled. Especially for the prospectus, drafting sessions with all the respective parties was a good practice to reach consensus. It was a major investment of time, but issues got resolved on the spot. With today’s technology, you could rewrite the language immediately and project it to the team to gain immediate agreement.”

Nelson and her team also needed to have a firm grasp of the new reporting requirements at the time of the IPO to ensure the company was compliant and to put together acceptable support for the prospectus, she said. These requirements included disclosures for earnings per share, segment reporting, and preparation of management discussion and analysis.

“Usually companies that are not previously public don’t have the internal expertise on SEC reporting and accounting rules. The best way to overcome that was to send the team to the appropriate education, which usually was an SEC reporting class and the AICPA or FEI [Finance Executives International] SEC conferences,” she said. “Additionally, the audit firms have detailed handbooks assisting in accounting and reporting issues. The AICPA Accounting Trends and Techniques is a great resource across industries.”

When the dust settles

The IPO journey can be long and arduous, especially for corporate controllers, given the multiple demands on their time. But preparedness is the name of the game for controllers and their teams so that once the IPO window opens and the timing is right, they’re ready to spring into action.

“The IPO process is incredibly demanding and requires long hours,” Nelson said. “But the end result is extremely fulfilling and a professional accomplishment—both personally and for the company you work for.”

Automating the month-end close process can help companies planning for an IPO meet their SOX compliance needs. Read more.

Image: iStock/monkeybusinessimages

The post No Matter the Timeline, Controllers and Their Teams Must Be Ready When the IPO Window Opens appeared first on Going Concern.

And sure, okay. So what’s the next corporate nanny move from Big Blue in the interest of financial and reputational security? Literally chaining people to their desks to prevent employees leaving the premises with proprietary information? Unannounced strip searches? Mandatory body cameras? I’m sure there’s plenty IBM can do to further eliminate any shred of trust it has with employees.

[BBC, The Register]

Image: iStock/OlyaSoloDenko

The post Flash Drives Are Contraband at IBM Now appeared first on Going Concern.

Yes, we are making this ask again, but we figured it’d been long enough that you wouldn’t mind. If you’ve taken it already, great! Share it with an accountant friend or colleague who’s suffering through their close RIGHT NOW. It’ll be cathartic for them and educational for us. Please and thank you.

Create your own user feedback survey

The post Reminder: Take This Survey About the Month-End Close appeared first on Going Concern.

Borderfree, a New York-based e-commerce technology company, had approximately 80 employees in late 2012 and revenue of $80 million, according to Paterniani, and the company was exploring the opportunity of going public. Paterniani had spent more than 10 years working in Grant Thornton’s assurance practice in New York City, and several of his clients had completed IPOs, the last of which was Tumi Inc. in April 2012.

Members of accounting and finance departments discuss every angle of the IPO process. Read more.

“It was shortly thereafter that I decided I was going to move on from Grant Thornton with the expectation of finding the right opportunity that fit my background and had the potential of an IPO at some point in the future,” Paterniani recalled. “I was introduced to the CFO at Borderfree in fall 2012. The opportunity checked off every box I was looking for, and I began working at Borderfree in February 2013.”

While the CFO often is the face of the IPO, the work of the corporate controller and his or her team to support the CFO during that rigorous process is invisible to the outside world.

“The controller certainly plays a critical role in all aspects of an IPO and, from experience, feels a tremendous amount of pride and accomplishment when the company goes public,” said Paterniani, who currently is vice president and corporate controller at Wheels Up, a membership-based private aviation company based in New York City. “However, in order to bring a company from the startup/emerging growth stage to attending the market bell ceremony at Nasdaq, especially within a 13-month window like we did at Borderfree, there are too many unsung heroes to count.”

“A successful IPO is a team effort. It has to be a team effort,” added Cary Morgan, controller at Utah Tank & Trailer, a West Valley, Utah-based company that specializes in tanks and equipment, who was vice president corporate controller at Chordiant Software Inc. in Cupertino, Calif. when it went public in February 2000. “Controllers are the main go-to people for numbers, but without the team, the IPO process will be delayed, potentially costing the company millions in valuation.”

Managing up

Paterniani understood what the CFO’s expectations were for him and his team before he embarked on his first IPO as a corporate controller in February 2013. This included, among other things:

• Overseeing relationship with Borderfree’s auditors and other partners;
• Scaling the accounting and financial reporting function up to the level required of an SEC filer;
• Building out a new, automated general ledger solution while integrating supplemental solutions to support the business and its expected growth;
• Reducing the month-end close from 35 days to less than 10 days;
• Managing the initial documentation of internal controls (Borderfree filed confidentially under the JOBS Act as an emerging growth company and was able to defer SOX compliance.); and
• Communicating to the audit committee.

But Paterniani also tried to be proactive in other aspects of the business outside of his direct responsibilities and the IPO process to “try and take whatever I could away from the CFO to free him up as much as possible.” This approach of “managing up”—staying a couple steps ahead of your direct supervisor—was something he took away from his public accounting experience.

“This included drafting and reviewing committee minutes, acting as an intermediary between other departments and the CFO and elevating only critical items for his consideration, communicating to the auditors and other partners that I was their key contact for any and all issues, and any other opportunities that came up to add to my own experience while limiting the amount of unnecessary distractions for the CFO,” he added.

All that hard work paid off for Paterniani and his team, as Borderfree went public on March 24, 2014. Although there were ups and downs along the way, Paterniani said there wasn’t anything that occurred during the IPO process that really caught him off-guard.

“There were unexpected issues that came up throughout the process, but nothing that surprised me,” he said. “Overall, although I may have tempered my initial expectations, the overall satisfaction of completing the IPO, operating as a public company, and then catching a healthy exit when Pitney Bowes acquired Borderfree less than a year and a half after we went public was just about as good as it gets. It’s going to be difficult trying to duplicate that experience before I retire.”

“Glutton for punishment”

The number of IPOs in the United States has dropped from its peak in the 1990s. There were 275 IPOs in the United States in 2014, the most since 2000, but 2015 and 2016 were down years (170 and 105 IPOs, respectively), according to data from research firm Renaissance Capital. The 2017 U.S. IPO market rebounded slightly, as there were 160 deals, with proceeds nearly doubling to $35 billion, and 2018 is off to a good start.

The problem with there being fewer U.S. IPOs since the turn of the 21st century is there are fewer CFOs and corporate controllers who’ve been through the IPO gauntlet. Therefore, a controller might only get one crack, maybe two, at working on an IPO in his or her career.

“Perhaps I am a glutton for punishment, but I enjoyed the process and hope to have a leadership role in another IPO someday,” said Britt Jeffcoat, CPA, a former public company chief accounting officer and current financial consultant, who was senior assistant controller at JP Energy Partners in Irving, Texas when it went public in October 2014.

Jeffcoat, who was exposed to the IPO process while in public accounting at Arthur Andersen and Grant Thornton, was vice president and assistant corporate controller at Sun Healthcare Group in 2010 when it spun off its real estate assets, thereby creating a separate publicly traded company—Sabra Health Care REIT.

Jeffcoat was hired by JP Energy in October 2013 after the IPO process had started, but the IPO was delayed for a brief time due to issues in internal controls, financial processes, and technical accounting, he said.

“Because I already had significant knowledge in a public company environment from my Sun Healthcare experience, JP’s controller was able to plug me into a number of different circumstances to drive solutions to the issues encountered during the IPO process,” Jeffcoat said.

Jeffcoat said he and the corporate controller supported JP Energy’s CFO by being committed to the project and staying flexible throughout the IPO process.

“Our job was to address the issues that arose and provide the data necessary to accurately portray the company’s results and future prospects,” he said. “I believe we made the CFO’s life easier by giving him confidence that our aspects of the IPO process were being responsibly addressed in a competent manner and that the work was completed timely. Meeting deadlines and staying on schedule are a huge part of the process.”

Experience gained

One of the expectations Jeffcoat had before the start of the IPO process, which eventually became reality, was being able to gain new experiences.

“I looked forward to getting through the process and confirming what I thought to be true about the IPO process: that IPOs are demanding but certainly attainable,” he said. “I encountered new challenges with certain technical accounting matters associated with unusual transactions that I had not yet experienced. I was faced with external audit requirements having a heightened sensitivity due to the transaction. IT system constraints and internal control matters also contributed to challenges.”

Gaining experience also was one of two main expectations Morgan had before going into the IPO process with Chordiant Software, with the other being hard work.

“Working with our small internal team, our outside legal counsel, our auditors, and our printers provided an incredible learning experience,” he said. “Sometimes we got caught up in the weeds wondering if a comma was in the right place or how to round a penny. During the final filing days, there were times I never made it to the office. Instead, I went straight to the printer’s office.”

From the onset of the IPO process, Morgan knew he would be the back-office help, providing schedules and numbers to the CFO, CEO, and others who went on the IPO roadshow to pitch the company to potential investors.

“This meant I had to work on their time schedule, whether they were in Europe, on the East Coast, or wherever,” he said.

It also helped that Morgan had a great working relationship with the CFO, he noted.

“I had worked for him at several other companies, so I knew what information he liked and would need, plus the format he liked,” Morgan added. “For example, we had a multiple ‘what if’ scenario spreadsheet that included the complete operating cycle, such as sales bookings, sales rep ramp up to full quota productivity, revenue recognition, accounts receivable days sales outstanding functionality, days payable functionality, balance sheet, income statement, and cash flow forecast. It was all linked together.”

Two IPOs, two similar processes

Robert Day, CPA, CMA, CGMA, has had two IPO experiences as a corporate controller—one as vice president and controller at SI International in McLean, Va., which went public in November 2002, and the other at KeyW Corp., a Hanover, Md.-based provider of national security solutions, which went public in October 2010.

“The IPO process for both companies was very similar—gathering all of the necessary data, knowing what type of questions the SEC might ask, and being able to provide that support in advance,” said Day, who has been corporate controller at KeyW since June 2010. “Because both companies were growing through multiple acquisitions, it was important to know what information was required for each of the acquired companies and how far back that information had to be collected for each entity.”

Even though SI and KeyW had the goal of going public within a certain time frame, both companies were advised to go out much earlier than had initially been planned, according to Day.

“In both instances, the decision to go out was market-driven,” he said. “We had been in discussions with our underwriters to go out at a certain date in the future when government contractor IPOs started being viewed very favorably and it drove us to go out earlier than we had planned. The biggest difference between the two time frames was the size of the company—we wanted to be larger before the IPO—which ultimately drove the IPO stock price. As a smaller company, we could not get the stock price we initially were hoping to achieve.”

The process to complete Form S-1 is very data intensive, and in KeyW’s case, the company had acquired 12 companies in a three-year span before it went public, making the data collection and presentation even more complicated, Day noted. And the CFO would need to review the information that is prepared for him.

“The S-1 filing requires so many years of historical data, and we needed to bifurcate that data between the time we owned them versus the time we didn’t own them, depending how far back we needed to present. Where the importance of the controller’s role becomes very apparent is at the integration stage of each of those acquisitions,” Day said. “If the financial data is not integrated correctly from the very beginning, such that the entities’ data can be evaluated both independently and on a consolidated basis, you will never be able to provide the detail needed for the tables in the S-1 filing. Once the process does start, being able to retrieve the appropriate data for the correct historical perspective is critical. It is the controller’s responsibility to prepare the document with accurate financial data so the CFO can review for context and comparability.”

In a future article, we’ll explore how corporate controllers prepared their accounting and finance teams for the IPO process.

How automating the month-end close process can help companies planning for an IPO meet their SOX compliance needs. Read more. You can read more about Going Concern’s partnership with FloQast here.

Image: iStock/DNY59

The post Supporting the CFO Through the IPO Process Is a Big Task for Controllers appeared first on Going Concern.

A cyber incident that takes a top-three cloud-services vendor offline for three to six days would spawn customer financial losses of about $7 billion to $15 billion, according to a report, “Cloud Down,” by Lloyd’s of London and catastrophic risk modeler AIR Worldwide.

Yes, if something were to knock out, say, Amazon Web Services for a few days or weeks or smote the whole operation, things would be bad. Very bad. Catastrophically bad. Horrific. Terrifying. Like, The Walking Dead bad. But I swear to you, regardless of the chaos that would emerge as a result of a significant portion of the cloud going down would pale in comparison to the schadenfreude that male CPAs of a certain age would be swimming in.

First, they’d laugh and point, but then it would turn ugly. They’d don their khaki trousers and blue blazers and hit the streets, promising to be “The Trusted Advisor” you need in this time of darkness. They’d start tent revivals, preaching “Reject the cloud,” telling followers that only true salvation can be found within…your own IT infrastructure. They’d demand that all accountants prepare tax returns by hand and schlep physical ledgers home every night to be placed under lock and key just to be on the safe side. They’d re-introduce BUSINESS FORMAL. Basically, it’d reinvigorate the CPA equivalent of flat-Earthers.

So, I guess what I’m saying is: Lock your shit up, AWS. Nobody needs this.

[CFO]

The post We’re One Meltdown Away From a Bunch of Crusty Old CPAs Saying ‘I Told Ya So’ About the Cloud appeared first on Going Concern.

The U.S. IPO market is coming off a first quarter in which 44 companies, including Dropbox, went public, raising about $15.6 billion—the best quarter by proceeds in three years, according to a March analysis by research firm Renaissance Capital. That $15.6 billion far exceeded the $10.9 billion raised over Q4 of 2017. In addition, there were four billion-dollar IPOs in Q1, more than all of 2017.

Members of accounting and finance departments discuss various angles of the IPO process. Read more.

That momentum is expected to carry over to Q2 and possibly all of 2018, according to Renaissance Capital:

[iQIYI] and Dropbox, together with Spotify’s pending April listing [Spotify Technology went public on April 3 but opted for a direct listing], may represent an emerging trend of large private tech companies making their long-anticipated debuts. If this trend continues, it should lead to another multi-year high in the second quarter. […]

With 44 IPOs year-to-date, this implies roughly 70-75 IPOs in the 2Q18, which would be a four-year high. […] A number of billion-dollar IPOs are also lined up, including spin-offs from AXA and DirecTV. Before those hit, there has been much ado about Spotify’s non-IPO on April 3rd, but regardless of its outcome, 2018 is on track to be the U.S. IPO market’s second-largest year since the dot-com bubble.

If you’re a corporate controller at a private company that is starting to put the wheels in motion on going public in the next year or two, this might be your first experience involved in an IPO process. Get ready to put in lots of long hours and expect many highs and lows along the way.

A roller-coaster ride

“It’s certainly fair to say that it was a roller-coaster ride—sometimes hour by hour—and it took a lot of work and dedication from a lot of different people,” said Scott Paterniani, CPA, vice president and corporate controller at Wheels Up, a membership-based private aviation company based in New York City, who was corporate controller at Borderfree Inc. in New York when it went public in March 2014.

Having assisted several clients through the IPO process while working at Grant Thornton helped Paterniani during his first IPO as a corporate controller. Hired by Borderfree in February 2013, Paterniani played a key role throughout the e-commerce technology company’s IPO journey.

“[That previous IPO experience] with former clients allowed me to go into Borderfree confident in knowing what to expect: the financial reporting and internal control requirements; the challenges of SEC reporting; scaling an accounting and financial reporting team to meet the requirements of an SEC filer; the ups and downs of the IPO process; the cadence of the deal; managing different personalities, both internally and externally; and providing guidance and support to other finance functions and other departments throughout the project,” Paterniani said.

“Additionally, having an intimate understanding of the processes and procedures from the public accounting side of an IPO really added value to the project, in my opinion,” he added. “I was able to anticipate questions, concerns, and procedures from our audit firm, which certainly helped our preparedness throughout.”

While you will never work on another project that will have such a wide range of ups and downs, Paterniani said, you’ll feel “a tremendous amount of pride and accomplishment when the company goes public.”

Advice for first-time IPO controllers

Paterniani and three other controllers who have been through the IPO wars offered the following 10 tips for their fellow controllers to consider as they embark on their first IPO experience:

1. Research the IPO process. “If you have not gone through an IPO, brush up on what is involved, who the players are, and what pitfalls have trapped others,” said Britt Jeffcoat, CPA, a former public company chief accounting officer and current financial consultant, who was senior assistant controller at JP Energy Partners in Irving, Texas when it went public in October 2014. “You will not be able to anticipate every challenge that arises, but being prepared for the more common issues will improve your ability to take on the unanticipated problems.”

2. Go through an IPO readiness assessment. “IPO processes can be a grueling experience due to multiple demands on your time. Management, external auditors, and internal auditors all want something from you. I cannot stress enough the importance of IPO readiness efforts,” Jeffcoat said. “The demands on your time can be more readily addressed once the organization’s fundamental processes are aligned to its end game. If you can routinize your financial reporting, your SOX internal controls, your monthly close process, etc., with a mind to behaving like a public company, you will have already fought much of the battle.”

3. Make sure your financial house is in order. “The controller should be getting ready [for the IPO] at least two years in advance because the condition of the financial data is going to be the key to getting minimal questions back from the SEC,” said Robert Day, CPA, CMA, CGMA, corporate controller at KeyW Corp., a Hanover, Md.-based provider of national security solutions that went public in October 2010. “The controller should clean up any purchase accounting issues and confirm that all acquisition data has been integrated into their accounting system appropriately.”

He also recommended making sure your financial reporting systems can replicate statements or schedules that were included in the SEC Form S-1 so that you can provide comparable data as you move forward, at least for the first year.

“Because you do not have a track record yet, the only thing investors have to compare you against is what you told them in the S-1,” Day added.

4. Read and study S-1 filings of other companies in your industry. “Look at the SEC comments on those filings so you have a good understanding of what the SEC is looking for and so you have an idea of how previous years’ financial data needs to be presented,” said Day, who was vice president and controller at SI International in McLean, Va. when it went public in November 2002. “In the situation where the accounting system would not support what you need, it gives you time to go back and modify your data or your reports so when the time comes, you are prepared to respond quickly.”

5. Scale and strengthen your accounting and financial reporting function. “When adding talent to the team, if you think you need someone with four or five years of experience for a role, find someone who has seven or eight years of experience,” Paterniani said. “If you are going to miss on a hire, always miss by hiring someone with too much experience.”

6. Utilize everyone on your team. “While a controller is going to be playing a key role in most every aspect of the IPO, it is your responsibility to make certain that each member of your team feels as though they own a part of the process,” Paterniani said. “This could be the only time in the careers of most of your team that they will participate in an IPO. Keep everyone involved, keep everyone dialed-in, and at the end of the project, your team will have a renewed sense of togetherness and they will be ready to move forward as a high-functioning public company accounting and financial reporting team.”

“Additionally, your goal as controller should be to prepare every one of your team members to take on more responsibility and move up the ranks at your company, or prepare them to take on larger roles outside of the company when they are ready to move on,” he added.

7. Get along with your team. “You will be spending hours, days, weeks, and months together. Be kind and respectful. Realize that everyone has a breaking point—don’t push them to theirs,” said Cary Morgan, corporate controller at Utah Tank & Trailer, a West Valley, Utah-based company that specializes in tanks and equipment, who was vice president corporate controller at Chordiant Software Inc. in Cupertino, Calif. when it went public in February 2000.

8. Be open, honest, and get things right. “No one wants a class-action lawsuit,” Morgan said. “Don’t be afraid to ask questions, be able to support your position with facts, be humble enough to admit you are wrong if you are, and give praise when it is merited.”

9. Don’t sweat the small stuff. “Having worked on half a dozen IPOs over the years, no IPO is executed perfectly or to plan—but that is the beauty of it all,” Paterniani said. “As issues and challenges arise, take a step back, figure out how to address the issue, make the appropriate corrections, quickly figure out how to avoid similar issues in the future, communicate that to the team, and move on. There are always more important things to get done.”

10. Maintain some balance. “Don’t forget your personal life,” Jeffcoat said. “The proverbial work/life balance will likely need to be out of alignment during the IPO, but you shouldn’t completely sacrifice the personal components of your life that make you who you are.”

In a future article, we’ll learn how these four corporate controllers supported their CFOs during the IPO process.

How automating the month-end close process can help companies planning for an IPO meet their SOX compliance needs. Read more. You can read more about Going Concern’s partnership with FloQast here.

Image: iStock/hanibaram

The post 10 Tips on How Controllers Can Survive Their First IPO appeared first on Going Concern.

WeWork, a commercial landlord pretending to be a tech-lifestyle company, raised over $700 million in a bond offering yesterday, and it seems they are taking a page from Groupon’s accounting playbook, offering a ludicrous profit metric for all of our enjoyment:

In the offering documents, WeWork went to unusual lengths to show ways in which the company would be profitable. While many companies typically offer “adjusted” earnings, WeWork offered three different layers of adjustments.

It called the fully adjusted number “community adjusted Ebitda,” by which it subtracted not only interest, taxes, depreciation and amortization, but also basic expenses like marketing, general and administrative, and development and design costs. Those earnings were $233 million, WeWork said.

“I’ve never seen the phrase ‘community adjusted Ebitda’ in my life,” said Adam Cohen, founder of Covenant Review, a bond research company.

There are lots of unflattering things that someone could say about your company’s ridiculous non-GAAP metric, I have a hard time thinking of something worse than “I’ve never seen that in my life.”

A Look at WeWork’s Books: Revenue Is Doubling but Losses Are Mounting [WSJ]

Update:

The Guardian on WeWork’s failed IPO published December 20, 2019:

Everything went wrong for WeWork soon after it publicly filed documents for an initial public offering of shares, on 14 August. Six weeks later, Neumann had voted to remove himself from the CEO job and given up his majority control of WeWork’s stock. The company’s proposed valuation had fallen by more than half, and the IPO had been called off entirely. The failed IPO and the company’s subsequent takeover by SoftBank, its largest investor, were both facilitated by the public exposure of long-known information: WeWork was losing a ton of money; its projections of the size of the market for shared office space (up to $3tn) were wildly optimistic (it counted anyone who worked at a desk in an American city where there was a WeWork as a potential “member”; in non-US cities with WeWorks, the estimate applied to anyone with an office job); and its corporate culture and strategy were completely in hock to Neumann and his family’s bizarre ideas and whims.

The company’s business model had been known to be expensive and have little path to profitability since at least 2015, when BuzzFeed first published documents WeWork had used to solicit investors.

Why WeWork went wrong [The Guardian]

The post Let’s All Have a Good Laugh at WeWork’s Stupid ‘Community Adjusted Ebitda’ (UPDATE) appeared first on Going Concern.

It seems that similar advice can be given to those considering the job of controller at a state university.

“In reality, just like all industries, most people in the public sector are hardworking and dedicated, and that dedication extends to improve the world we live in. There is no doubt that you will not get rich being a controller at a university, but with that said, you have to take the intangibles in mind,” said Robert Kuehler, CPA, associate vice president/university controller at the University of Colorado. “Ask yourself if you want to have some role in making a difference in the world around you. Ask yourself if you are proud to say where it is you work and why. Ask yourself if you would rather have more time with your family and friends rather than being in the office or at the client.”

Alan West, CPA, CGMA, assistant vice president and university controller at the University of Florida, said a controllership position at a state university offers unique opportunities for accounting professionals that they will not find in a traditional auditing environment.

“The diverse stakeholders, funding sources, and university activities mean that you are always learning and never bored,” he added.

Six key tips for would-be university controllers

Kuehler and West, who recently shared how their career paths took them to their respective university controller roles, offered the following advice for accounting professionals who might want to follow in their footsteps:

1. Keep stakeholders in mind. “Recognize there are lots of stakeholders at a public state university, including faculty, students, administration, and the public,” West said. “Change is slow in this environment. When you come across a process that needs to change, or you want to implement new software, you need to stop and consider the impact and differing viewpoints of the different stakeholders on campus. How will this impact faculty? How will this impact students? Will other administrative areas be impacted?”

2. Know the government accounting rules. “If you are considering working for a public institution, it is extremely beneficial to have some background in the Governmental Accounting Standards Board,” Kuehler said. “While the differences between the FASB and the GASB are narrowing, they are definitely not the same. If you do not know, or are not willing to learn, then the public sector is not the place for you.”

3. Embrace technology. “As technology continues to advance, the CPA profession also needs to continue to evolve,” West said. “Sometimes it is hard for people to give up the comfort of their Excel spreadsheets or change how transactions are processed. It is an important role for the controller to embrace new technology and continuously challenge the status quo of how transactions are processed.”

4. Collegiality is paramount. “Know that big decisions require significant time and input from a broad range of people,” Kuehler said. “You have to work with others in a deliberative process to accomplish things.”

5. Consider volunteering. “I’m currently the chair for the Florida Institute of CPAs. I am the 90th person to hold this position, and I am the first person ever from higher education. Volunteering with the FICPA has been tremendously beneficial,” West said. “It has provided me the chance to learn from my peers in other industries, as well as the opportunity to serve on the AICPA Governing Council. This service allows me to see how the CPA profession is changing for the future. Lastly, I have made some great friends along the way in volunteering. I would encourage everyone to become engaged in your state CPA society.”

6. Lend a hand. “If you are coming from public accounting, understand you are moving from the profit center of an organization to a cost center. Your role is to support the people providing the educational, research, and public service missions of the university,” Kuehler said. “Do your best to help them, and you will help the university. In doing so, you are having a positive impact.”

Image: iStock/kasto80

The post What It Takes for a University Controller to Be Head of the Class appeared first on Going Concern.

As associate vice president/university controller at the University of Colorado, Kuehler oversees a staff of approximately 30 individuals. The University of Colorado System has four campuses, each with its own accounting staff with separate reporting lines, he said. The Office of University Controller is composed of five departments:

• Accounting Services
• Payroll/Benefit Accounting
• Tax
• Finance and Procurement Business Services
• Financial and Reporting Systems

“While I do not directly interact with students or with researchers working on projects that potentially improve people’s lives and result in breakthrough scientific discoveries, I know that by doing my job to the best of my ability, I am contributing to the mission of a great university,” Kuehler said. “Helping to improve a company’s profit is an important job. For me, helping an institution so more funds can be focused on teaching and research is a calling.”

West, assistant vice president and university controller at the University of Florida, oversees approximately 160 full-time employees in the Division of Finance and Accounting, which comprises several departments:

• General Accounting and Financial Reporting
• Asset Management
• Payroll and Tax Services
• Treasury Management
• University Bursar
• Cost Analysis and Construction Accounting
• University Disbursements

“I was drawn to the controllership position because I wanted to have a positive impact on the university, and there are so many opportunities for me to learn and be engaged,” said West, who also is the current chair of the Florida Institute of CPAs. “There is never a dull moment around here.”

During a recent interview with Kuehler and West, I asked them about how their public accounting experience has helped them in their current role, what expectations they had when they first took over the university controllership, and what type of person should consider the controllership at a state university or other state government institution. Some of their responses have been edited for length and clarity:

Going Concern: Can you tell us a little bit about your public accounting experience and how you wound up as the controller of a state university?

Robert Kuehler: My first engagement at KPMG was a community college. As time went on, I focused on the public sector because I believed in their missions. I started in the Amarillo, Texas office, transferred to Denver, then to Dallas. While in Dallas, I was asked to temporarily relocate to New York City to work in KPMG’s Department of Professional Practice, focused solely on the public sector. This was a tremendous experience, both personally and professionally.

After my two-year rotation ended, I was promoted to partner in the Denver office in the Public Sector practice. My main client base included public and private higher education entities, cities, counties, performing arts, hospitals, and other not-for-profit and public-sector entities.

During the Great Recession, KPMG downsized the partnership and I separated from the firm in April 2009. Having focused on the public sector for almost all of my 20 years in public accounting, and knowing the culture of these entities, I knew that I wanted to have a role of some kind in this area. By extreme good luck, the University of Colorado System controller position opened up at about the same time. After a number of panel and one-on-one interviews, I was fortunate to be selected for the position, which I started in July 2009.

Alan West: I started my career in public accounting doing auditing. I encourage everyone to start their career in public accounting if they have the opportunity because it will help you develop excellent analytical skills and become receptive to feedback about your work. Being humble and open to other people’s ideas and suggestions can have a very positive impact on your career.

After seven years in public accounting, I moved on to work for the University of Florida Foundation. The Foundation is where all of the gifts for the university are received, and I learned a great deal about endowment accounting and interacting with donors.

After seven years at the University of Florida Foundation, I moved over to the university to oversee Treasury Management and the University Bursar. After about two years in that role, the opportunity to be the university controller opened up, and I accepted the position in July 2015.

GC: Robert, why was it important to you to pursue the controllership at the University of Colorado?

Kuehler: As I said earlier, I was drawn to the public sector because of their missions. Working on publicly-traded companies is a key focus of the big accounting firms. For-profit enterprises are obviously important to the economy and do many things for individuals. However, I needed a closer connection, or at least as close a connection as I could get being an accountant, to those entities focused directly on the public good.

Having worked with clients in higher education while in public accounting, I knew that of all the places I could end up, higher education was at the top. Also, the University of Colorado is the flagship public higher education entity in Colorado, which made the position even more attractive.

GC: How has the experience you both gained in public accounting helped you in your current role?

Kuehler: My time in public accounting helped me tremendously on the technical accounting side, while at the same time provided great exposure to presenting in front of boards of directors. Also, the teamwork element required in public accounting is important in any job. Teamwork in higher education is the basis for success, both individually and for the university.

West: I was very fortunate to have audited various industries early in my career, which gives me a unique perspective in my daily interactions as the university controller. We have so many different sources of money that flow into the university, each with its own unique set of rules and regulations we need to know and understand. Some of the various sources are state appropriations, federal research awards, and donations.

GC: What expectations did you have when you first took over as university controller? Have any or all of those expectations actually become reality?

Kuehler: While my expectations were high when I arrived at the University of Colorado, I found I had not touched the surface of the dedication of its employees. Being tied to a common goal and the common good are the motivators for people who work in higher education or any similar organization. In some ways, for some individuals, this is a far greater source of motivation than monetary incentives.

In addition, I had believed that public accounting provided exposure to a broad spectrum of the clients’ activities. To some extent, I still believe that. However, in my position at the University of Colorado, I not only work with fellow accountants and CPAs, I work with procurement specialists, IT specialists, attorneys, web and graphic designers, human resource experts, regents, and a host of others. And I’ve been able to do things here that would never have happened in public accounting.

A good example is how we transformed our annual financial report a few years ago and introduced an “Illustrated Guide” to accompany the financial statements. As we all know, financial reporting is getting increasingly complex for people who are not accountants to understand. Using the great resources internal to the university and at no additional cost, we developed an HTML version of our financial statements and created an online Illustrated Guide. The guide takes the complexity of the financial statements and replaces it with plain English. Not an easy thing to do!

West: I had three goals when I took over as the university controller. My first goal was to create a more collaborative leadership environment in the Division of Finance and Accounting. A key component of this was to establish a “learning culture” within the division. We are rolling out the first phase of a job-shadowing program in April, which will allow employees the opportunity to learn other areas within the division.

My second goal was to create an accounting internship program for the division. We are in the second year of the program and it has exceeded my expectations. We piloted the program with two students spending a few weeks in each of the areas of Finance and Accounting, with the goal of identifying which areas would be beneficial to both the student and the department. We have received a lot of positive feedback from both students and employees.

My third goal was to establish the University of Florida as a leader in communicating financial information. I have completed two key components of this goal and I am in the process of finalizing the last component. First, we created an HTML version of our audited financial statements that is easy to search and view online, instead of just relying on the boring PDF version. Second, we, too, have created an “Illustrated Guide to Our Annual Financial Report,” designed to help non-accountants understand the financial report. The last component, which is currently in progress, is to create an easy-to-understand quarterly financial report for our board of trustees.

GC: What type of person do you believe should consider, or would be perfect for, a controllership position at a state university or other state government institution? 

Kuehler: If you are an accountant more driven by how your work impacts your community than by how it impacts the company you are auditing, a position such as mine may be right for you. If you are willing to exchange the chance of making lots of money for making good money and having a sense of purpose close to your heart, a position such as mine may be for you. If you are willing to take longer to make decisions so that input can be obtained from a wide range of people and constituencies to obtain a better outcome, a position such as mine may be for you.

West: I think the person needs to have good communication and collaboration skills, especially the ability to explain complex accounting issues to non-accountants. There is little value to the university if I am the only one who understands the accounting issue. It is imperative for me to communicate the issue in plain language so that others, even those with no accounting knowledge, understand the issue as well.

Stay tuned for more from Kuehler and West in a future article where they offer advice to accounting and finance professionals considering a controllership role at a state university.

Image: iStock/bieshutterb

The post How Two CPAs Ended Up Back in College As University Controllers appeared first on Going Concern.

It’s amazing how much time is wasted within accounting teams due to lack of standardized process, documentation, and reviews. Get your act together, help your team become more efficient, and get home in time for dinner with these five, simple strategies from FloQast co-founder and CEO, Mike Whitmire:

• Assessing the trial balance for completeness
• Standardizing templates with documentation
• Organizing documentation in a logical manner
• Tying out the trial balance consistently
• Centralizing reviews
• And much more!

Who doesn’t need more Excel skills, amirite? The webinar is available any time and is free.

And, while you’re at it, check out these additional resources from FloQast:

• Whitepaper: Increasing Accounting Efficiency Using Excel in Your Month-End Close
• Tools: Best Practice Excel Reconciliation Templates

Image: iStock/200degrees

The post Webinar: 5 Strategies for Streamlining Reconciliations in Excel appeared first on Going Concern.

“He knew he wanted to pursue a career in accounting but wasn’t at all sure what path to follow or where he should focus,” said Bronchetti, controller at Velocity in Albany, N.Y. “He also wanted to continue learning—to pursue additional education in order to broaden his knowledge. The option of becoming a CMA was news to him. Within a few days, he had thoroughly researched the Institute of Management Accountants online and came by my office with lots of questions. In that short time, he had even told some other students about the CMA.”

When Bronchetti was in graduate school, she knew she liked accounting, but the job duties of a CPA in public accounting weren’t at all appealing to her. What was appealing was the interaction between the finance function and other functional areas within a business, Bronchetti said.

“I then decided to pursue the CMA, as I realized this would be the perfect complement to my growing interest in corporate accounting,” she said.

Bronchetti is one of seven corporate controllers I spoke to recently who opted for a different professional certification instead of a CPA: three are CMAs, two are Certified Fraud Examiners, one is an enrolled agent, and one is planning to take the CMA exam in the future.

I asked them what advice they would give to a budding accountant who’s considering an alternative to the CPA. Here’s what they told me:

Figure out what’s best for you

Soon-to-be-accounting graduates should take their time to figure out which areas of accounting they prefer, and pursue a certification that’s in line with those particular areas, said Tracy Gale, EA, controller at Quality Plastics in Sparks, Nev.

“Being a CPA has a very broad meaning. A CPA can specialize in one thing or another, but it doesn’t make them qualified in all areas,” she said. “Internships are valuable to make the determination. It’s all about experience. If someone is interested in audit specifically, a CPA is really the only way to go and a great option. However, if an individual is interested in tax, I believe an EA is the way to go. Because the focus is on tax, the experience becomes tax and nothing else.”

Eric Vahle, CFE, controller at Rocklin, Calif.-based Riebes Auto Parts, said in hindsight, the two- or three-year grind of working in public accounting and then taking the CPA exam may not have been a bad way to start his career. But he decided to become a CFE instead of a CPA.

“If you really want a CPA license and there’s zero question that it’s the most requested applicant asset, then go directly to public accounting. It’ll undoubtedly be a grind, but firms offer their employees time to study for the exams, unlike most private industry positions,” he said.

Network and ask questions

If you’re still not sure which certification is right for you, don’t be afraid to reach out to credentialed accounting and finance professionals and ask them questions to get a feel for which certification would best suit you, said Joel Konts, CFE, controller at Global Plastics LP in Manchester, N.H.

“LinkedIn is a great tool for this, and there are many people who wouldn’t mind sharing their opinions and thoughts,” he added.

For those considering either the CMA or the CPA designations, Bronchetti recommended contacting or meeting with members of their local chapter of the IMA, their state CPA association, or the American Institute of CPAs to gain their perspectives.

“Ask them how they made their decision to become a CPA or CMA, where has that led them, and what are the pros and cons as they see them?” she said.

And it’s also OK to want both credentials, Bronchetti added. As of March 31, 2018, there are 5,091 accounting and finance professionals in the Americas region who are both CMAs and CPAs, according to data provided by the IMA. Globally, there are 5,865 professionals with both credentials.

“I have a friend who’d worked in the banking industry for nearly all of his career. He obtained the CMA credential several years ago and soon after decided to also obtain his CPA,” Bronchetti said. “He said the CMA exam was much harder!”

Have the will to learn, and be humble

Knowledge is key to successfully moving through your accounting career path without a CPA license, Konts said.

“Be willing to gain the understanding of real-world accounting practices and how to apply them to actual circumstances. Ask questions, no matter how little you think they are,” he added. “If you don’t understand why a certain entry is being made or why a certain accounting procedure is being done, ask why. No one knows—not even a CPA—everything there is to know about GAAP or IFRS, especially right out of school. Take the time to process what you’re doing in the workplace and fully understand it.”

Wayne Ledbetter, CMA, CFM, controller at Furniture Services Inc., said he is a firm believer in lifelong learning, and whether through a pursuit of one or many certifications or by attending CPE courses, it’s your responsibility to keep current.

“Business and accounting have changed dramatically during my career, as I’ve seen us move from paper documents to fully integrated systems. Certifications and training are a necessity to demonstrate to employers that they will be getting an employee who’s updated on the latest techniques and pronouncements affecting how you do your job,” he added.

Melissa Adams, CMA, controller at Gray, La.-based Danos, also recommended taking advantage of the many years of experience and knowledge that your mentors have to offer.

“They provide insight and valuable experience that you won’t learn in a textbook. Be a humble employee and student, and always remember you have a lot to learn,” said Adams, who also recommended reading books and articles and attending seminars as ways to continue your accounting education.

Look at any and all opportunities

Even though the logical path is to get your CPA and start your career in public accounting, it’s not the only path out there, Adams said. Be open to whatever opportunities are in front of you.

“Make sure you focus on your interests and what drives you to succeed,” she said.

In addition, you should never settle working for a company just because it offered you a position before anyone else did, Konts said.

“I truly believe if I had settled and didn’t look around for the opportunities that were right for me, I wouldn’t have had the same path I’ve been on,” he added. “It’s OK to look around and negotiate. Make sure the people you’re about to work for care about you succeeding. I can’t emphasize that enough—you don’t want to work for someone who doesn’t care about your growth.”

Be prepared for change

As new accounting graduates enter the workforce, they must understand that the only constant in business these days is change, Ledbetter said.

“One of the major topics around today is innovation. Business continues to innovate and evolve at what seems to be a faster pace,” he added. “Sometimes in your career that means you’ll be caught up in downsizing or you’ll make a mistake that’ll result in you losing a job. This is what we call ‘experience.’ Be prepared to accept it and use the network that you’ve developed during your career to land on your feet. The days of working for one company from the time that you graduate until you retire have passed. You must be prepared for change, and certifications and lifelong learning are two of the best means of being prepared.”

Get an MBA

Given that four of the seven controllers I spoke to have an MBA, they feel very strongly about this.

“I obtained my MBA with an emphasis in finance because I felt it would give me the higher-level tools I would need to excel in my chosen career,” Adams said.

“There’s no reason you can’t get this degree while working, and whether you go for a CMA, CPA, or [professional accounting] certificate, having this in your back pocket is key,” added Nicole Walters, controller and head of HR for Riviera Bronze Inc. in Ventura, Calif., whose goal is to become a CMA. “An employer that sees this knows you did a little extra and made an effort when you didn’t need to, and that’s a very hirable trait.”

Image: iStock/Jorgenmac

The post Non-CPA Controllers Offer Perspective on Choosing a Certification appeared first on Going Concern.

The move mirrors Levi’s recent push to use lasers to create the holes, fraying and fading to give jeans a worn look, and replace a labor-intensive hand-finishing process.

I hope Levi’s can incorporate some artificially intelligent baby puke stains in a future line of jeans. I’m getting tired of explaining those.

[WSJ]

The post Levi’s Finds Artificial Accountants, Ripped Denim More Fashionable Than the Real Thing appeared first on Going Concern.

Also, since you’ve all returned to everyday life, we hope you don’t mind taking this survey about your experiences with the month-end close. The survey is short, harmless and helps us out. Your participation is appreciated.

Create your own user feedback survey

Image: iStock/Andrew_Rybalko

The post Survey: What Are Your Experiences with the Month-End Close? appeared first on Going Concern.

“I also knew that if I didn’t go for my master’s degree right after graduating with my bachelor’s, I might not have the motivation to [take the CPA exam],” he said. “Instead, I decided to work on my MBA with a concentration in forensic accounting, get an entry-level position in industry, and then I’d pursue the typical accounting course of studying for my CPA and getting in with a public firm.”

But it was as a staff accountant for a Boston-area software company when Konts realized he didn’t need to go into public accounting to have a successful accounting career.

“The CFO at that company took me under her wing right away and made me want to learn more and work harder to take any promotion I could take. I moved up quickly there because of this,” he said.

And because Konts chose an MBA concentration in forensic accounting and fraud examination, becoming a Certified Fraud Examiner was a better fit for his career aspirations than becoming a CPA.

“Through that coursework, the CFE was a designation that was brought up on numerous occasions by professors, and I decided I would study for the exam, obtain the CFE, and have the chance to broaden my opportunities,” he said. “A CFE gives a more in-depth understanding of fraud and forensic accounting—both of which lead to a better understanding of accounting principles.”

Now controller of Manchester, N.H.-based Global Plastics LP, a company that specializes in the distribution of thermoplastic resin, Konts said the CFE credential helps him understand what needs to be done to prevent fraud, better organize the accounting department, and what to look out for when it comes to “iffy” transactions and changes in accounts.

“Just the studying for the [CFE] exam alone really helped provide me with a better general understanding of the field, which I could apply directly to my day-to-day workload,” said Konts, whose ultimate goal is to be a CFO.

Like Konts, there are a plethora of corporate controllers who bucked conventional wisdom that says newly minted accountants should get their CPA and go into public accounting after graduation. Instead, they started their careers in industry accounting and finance roles, and opted for professional certifications, like Certified Fraud Examiner, Certified Management Accountant, and enrolled agent.

“I believe that the CMA is growing in stature as a credential and will continue to as the number of CMAs increases, as they have in the last five-plus years,” said Wayne Ledbetter, CMA, CFM, controller of Furniture Services Inc.

Here are the stories of six other controllers who’ve had successful accounting and finance careers without being a CPA:

Melissa Adams, MBA, CMA, Danos

“My career journey didn’t start out like most. I had a lot of luck along the way, as well as really good mentors who put me on the right path,” said Melissa Adams, corporate controller at Gray, La.-based Danos, a family-owned and managed oilfield service provider.

After serving as a facility watch supervisor in the U.S. Navy for five years, she began working as a financial analyst at Kinko’s corporate office.

“I quickly realized that finance and accounting were two very different worlds that were integral to each other,” said Adams, who has an MBA in finance. “I moved up quickly in finance; however, I was very interested in gaining experience in accounting as well. My career aspirations were always to be a controller and a CFO one day, so I would need strong experience in both accounting and finance.”

Adams said the best decision she made was “to take a step backward in my career and move from a financial planning manager to an accounting manager at Danos.”

“I felt this would give me the edge I would need in the future,” she added. “I now truly enjoy both the accounting and financial role that I play for Danos.”

A mentor, who is a CMA, convinced Adams that she, too, should pursue the CMA.

“He felt that with my MBA, this credential would give me an advantage,” she said. “The CMA credential doesn’t only focus on higher-level finance and accounting principles, but it also teaches you how to be a leader as a management accountant. It was a difficult few years to pass these exams and I was proud once I finished.”

Adams said the biggest advantage of having both the CMA and an MBA is that she can look at the organization from a broader view, not just the debits and credits.

“I can think more strategically and help the organization to not only process the monthly close but to budget and forecast effectively in order to solve problems and look into the future,” she said.

Anne Bronchetti, CMA, Velocity

When Anne Bronchetti was in college, the only accounting career path she remembers being discussed amongst the students and professors was the CPA track. There was no talk about the CMA program, accounting and finance opportunities in private or public companies, or even the government sector.

“I kept thinking, ‘Why do all of these people want to do the same thing, and how can there possibly be enough jobs out there for everyone to do it?” she recalled. “Conversations about the CPA track always came with phrases like ‘competition,’ ‘long hours,’ ‘paying your dues,’ and ‘tax season.’ It didn’t sound all that inviting to me. I wanted to do something different in the accounting field, something that would involve me with the organization rather than utilize my services from the outside.”

Bronchetti graduated with a bachelor’s degree in business/economics and was preparing to take the CPA exam, but she changed course and decided to go back to school to get a master’s degree in accounting. The master’s program was less focused on the CPA track and more focused on a holistic view of business, management, and accounting, she said.

“While at grad school, I had come across the CMA program, and soon after took a new position in which I reported to a controller who had passed all four parts of the CMA at once, the first time! I felt that the CMA focused less on tax, which I disliked, and more on financial reporting and management,” Bronchetti said. “I then decided to pursue the CMA, as I realized this would be the perfect complement to my growing interest in corporate accounting.”

She said the CMA gives her a professional advantage because it’s different and makes her stand out compared to her CPA peers.

“The depth and scope of the program prepared me for many areas of accounting, including many that I had not yet encountered, and gave me a very well-rounded background of knowledge,” said Bronchetti, who currently is controller of Velocity, an Albany, N.Y.-based company that specializes in print, promotional products, and warehouse/fulfillment of marketing essentials. “There have been many articles recently addressing the idea that controllers are no longer only expected to manage and control finances, but also to support or readily engage in the areas of insurance, banking, investing, human resources, forecasting, and analysis. The broad scope of the CMA supports this new definition of controller.”

Tracy Gale, EA, Quality Plastics

With a business management degree already in hand, Tracy Gale decided to go back to school at the age of 40 to get an accounting degree, with the intention of becoming a CPA. Gale did earn her accounting degree, but she decided to pursue a different professional designation.

“In the state of Nevada at that time, it was required to complete 750 audit hours under a CPA to get the CPA license. I wasn’t interested in working for a CPA firm for minimal pay to complete that portion,” Gale said. “My interest was in tax and managerial accounting. I wanted to be self-employed and didn’t feel that a CPA license would benefit me more than the EA designation.”

So, after she got her accounting degree, Gale took the Special Enrollment Examination to become an enrolled agent and passed. She then spent several years as a sole proprietor, providing tax preparation and personalized QuickBooks-based bookkeeping services, and was co-owner of a firm that specialized in accounting, bookkeeping, and consulting services for small and medium-sized businesses.

During her time as co-owner of Gibson, Gale & Associates, Gale and her partner, Marie Gibson, had many of the same responsibilities as a controller. That experience helped put Gale in position for the controllership at Quality Plastics, a Sparks, Nev.-based plastics manufacturing company.

“I was working as a part-time, full-charge bookkeeper at Quality Plastics to learn the business and the plastics industry, with expectations that the controller was going to retire,” said Gale, who is currently studying to become a CMA. “I knew I had the experience and qualifications to be a controller without having a CPA designation.”

As a controller, Gale said her experience as an EA and bookkeeper gives her the advantage of “knowing the small details of an accounting system and its reports versus only seeing the financial statements at their completed stage.”

“I believe a good controller needs to be very aware of the data-entry portion so they can better evaluate the finished numbers,” she added.

Wayne Ledbetter, MBA, CMA, CFM, Furniture Services Inc.

While Wayne Ledbetter’s fellow accounting graduates were pursuing jobs with, at that time, the Big 8 firms, he had entered the U.S. Air Force through the ROTC program.

“My career path in the Air Force was in the accounting and finance realm as a budget officer, which meant preparing budgets, reviewing spending against budgets, and recommending courses of action,” Ledbetter said. “It was much more of a managerial accounting role than what you would find at a CPA firm, especially as a recent graduate.”

After separating from military service after four years, Ledbetter chose to go into industry rather than public accounting and joined a manufacturing firm as a staff accountant. That firm was actively involved in the National Association of Accountants, which would become the Institute of Management Accountants (IMA) in 1991.

“At that time, I started pursuing an MBA degree and learned that the [CMA] exam covered many of the same topics,” he said. “The CMA also at that time covered operations management, management skills, and finance, which I felt would be needed as I moved up in the organization.”

Ledbetter, who also is a Certified Financial Manager, has served as controller for several organizations throughout his accounting and finance career, including Furniture Services Inc., a position he has held since late 2016. This is his second go-around with the Elgin, S.C.-based company, which provides rental and retail furnishings; he served as its accounting manager from 2002 to 2004.

“I utilize aspects of my CMA and CFM credentials on a daily basis, whether I’m dealing with banking, insurance, financing, or accounting-related issues,” Ledbetter said.

And as an IMA member for more than 30 years, Ledbetter said he has built up an expansive network of professionals with whom he can call “to bounce ideas off of or, in some cases, utilize ideas that they bounce off me that have an impact on making our business more profitable or efficient.”

Eric Vahle, CFE, Riebes Auto Parts

After graduating with a bachelor of science degree in accountancy information systems (a combination of accounting and computer science), Eric Vahle wasn’t sure which direction his career would go.

“I had one interview with a public accounting firm in my last semester of college and felt the environment was not for me,” he said.

But during his final year of college, Vahle had a paid internship with a forensic accounting firm, and he loved the work. Vahle started his professional career as a staff accountant, but as his career progressed, he still had an interest in the forensic accounting field and stayed current.

“In 2012, I was qualified to take the [CFE] exam and passed it. The certification just sort of happened. I was qualified and saw it as a value-adding certification,” he said.

Vahle felt the need to grow more as an accounting and business professional, so he served as controller for a few different organizations before landing at Riebes Auto Parts, a Rocklin, Calif.-based auto parts and accessories retailer, in 2014.

“Because I’ve always seen myself as a quick learner and more of a ‘see the forest for the trees’-type thinker, the controller position was a good fit and is a steppingstone to a CFO seat,” Vahle said.

As a CFE, Vahle believes he is well-positioned to serve as controller of a company in the retail industry because he can spot the many various forms of fraud.

“From cash embezzlement to inventory fraud, it’s always a concern for any controller or loss prevention profession,” Vahle said. “While the CPA exam touches on some areas of fraud, the CFE provides a much more in-depth understanding of the problems some companies are facing.”

Nicole Walters, MBA, Riviera Bronze Inc.

Nicole Walters never wanted to be a CPA. After she graduated college with a bachelor of science degree in management science, Walters fell into a controller position with a fast-growing orthopedics practice in the Los Angeles area.

“They needed someone cheap and fresh from school to help with the books. So, they hired me right out of college,” she recalled. “While working, I decided to get my MBA in finance because, well, why not? And then the role took off and I became their lead finance person, which later developed into their CFO.”

As her role continued to grow, Walters wanted to know more about the accounting side of the position “so that I could make the books as clean as possible for our outside CPA firm.” She ended up going back to school to earn a professional accounting certificate from the University of California, Santa Barbara.

“I figured it couldn’t hurt and would only make me more valuable,” said Walters, who’s currently controller and head of HR for Riviera Bronze Inc., a manufacturing company based in Ventura, Calif. “If I had more time, I probably would’ve taken the CPA exam, but the CMA exam is still something I want to do and is a goal of mine. It’s much more in line with what I do every day.”

She said her MBA has taught her how to balance full-time work and school, and to work with other like-minded professionals to problem-solve and learn new skills.

“The MBA was also very valuable in that it taught me time management and stress management,” Walters added.

The professional accounting certificate allowed her to learn new professional accounting skills, such as tax, and it provided her with the necessary semester units to eventually take the CMA or CPA exams, if she so chooses.

“It has helped because I know exactly what the CPA firm needs from us and important dates, and I now feel very on top of that side of things here,” Walters said.

Stay tuned for Part 2 of this article in which the controllers I spoke to offer advice to budding accountants on how they can become a corporate controller without being a CPA.

Image: iStock/DNY59

The post No CPA, No Problem: Why Some Controllers Opted for Other Professional Credentials appeared first on Going Concern.

Anyway, if you’re a business owner or manager and you have the slightest inkling that something untoward is going on in your accounting department, try this: Promote your prime suspect and reassign all their responsibilities to someone else.

This story from the Deseret News reports on the allegations against Daniel Scott Richardson, who is accused of swiping more than $1 million from his former employer, Pegus Research Inc., and includes how the jig was upped:

From about April 2013 through December 2016, prosecutors say Richardson made “180 unauthorized transactions totaling just under $1.3 million.”

Some of the items Richardson purchased using his company’s money included a Hawaiian vacation; two Lincoln SUVs for more than $50,000; hotel stays; groceries; tens of thousands of dollars of airline tickets from Delta, including trips to London, Amsterdam and Australia; European hotel stays; $10,000 at Pottery Barn; and thousands of dollars of purchases from Apple and Amazon, the charges state.

The fraud was discovered by the person who took Richardson’s position after Richardson was promoted to senior accountant, according to the charges. He was fired on Dec. 5, 2016.

What’s not clear is if Pegus thought Richardson was doing a great job or if they got wind of his globetrotting or his spending sprees at Pottery Barn and wanted to flush out their suspicions. If it’s the latter, then good for them. If it’s the former, well, then catching a fraudster by dumb luck works too.

[Deseret News]

Image: iStock/AntonioGuillem

The post Suspect Someone of Fraud? Give Them a Promotion appeared first on Going Concern.

In that article, Jeff Raikes, then director of marketing applications programs at Microsoft, said about Excel, “We don’t expect [it] to make a huge impact right away. But we are heading into a technology transition, and over the long term we have a major opportunity.”

Controllers, get your team better prepared to tackle your month-end close by downloading these best practice Excel reconciliation templates from FloQast.

But it didn’t take Microsoft long to knock Lotus off the top of the spreadsheet mountain. Within a year after Excel 2.0 debuted, its sales began outstripping Lotus 1-2-3, according to Excel guru David Ringstrom, CPA. IBM eventually pulled the plug on Lotus 1-2-3 in 2013; meanwhile, Excel continues to have a rabid fan base, with more than 750 million users worldwide, according to some estimates. There’s even an international Microsoft Excel championship (although the competition is limited to ages 13 to 22).

It’s no secret that accounting and finance professionals are among the most loyal to the iconic spreadsheet program, mostly because it’s fast, powerful, straightforward, and easy to use. According to the 2017 Benchmarking the Accounting & Finance Function report from the Financial Executives Research Foundation and Robert Half, 69% of U.S. companies still use Excel as their primary budgeting and planning tool.

“It’s a fantastic tool for tracking, analyzing, troubleshooting, modeling, and summarizing data,” said Jason Page, corporate controller of Provo, Utah-based Chatbooks, a subscription-based service that automatically turns digital photos into photo books. “I can quickly see and understand the summarized data, trace through formulas, understand what’s happening without much explanation, and ultimately see/touch/feel the underlying data. And it’s beyond easy to sort, filter, pivot, and chart information.”

Accountants’ loyalty even stretches outside the walls of their cubicles and offices.

“I wrote a children’s book and brought it to a publisher for review, and I was the only person who ever brought them a draft of a book in Excel, not a Word document,” said Eva Wells, CPA, corporate controller at Turck Inc., a Minneapolis-based company that specializes in connectivity and sensor products.

Why Excel is still relevant

But as more cloud-based financial software programs (and even database software solutions) hit the market, I asked Wells, Page, and a handful of other controllers what makes a manual-intensive tool like Excel still popular and relevant among accounting and finance teams in this age of automation.

“It’s the same reason why CAD [computer-aided design] software is popular for engineers who need to design and build things. We need to design and build things with numbers, and Excel is a very user-friendly tool to use for that purpose,” said Wells, an Excel user for nearly 25 years. “Even though you can theoretically create a report for most anything from your enterprise resource planning (ERP) system using business intelligence, it might not be able to be done fast enough, and it might not be flexible enough, to allow you to analyze thoroughly. You can build anything in Excel fast.”

Another reason is Excel provides a standard language that most people can understand, said Fred Butterweck, CPA, corporate controller of New York-based Clickspring Design, a multidisciplinary design firm. Because Excel is relatively intuitive, a person doesn’t need several years of training to become proficient with it, he added.

“Because of its linear format, Excel forces you to organize data in a logical and straightforward manner,” said Butterweck, who’s been using Excel professionally since 2000. “An important feature of Excel is that it allows the user to retrace his or her steps by looking at the formulas. Most importantly, it allows users to retrace someone else’s steps if they didn’t create the spreadsheet.”

And Butterweck added that Excel is relatively cheap and doesn’t have implementation or setup costs like some business intelligence platforms. Microsoft Office 365 Business and Business Premium plans cost between $8.25 and $12.50 a month, and customers on either plan get access to applications like Excel, Word, and PowerPoint, among others.

“The Cheesecake Factory of financial tools”

The versatile range of Excel’s capabilities—“from simply logging data and preparing reports, to running complex scenario analyses, to troubleshooting and normalizing data”—is one of the things Page loves about the tool.

“If I can imagine it, I can probably do it in Excel. I’ve even used Excel as a CAD program to map out my home sprinkler system,” said Page, who’s used Excel professionally since 2003. “While it may not be best-in-class in any specific isolated area, it performs a large array of functions. It’s the Cheesecake Factory of financial tools.”

Here are some other things controllers told me they love about Excel:

Pivot tables: “Excel has made the pivot table functionality incredibly simple,” Butterweck said. “When distributing reports and analyses, having the underlying data available by one click really helps the users of the reports understand what’s behind the numbers they’re analyzing.”

Goal Seek function: “This is a ‘what if’ function in the Data menu that allows you to quickly find out what input you need to arrive at a certain result,” Wells said. “The possibilities are endless in accounting for situations where this is useful. For example, if you input two amounts in two different cells for revenue and expense, and then make a formula to calculate income, you could then run Goal Seek to determine what your expense target needs to be in order to achieve the income you want given a fixed revenue number.”

Formula Auditing tool: Formula Auditing can be found by clicking on the Formulas ribbon tab. “You can trace dependents or precedents to see which other cells are connected to the cell you’re looking at,” Wells said. “It’s very useful when you’re making sure a spreadsheet was set up properly from a reviewer point of view. You can review faster.”

Integrates well with other programs: “A good example is how Excel data can greatly increase the efficiency of data input into accounting systems, such as QuickBooks, SAP, or Workday, just to name a few,” Butterweck said. “Rather than spending hours booking journal entries, creating vendor records, and entering invoices, you can just create an Excel sheet and import everything with a few clicks.”

FloQast designed and built a cloud-based close management software platform that closes the gaps between Excel spreadsheets and ERP systems, said co-founder and CEO Michael Whitmire.

“With FloQast, your reconciliation workpapers are still in Excel format stored in cloud document storage that you own (Box, Dropbox, Google Drive, OneDrive, Egnyte, etc.). FloQast sits in the middle, tying together your spreadsheets, checklists, and ERP trial balance,” he wrote in a blog.

With this approach, accountants get the familiarity of working within a tool like Excel but integrated with the actual results that are coming from the business’ operations.

Creative spreadsheet design: “I like being creative in design in the non-creative world of accounting,” said David Rosso, controller, Massachusetts/Midwest Accounting Division of City Electric Supply, an electrical wholesale distributor, who’s been using Excel for 24 years and considers himself a power user. “Designing a spreadsheet for non-financial people to see and to understand is a creative outlet.”

Defending against the Excel backlash

But there’ve been recent defections from Excel Nation, as the Wall Street Journal reported last November. Some CFOs are ditching Excel for their financial planning, analysis, and reporting, opting instead for cloud-based financial software programs that have capitalized on Excel’s weaknesses, touting better data management, analytics, and transparency; collaboration across departments within a single document; and process automation that reduces administrative tasks and errors.

Kolleen Gibson, controller at Boston-based Invaluable, an online marketplace of fine and decorative arts, antiques, and collectibles, said it’s unfair to compare Excel with the specialized technologies mentioned in the Wall Street Journal article.

“Excel is an all-purpose tool, and spreadsheets are built by the users,” said Gibson, who’s been an Excel user since 1990. “Of course, a customized, professionally built and tested tool would be better than something built in Excel. But the article does mention that all these tools have an ‘export to Excel’ feature, so they don’t really make Excel obsolete.”

While cloud-based technologies are “great” and allow users to analyze and crunch data faster, what they don’t have is direct access to granular data, said Marc Baumann, CPA, controller at Sweetwater, a Fort Wayne, Ind.-based music technology and instrument retailer.

“I enjoy having the base data in front of me and being able to alter as I see fit,” said Baumann, who has used Excel professionally for nine years. “I also think ad hoc report generation is more efficient in Excel than these cloud-based databases.”

CFOs said in the Wall Street Journal article that Excel hasn’t kept up with the demands of today’s accounting and finance teams, but that hasn’t been the case at Zipwhip, a Seattle-based business texting provider, according to Controller Ryan Letson.

“From my perspective, Excel has kept up with the demands of my team and I,” said Letson, who’s used Excel professionally for 12 years. “There aren’t many projects or tasks that I take on or assign to my team that cannot be done in Excel.”

Excel skills no longer a priority?

A recent survey by Adaptive Insights, a provider of cloud-based financial software, revealed that CFOs no longer rate Excel proficiency as the most important skill for finance professionals.

According to the survey, only 7% of finance chiefs list Excel skills as important for new hires, and just 5% considered proficiency in Excel as the top skill for their financial planning and analysis teams, down significantly from 78% two years ago.

But Rosso said he tells his team members that there will always be a job for them in accounting or finance because of their knowledge of Excel.

“I tell my employees all the time that no matter what, and wherever you go from here, your Excel education can’t be taken away from you,” he said. “It’s not always easy to find an employee who has experience in Peachtree [Sage 50 Accounting], QuickBooks, SAP, or name any other accounting software as there are hundreds. But there’s only one Excel.”

In a future article, we’ll look at some of the cloud-based financial software platforms that are competing with Excel for accounting and finance teams’ financial planning, analysis, and reporting needs.

Discover how your team can make the most of Excel for your month-end close in this white paper from FloQast. You can read more about Going Concern’s partnership with FloQast here.

Image: iStock/Gearstd

The post More Than 30 Years After Its Debut, Many Controllers Still Head Over Heels for Excel appeared first on Going Concern.

Since Friday, Foster has declined to talk any more about his sudden fame. A representative for Golub Capital’s (Foster’s employer) New York-based public relations firm said it fielded several requests for interviews and is turning them all down.

The Hawks fielded ”dozens” of requests early on but they tapered off. “Foster expressed to the team that he preferred to prioritize his family and work following his NHL stint, and the team is supporting his preference,” vice president of communications Adam Rogowin said Monday.

This is the right move. A more foolish person would milk all the t-shirts, jerseys, Office Space parodies, celebrity shoutouts, countless interviews and try to parlay it into a vapid reality TV show. Our Scott is going back to his kids and his spreadsheets, and that’s perfect. No one wants their accountant-turned-hockey-folk-hero to become the next Eric Decker. That’d be infuriating.

[CT]

Image: iStock/SIphotography

The post Leave Scott Foster Alone, He Has Accounting To Do appeared first on Going Concern.

Busy season is brutal for because of the lies and deception … because any time I interact with anybody in public accounting I have to pretend like I don’t work just seven or eight hours a day.

Busy season triggers my public accounting survivor’s guilt.

I spent one tax season in public — 2009. I was hired in June 2008, straight out of school, into the firm’s technology department, and I spent the first seven months at the firm consistently failing the Advanced QuickBooks ProAdvisor test. Someone told me that I wouldn’t get enough billable hours doing QuickBooks implementation and support, so I’d have to jump on as much tax work as I could during tax season to reach my billable goal.

I was doing everything I could to master QuickBooks to the degree that I wouldn’t be an embarrassment to the firm. As a result, once tax season hit I knew nothing about UltraTax, making me an embarrassment to the tax partners.

The partner whose bitch I was eventually pulled me into his office and told me that nobody wanted to give me tax work because I was over my time budget too often. Apparently, I was so slow at UltraTax they were losing money. Because in CPA firm economics, having a salaried staff accountant not work on anything makes the firm more money than having that same staff accountant do a tax return a little bit slow. Makes sense that a firm would work like that because we’re trusted business advisors.

The pressure to get enough billable hours combined with the stress that nobody wanted to give me billable work eventually messed me up. I went to see my doctor because my heart was racing all the time for no reason. He said I was suffering from anxiety and prescribed Klonopin. The Klonopin didn’t really help my racing heart, but it did make me super drowsy which made me even slower at preparing tax returns which stressed me out even more than I was without the Klonopin.

So I planned my escape, and after working under the direct supervision of a licensed CPA for 2,003 hours, I got hired away from the firm by my current employer.

But that’s where the guilt kicks in. I was able to get out when so many others weren’t. How am I so lucky to be able to watch all three Back to the Future movies on St. Patrick’s Day when the only TV my friends in public get to watch is a minimized and muted March Madness game on their third screen while they enter trial balances in AuditFile?

I feel ashamed that I can take a sick day when I have a little bit of a headache in mid-February whereas my friends in public have to drag themselves in for twelve hours of inventory audits even though they have renal kidney failure or stage five lupus.

What’s so special about me that I escaped public accounting when so many good people — people I respect — did not? Maybe they hate their family and friends, and they’ve found public accounting to be an effective way to avoid them for three months of every year. Maybe they’ve developed Weinberger syndrome (similar to Stockholm syndrome wherein a captive begins to identify closely with his or her managing partner). Or maybe they don’t understand that their skills are in high demand and that they can get a job in industry that pays just as much with a company whose HR department doesn’t follow the Bangladeshi sweatshop model.

I live with shame three months of every year. Sometimes I force myself to stay up until 2:00 or 3:00 in the morning watching Undercover Boss on Netflix just so I can honestly say that I’m also not getting hardly any sleep because of “work stuff.” Not my work stuff, but somebody’s work stuff.

I’ve considered seeking professional help for my survivor’s guilt. It’d be worth seeing a mental health professional for an hour or so every Tuesday afternoon mostly because I’m not really doing anything at work at that time anyway. I’ve even considered starting a support group, but it’s difficult to schedule the time around all my naps.

If you suffer from survivor guilt like I do, just know you’re not alone. I mean, you might be alone when you take a long lunch to catch a matinee of Tomb Raider, but you’re not alone in your struggle.

Image: iStock/Andrew_Rybalko

The post Busy Season Triggers Survivor Guilt in CPAs Working in Industry appeared first on Going Concern.

“The question is, how far down the road is that?” said Christensen, executive vice president of global internal audit and financial advisory at consulting firm Protiviti. “We’ve seen tremendous advancements as companies go through digital transformation, and accounting functions, audit functions, and review functions will also go through that transformation. We’re starting to embark upon an era that’s very exciting.”

Download this Tech Brief from FloQast to learn how close management software can help controllers address their SOX compliance needs.

That transformation will involve accounting and finance teams becoming more strategic and forward-looking instead of compliance-driven and backward-looking. An EY report puts it like this:

Today’s finance functions want technological tools that “connect” (e.g., software that allows them to scour swathes of data to identify trends and challenges), that “automate” (e.g., robotics that process expenses) and that are “smart” (e.g., advanced predictive analytics that model the future direction of the business). These tools allow finance functions to perform existing tasks in a more efficient and less time-consuming way than before and to undertake new tasks that they could never perform in the past.

AI and blockchain are two such tools, with AI as the “yin” and blockchain as the “yang,” according to a PwC report.

AI would be the creative one on the team, the abstract thinker and observer who studies the fuzzy complexities of the business environment, the unruly customer data, the tidal wave of social media, the complexity that needs to be abstracted, and the imagery and voice input that needs quick assessment. It provides the educated guesswork to make sense of a complicated business environment and suggest a path forward.

A blockchain by contrast would play the role of the truth teller, guarantor and mediator, the one bringing two parties together to forge and document an agreement immutably.

AI and blockchain’s potential in SOX compliance

Many corporate controllers say that as technologies like AI and blockchain continue to develop, organizations will look to consume their value, especially as it relates to SOX compliance.

“Research studies have already been conducted using AI models within SOX compliance processes,” said Debbie Smith, PMP, corporate controller of Phoenix-based BeyondTrust. “I believe big data helped pave the road for AI, resulting in large, meaningful data sets that can feed the AI algorithms. Additionally, blockchain has a complex and challenging implementation; however, it garners incredible value for SOX compliance: decentralization, inalterability of data, transparency, and in real time.”

Creating computer applications that are as smart and agile as humans is not a new concept, said Steve Rinaldi, CPA, U.S. corporate controller at InterSystems in Cambridge, Mass., but “the current increase in viability with pre-programmed knowledge and rule-based decision-making would make an immediate impact on assisting with SOX compliance.”

“Cost and resource reduction, error identification and resolution, and manageable routines can all be service-accelerated,” he added. “Blockchain technology’s ability to guarantee the accuracy of data makes it useful for a number of AI applications—both for feeding data into AI systems and for recording results from them. Aligning blockchain and AI technology is still emerging, but convergence is inevitable.”

Last week we reported on how SOX compliance has changed through the years, and Christensen singled out robotic process automation (RPA)—the automation of rule-based processes and routine tasks using software applications known as “bots”—as presenting tremendous opportunities for accounting and finance teams in the next generation of SOX compliance.

David Lloyd, CPA, vice president, corporate financial controller, and treasurer of Delaware, Ohio-based Greif Inc., believes that as RPA gets used more in shared-services environments, it’ll become the next big challenge in SOX compliance.

“If we can get everything right around those types of tools, they have the potential to save quite a bit of time on an overall basis, as testing any kind of automated control or process is generally going to be easier and less susceptible to error than a manual business process control,” he said. “However, it also increases the risk that if something goes wrong in the general IT environment, the effects could be much more far-reaching.”

What about security?

One such risk is a data security breach. In a recent report, PwC predicts that as AI advances, companies will face an increased risk of cyberattacks. Techniques like advanced machine learning, deep learning, and neural networks, which enable computers to find and interpret patterns, also can find and exploit vulnerabilities. For example, bad actors could inject biased data into algorithms’ training sets, according to the report.

Just as we expect AI to be a growing cyberthreat this year, we’re also confident it will be part of the solution. Already, scalable machine learning techniques combined with cloud technology are analyzing enormous amounts of data and powering real-time threat detection and analysis. AI capabilities can also quickly identify “hot spots” where cyberattacks are surging and provide cybersecurity intelligence reports.

Companies also are combining structured and unstructured data, such as social media and web monitoring, email messages, word processing documents, videos, photos, and audio files, to identify “rogue activities, patterns, and trends, and mitigate risks, such as fraud or cyber breaches,” wrote Craig Sullivan, group vice president of product management at NetSuite, in an article for CFO Magazine.

It’s much more difficult—nearly impossible, some experts say—to alter data or transactions secured in blockchain technology, as the digital ledger is distributed throughout a network of computers based in various locations within an organization. If there are any changes to the ledger, they immediately change in everyone else’s books and records in real time. The information in the ledger is cryptographically sealed, making it extremely hard to compromise without everyone else in the chain knowing.

Haskell Garfinkel, co-leader of PwC’s FinTech practice, explains in a little more detail how secure blockchain really is in this video on the firm’s YouTube page (starting around 2:12):

A slow migration to automation

But will companies that are continuing to use desktop tools, spreadsheets, and other manual processes for SOX compliance migrate to these emerging technologies? If recent data is any indicator, the answer is “no.”

According to the 2017 SOX and Internal Controls Market Survey from Moss Adams and Workiva, 69% of companies still rely on desktop tools that manage compliance requirements, such as templates, policy toolkits, checklists, and controls tracking.

And a 2016 article on AuditBoard.com stated that more than 98% of companies still manage their SOX compliance programs on Excel spreadsheets.

But more companies are starting to hop aboard the automation train. According to the Moss Adams/Workiva survey, 52% of companies indicated they use governance, risk, and compliance tools or cloud-specific software for SOX compliance.

And Protiviti’s 2017 SOX Compliance Survey revealed that 51% of large accelerated filers had either significant or moderate plans to automate IT processes and controls in fiscal year 2017. Only 11% said they had no plans to automate any processes and controls.

“There’s been increasing focus in recent years on key reports, IT general controls, and in verifying the accuracy of data used in the operation of regular business process controls,” Lloyd said.

Close management software’s role in SOX

With AI, blockchain, and RPA on the horizon, close management software can help corporate controllers address their SOX compliance needs today. But some controllers might be unaware of how close management software can positively impact SOX compliance.

“I think it’s because of a lack of education,” said Shivang Patel, director of sales engineering and operations at FloQast. “When I’m chatting with people, I tell them that FloQast alone isn’t going to get you SOX compliant. It’s only a tool that’s part of the process, and it’s really the culmination of your people, your processes, and your systems. But it’s another benefit or value-add to enhance your internal control environment and thus become SOX compliant. And once you do provide the education, people are pretty open to seeing what sort of key controls you offer and how that would work.”

Specifically, close management software can help controllers with their SOX compliance efforts by ensuring an accurate and timely review of all reconciliations, Patel said.

“All reconciliations would be prepared and reviewed and signed off, with evidence of that qualitative review, as well,” he said.

Because SOX regulations require companies to maintain activity logs related to the month-end close—not only to show who has authority to perform certain tasks, but also to identify any malicious behavior—FloQast provides auditors with an export log that tracks data on key user activities, such as user access role change, removing user, new user created, and when general ledger account attributes are changed, such as variance threshold.

“Auditors often cite overruns or additional charges to their clients due to a lack of receiving timely PBCs [prepared by clients],” Patel said. “With respect to our offering, we provide auditor licenses. So, for the corporate controller, it’s not just making sure your review is clean, orderly, there’s less paper, everything is soft-copied, and a little more streamlined—that’s just the operational benefit. If you fast-forward five or six months, now you can give your auditors access when they come on for fieldwork. With the combination of enhancing the internal control environment as it relates to reconciliations and SOX controls, coupled with providing auditors access to supporting schedules, our hope is to prevent discussions around increased audit fees.”

Don’t be left in the dust

Cheryl Kerr, CPA, controller at Denver-based Pursuit Collection, graduated college during the time of basic programming and paper-based audit support, and she’s amazed at how far technology has come since she started her accounting career 30 years ago.

“I literally started auditing using enormous green notebooks with green bar paper. As a staff accountant, you had to splice your work papers to add additional columns, and if you could line it up perfectly, it was impressive,” she said. “The progress in automation of manual accounting processes is pretty phenomenal. Today, the accounting profession is much more about process improvement, automation, controls, and risk mitigation. I think if we’re not looking to technology to improve our processes and to make our lives easier, then we’ll be left in the dust.”

Learn how close management software can help controllers and chief accounting officers achieve SOX compliance in this webinar from FloQast. You can read more about Going Concern’s partnership with FloQast here.

Image: iStock/monsitj

The post Controllers Say AI and Blockchain on the Cusp of Transforming SOX Compliance appeared first on Going Concern.

“I am not sure whether they are a couple. They are certainly related,” Mr. Hegge told CFO Journal in an interview on Friday.

Okay, he’s maybe not enjoying them, but he’s acknowledging the possibility that they have some connection and that’s far less than humans expect. In fact, he’s far exceeding the amount of personal interest that robots require. Regardless, there’s little doubt that the Rob-bots are proving useful and exceeding Hegge’s expectations:

Statoil has automated over 50 finance and treasury tasks and plans to grow the number of robots deployed in its finance unit, Mr. Hegge said. “This helps us to improve efficiency,” Mr. Hegge said.

Statoil has reduced its finance department from 1,400 in 2013 to 897 in 2017, and if you thought that was the end of doing more with robots and less with humans, you would be wrong:

“We will continue to shrink the finance function in terms of our full-time employees,” [Hegge] said.

Will the last human out of Statoil could turn out the lights? And maybe leave a bit of personality behind for the bots to tinker with? That’d be great.

[WSJ]

The post Statoil CFO Happy With His Robots; Later, Humans appeared first on Going Concern.

Read anything online and you’re likely to be told some variation of “The rapid pace of technology is disrupting X.” And since those words appear on the internet, adjacent to stock images of word clouds, or an illuminated light bulb, or a smug nerd with people clacking away on laptops in the background, you assume that the rapid pace of technology is disrupting X. If this technology is making some headway then, great; good for you, little disruptors!

But according to a Protiviti survey mentioned in this Wall Street Journal article, one little corner of the world that has managed to resist a fair amount of disrupting is American internal auditors.

U.S. companies are trailing their counterparts in Europe and Asia in the crucial task of integrating data analysis tools into the expanding role of internal auditors, according to a survey by management consulting firm Protiviti Inc.

“People are not moving at a pace of change that is responsive enough,” said Brian Christensen, executive vice president, global internal audit at the firm.

The survey found that 70 percent of Asian and 79 percent of European internal audit departments have “a dedicated data analytics function”; the U.S. came in at 40 percent. Christensen says, “Those who fail to integrate these initiatives risk becoming obsolete,” which sounds a lot like “DON’T MAKE US SEND IN THE ROBOTS.”

What gives, Internal Audit America? Are you warming your offices by campfire? Shall we send Emeril Lagasse in to bark “Kick it up a notch” every 15 minutes? Come on, this is embarrassing.

[WSJ]

The post Most U.S. Internal Audit Teams Still Crunching Numbers on Cave Walls Compared to Their European, Asian Counterparts appeared first on Going Concern.

“I’ve seen quite a few SOX changes through the years and improvements to internal controls since the original COSO framework was launched in 1992,” said Cheryl Kerr, CPA, controller at Pursuit Collection, a Denver-based company that operates attractions, lodges and hotels, and sightseeing tours in Alaska, Montana, and western Canada. “Internal controls are necessary to mitigate risk and when they are well-designed, they give you peace of mind that your financials are correct. The framework provides a uniform model to promote efficient and effective controls.”

Download this Tech Brief from FloQast to learn how close management software can help controllers address their SOX compliance needs.

Compliance scramble

Brian Christensen, executive vice president of global internal audit and financial advisory at consulting firm Protiviti, said most companies at this point are doing a fairly good job of responding to the needs of the SOX requirements.

“I think we’ve gotten to the point where people understand and appreciate what’s there,” he said. “It’s now moving into how do we continue to improve the efficiencies?”

But back when SOX became law on July 30, 2002, Debbie Smith, PMP, corporate controller of Phoenix-based BeyondTrust, a provider of cybersecurity threat management software, remembers organizations scrambling to figure out how to become compliant.

“There was a lot of uncertainty and resistance. So, I would say the first several years most of the focus and effort was on compliance,” she said. “Probably three to five years post-enactment, organizations started to settle and get perspective. The tone was changing. Organizations were meeting the minimum needed for compliance and the environment started shifting into areas identified for efficiency and improvement, such as standardizing key processes and controls, reducing complexity, increasing documentation and training, and ensuring an effective control environment. Compliance became the result of that effort, not the driving force.”

AS 5 and SOX audits

To CPA David Lloyd, a significant SOX compliance development occurred in 2007 when Auditing Standard No. 5 was adopted by the Public Company Accounting Oversight Board, which was created as part of SOX.

AS 5, which is used by auditors when auditing internal controls over financial reporting, replaced Auditing Standard No. 2, which was considered “unduly expensive and inefficient.”

“Approaches were fairly stringent in the first few years [of SOX], but that relaxed quite a bit with AS 5,” said Lloyd, vice president, corporate financial controller, and treasurer of Greif Inc., a Delaware, Ohio-based company that produces and sells industrial packaging products and services. “AS 5 provided for a more top-down, risk-based approach to the SOX audit. AS 5 was designed to reduce costs by allowing auditors to focus on the most important issues and simplify their procedures.”

He also noted that the requirements that get passed along to companies through the PCAOB inspection process and the updated 2013 COSO Internal Control—Integrated Framework have raised the bar in SOX compliance in recent years.

“Both have really added to the complexity and the level of effort required for compliance,” Lloyd said. “One recent example from the last few years is around key reports that are used in the operation of controls. There’s been more attention recently on documenting parameters, such as correct dates and correct entities, instead of just the testing of report logic.”

COSO framework’s impact

COSO’s original framework, released in 1992, satisfied the U.S. Securities and Exchange Commission’s rules for implementing internal controls over financial reporting in accordance with SOX Section 404.

The core of the 1992 framework were the five components of internal controls: control environment, risk assessment, control activities, information and communication, and monitoring activities.

Although effective, the framework started to show its age, according to Kerr and others.

“The COSO framework was published and adopted as the uniform framework for internal controls. As companies began to migrate to a similar control framework, you saw consistencies in controls,” Kerr said. “We had that original COSO framework for many years before it was revised. It had become outdated and didn’t address significant business changes, particularly in the area of IT general controls and compliance. When they revised it in 2013, the framework became more robust and appropriate for today’s business climate.”

The 2013 COSO framework contains 17 principles that explain the concepts associated with the framework’s five main components—one of which, No. 11, is “selects and develops general controls over technology.”

And unlike the 1992 framework, the 2013 framework includes the concept of considering the potential for fraud risk when assessing the organization’s risk objectives.

“The 2013 COSO framework put some more onus on management in the area of fraud control in the revamped framework,” Kerr said. “So, you saw that big shift a few years ago to the new COSO framework, and companies had to identify their controls and map them to the new framework.”

Better collaboration

From an operational perspective, Kerr said one of the biggest changes she’s seen over the past 15 years, other than COSO’s influence over the framework, is the way businesses and auditors are working together to ensure the control framework is right-sized.

“You don’t want a proliferation of excessive controls that aren’t really providing any risk mitigation or a control framework that is too minimal,” she said.

“It’s all about right-sizing your control framework and identifying those controls that are key within the framework to prevent financial statement misrepresentation,” Kerr continued. “You used to hear a lot, ‘The auditors made me do it.’ Well, auditors aren’t making us do anything that we shouldn’t be doing. These are our controls and we own them, we design them, and we work with the auditors to ensure our framework mitigates our risk.”

She also noted that getting IT and business process people on the same page will result in a more aligned framework.

“What I’ve seen over the last few years is more collaboration where you’ll have both IT control owners and business process control owners in the same walkthrough because the systems are so integrated with business processes,” Kerr said. “They’re really working together on the control framework and aren’t designing system controls in a vacuum from business process controls and not designing business process controls in a vacuum from system controls. Getting that to work has been a challenge, but when it does work well, it makes the entire process much smoother and more efficient.”

Key SOX challenges for controllers

“Other than the ever-emerging control requirements and technical compliance requirements of managing SOX, the biggest issues facing companies relate to the required time and cost implications it takes to comply, to assess controls on an ongoing basis, to manage a myriad of new issues related to acquisitions, and to manage the increased intensity around cybersecurity,” said Steve Rinaldi, CPA, U.S. corporate controller at InterSystems, a global health IT vendor based in Cambridge, Mass.

Indeed, many of those issues that Rinaldi mentioned were highlighted in Protiviti’s most recent SOX Compliance Survey.

Compliance costs: There was a slight downward trend in annual SOX compliance costs in fiscal year 2016 compared to the previous year, according to the survey. One reason is that most organizations have now completed implementation work in connection with the 2013 COSO framework—which typically costs between $50,000 and $100,000.

But that decrease in costs hasn’t been felt by all public companies. While more companies spend $500,000 or less annually on SOX compliance than in prior years, many are still spending more than $2 million.

“I think we’ve seen established companies that have gone through the SOX process year over year increase those efficiencies and move to a maturity level that gives them a better return and, in the end, maintain or lower the costs of the effort,” Christensen said. “However, those that are relatively early in their SOX journey still see there’s an opportunity to move up that maturity curve—move from more of an ad hoc state to a better-defined level. And I would expect that they would see those efficiencies somewhere in their near future.”

Compliance hours: Time spent on SOX compliance activities went up for most companies in FY 2016, and for two out of three of these companies, hours increased by more than 10 percent, according to the survey.

Cybersecurity: There was a fairly big jump in cybersecurity disclosures in FY 2016 (33%) compared to the prior year (20%). “I talk with a lot of audit committees and internal auditors about what’s on the macro-level lists that the C-suite and the boardroom are thinking about, and obviously, cyber the last year or two has been close to the top of the list,” Christensen said.

Future of SOX compliance

A big question moving forward, Christensen said, is: What will next-gen SOX look like?

“The topics that we’re seeing include the introduction of some robotic process automation. RPA is a hot topic, and I don’t think people have gone too far down that path, but there are tremendous opportunities and it’ll be part of the future,” he said.

“Some of the bigger advancements are going to come through automated techniques that are there, particularly with advancing technologies,” Christensen continued. “Big data sets and disparate data systems communicate and corroborate information, adding elements and things that you can get into the cloud and in the various cloud environments. That’s probably the next frontier of where SOX can go, but that’s probably two to three years away. But companies that are on the cutting edge around SOX are beginning to implement and experiment with these, as recently as today. So, that’s creating some excitement and interest in where SOX goes.”

Technology advancements in SOX compliance will be the focus of a future article, as these controllers talk about tech trends, automation, and the possibility of using artificial intelligence and blockchain in their compliance efforts.

Learn how close management software can help controllers and chief accounting officers achieve SOX compliance in this webinar from FloQast. You can read more about Going Concern’s partnership with FloQast here.

Image: iStock/shutter_m

The post Controllers Talk About the Paths They’ve Taken Toward SOX Compliance appeared first on Going Concern.

“Carillion’s approach to its reverse factoring arrangement had two key shortcomings: the scale of the liability to banks was not evident from the balance sheet, and a key source of the cash generated by the business was not clear from the cash flow statement,” Mr. Pijper said. The company’s 2016 balance sheet didn’t give a clear picture of the full scale of its liabilities to banks, he added.

The bummer for Carillion, of course, is that their lenders had a clear picture of their liabilities the whole time. Banks are such sticklers about the whole “you owe us money” thing.

[WSJ]

Image: iStock/solar22

The post Off-Balance Sheet Liabilities: Still Got It! appeared first on Going Concern.

After speaking to Megan Scheiderich, director of internal audit at PulteGroup, we have a different outlook on the benefits and potential of a career path in internal audit. She discussed the path to her position at the company, the transition from a Big 4 position to industry, what makes for a good internal auditor, and more.

This interview has been edited for length and clarity.

GC: First, we should get some background — What’s the arc of your career been so far?

Megan Scheiderich: Going way back, I started at University of Tennessee as an engineering major, but switched to accounting due to the ability to see and understand businesses. I got a double major in accounting and international management and skipped the masters since I had the CPA hours.

I was with Deloitte for ten years, and left as a senior manager. I worked solely in our real estate group, with clients ranging from homebuilders to public and private REITs in multifamily, office, industrial, and retail. My favorite Deloitte experience is still working on Augusta National, which was in the real estate group.

I loved public accounting – I had great clients and teams. But, I needed to take a step more for my personal life and achieve more balance. I started a program at Deloitte (WIN -Women’s Initiative Network) that helps high performing senior managers prepare for the partner process. It was going through that program that helped me clarify that, while I truly enjoyed what I did, I didn’t want to be in public forever. That was a really difficult choice because I enjoyed public accounting and I always saw myself as a partner at Deloitte. However, when I looked up to those I worked with as partner, they worked just as hard as I did. The balance didn’t seem to come with the partner promotion and with that, I didn’t see myself being able to achieve my personal goals staying at Deloitte.

Before I truly pulled the plug with Deloitte, I took nearly six months off (through a leave of absence program with Deloitte) and traveled, did volunteer work… it is a huge benefit of being with a large firm. I spent a month in Spain.

When I left, I wasn’t sure exactly what I wanted in my next role, but defined my search by what I didn’t want: a public company in SEC reporting or internal audit. My goal was to find a private company in real estate with a role that wasn’t siloed within the accounting function. I wanted to get to know the business and operations within my next role. I found the perfect role (after a lot of looking) at a small regional homebuilder as the corporate controller. There, I was able to help take a small private accounting function and help transform it into a more timely and accurate department. I was also able to get my hands into other areas – sales and purchasing, to name a couple. The builder had been purchased by outside investors from its original founder. The investors knew they wanted an exit event eventually, and upgrading the accounting was part of this.

PulteGroup purchased the builder in January 2016, and I came along with it to help lead the integration. As Director of Finance for the Southeast Area, my role was very different from any I previously held, primarily in that I went from having a team of direct reports, to having nearly none as we completed the integration. Additionally, the role was very opportunistic, as I was able to define and work through projects in the area, even acting as an interim VP of Finance for two of our divisions as theirs were out on maternity and paternity leaves, providing direct exposure to the division’s operations.

Originally, my plan was to find a VP of Finance role in a division after about two years. Two things changed – (1) I met my husband, who isn’t able to relocate right now; and (2) the internal audit job became available. I never would have considered this role from the outside – but I’ve been nothing but impressed by the tone of the organization and the level of respect for the finance function. Within Pulte, the finance function has a seat at the table.

Check out available jobs with PulteGroup here.

GC: We recently interviewed a slew of controllers about their transition from public accounting to an industry job? How would you describe your experience of moving on to a career outside the Big 4?

Scheiderich: It’s a huge transition – My biggest surprises in a small accounting shop at a private company were the ability of my team to shift and change. In public, if you ask your team to shift gears and explain why, it’s a matter of how long it takes to do it. In a small private company (in this case, with some of my staff tenured over 30 years), change can be difficult. I found change management was one of the biggest obstacles I had to work through as you didn’t have the immediate buy-in like in public, you had to paint the picture of why things had to change.

Second, the perspective – I think as public accountants we can lose sight of what is important to the operators of the business. Yes, the numbers are important – but as a controller often my hottest fire was finding a new staff accountant and training them versus ensuring the audit team had the debt rollforward the minute they needed it.

GC: What attracted you to the internal audit position?

Scheiderich: A few things. First, the ability to shape a team once more. At Deloitte, I was highly involved in training our new hires to seniors. I missed having a team where I could have an impact on their development. Additionally, exposure to senior leadership. This role is highly visible in the organization. I have more opportunity to meet with the leadership throughout the company, not just the region.

GC: What attributes make for a good internal auditor?

Scheiderich: We look for the skills of the auditor, but we look ahead to people who can be successful in the next role as well. The audit role isn’t a far leap from what someone would see in public, so that’s the basics for me – having some audit experience.

So, in addition …I look for people who are intellectually curious. I want a team who wants to really understand the business – who wants to not just understand the audit role, but wants to jump in the car with the VP Of Construction and go see what we’re doing in the field. I look for people who are creative and dynamic. For example, people who can bring their experience to the table and make connections to our company and department, bring new ideas to the group, good problem solvers.

GC: Can you talk about the culture of your internal team and how that fits into the broader company?

Scheiderich: Culturally, we are similar to an engagement team in public accounting in that we work in a smaller team and work closely with each other. We travel together, so there is a lot of opportunity to get to know one another. Because the group is rotational, we always have new ideas coming in with new people. Again, because of the rotational nature, I think the group doesn’t get complacent as well. As the leader of the team, I try to give the group opportunities to see more than just the audit, for example – working with a division on an M&A project, or filling in at a division in an area where they are interested to gain experience.

In terms of how our culture fits in – two responses: Finance is key to the organization, as we talked about, so there is a lot of respect for what we do and a desire to get to know the audit team;

Internal promotion isn’t limited to finance – when we have openings, the company first looks internally to see if it can be filled, so there is a desire to build the skillset of our team members so they can be attractive choices to fill those roles.

GC: What kind of questions should a person ask themselves before considering an internal audit position?

Scheiderich: I would focus on the career path and the goals of the individual – some internal audit groups are more long-term in nature. That’s a wonderful path for those who want it, they can become experts in the company and the field – and many of the groups offer the opportunity to do many types of audits which can keep the variety and ability to grow high. These roles can offer work/life balance, but perhaps the trajectory gets a little shallower from public.

I think our group offers the best of many things – you can continue to see a path to some exciting roles to keep career momentum for those who want that, but you can get more work/life balance than public, and (perhaps) a little less travel. Our audit charter includes that we are a pipeline of finance talent for the organization. Graduates of the internal audit group include Division Presidents, VP of Finance, Land Managers, Controllers, among many others.

GC: You’ve mentioned the importance of the internal audit group as a pipeline to the rest of the company. Can you explain this in more detail and how it developed?

Scheiderich: It goes back to the founding of the company. When Bill Pulte started the company, he began surrounding himself with a finance team at the suggestion of his first CFO. That team took more and more progressive roles throughout the company, including Division Presidents, at the time. Leadership continued to find that finance talent were great leaders all around and solid business people. When the audit group started, it was a natural fit to continue to develop and train finance professionals to maintain a pipeline for talent in the organization, as we continue to promote extensively from within. As an example, our CEO and COO both started as controllers in various markets, and continued onto progressively larger roles until they ended up in the C-suite, something I think is very unique to our organization.

Check out the open corporate auditor positions at PulteGroup in Atlanta, Chicago, and Detroit.

The post At PulteGroup, Internal Audit Opens Many Doors appeared first on Going Concern.

But that’s not all.

“I have to wear many different hats to keep the organization fiscally responsible and within compliance,” she said. “My job varies day to day, from managing cash flow to setting up new technology for our direct care staff out in the field to have what they need to do their job daily. We don’t have the resources to add full-time positions for every need, so many aspects of my job extend beyond finance and into IT, payroll, operations, insurance, and development.”

During conversations I recently had with several nonprofit controllers about what they do, how they got there, and why they do it, I heard similar stories as McDonald’s. Especially at smaller nonprofits, controllers often are asked to do many things that fall outside of their job description.

“Controllers at nonprofits are asked to add their expertise to various situations,” said Shannon Emley, CPA, controller at Second Harvest Food Bank of Middle Tennessee. “So, someone considering such a position should be willing to take on a wide variety of tasks and shouldn’t count on a specific set of repetitive duties.”

But spending time working outside of the traditional accounting role isn’t a bad thing, said Denise Garcia, controller at the Houston Parks Board.

“Be prepared to roll up your sleeves and expand your experience in ways you may not have considered, and view these times as opportunities for personal and career growth,” she said.

Flex your accounting muscle

First, controllers must put on their accountant’s hat, as nonprofits need professionals who understand all aspects of nonprofit accounting, financial reporting, taxes, and compliance.

“Many of the qualities expected of a public or private company controller—oversight of the general ledger, knowledge of GAAP, strong accounting and communication skills, and experience managing A/R and A/P—will be applicable to the nonprofit controller, too,” Emley said. “Staying updated on principles pertaining to these areas is important.”

And while there are some significant differences, nonprofit accounting rules under GAAP aren’t too dissimilar than for-profit accounting rules, he said.

“Much of the work at the controller level is spent on team management and making sure your processes are up-to-date and efficient. The differences [in accounting] can be learned,” Emley added.

Garcia said a clean audit is of the utmost importance to nonprofits because audited financial statements are distributed to funders and other stakeholders who help sustain a nonprofit and its mission.

“Grants and contributions are almost always contingent on a clean audit, and internal controls are key to this outcome,” she added.

And because stakeholders and other members of the management team might not be familiar with financial terms, controllers should learn how to talk about GAAP and financial statements in clear, understandable language, said Ashley Bassim, controller at the Denver Museum of Nature & Science.

“You don’t want your message to be lost or, even worse, intimidating,” she said.

If the decision-maker hat fits, wear it

Another hat nonprofit controllers often must wear is that of the decision-maker.

“I think all nonprofit organizations need controllers who want to be a key member of the decision-making team,” Bassim said. “Especially in a small-to-midsize nonprofit, if you’re content spitting out the same financial reports month after month that just tell the history of the numbers without affecting real-time change, you’re not adding enough value. Controllers have a big-picture perspective—we see everything—that a lot of other managers just don’t get.”

She added that aspiring accounting and finance professionals might not consider controller roles at nonprofits because they don’t realize how entrepreneurial the industry really is.

“It’s a very exciting time in the industry, and there’s a lot of opportunity for accountants to become key players in the leadership of these organizations,” Bassim said.

Go team!

Nonprofit organizations are also looking for controllers who are willing to be team players and work with every other department in the organization.

“This means communicating and working with people in very different fields who won’t consider the bottom line as one of their top priorities,” Emley said.

Carolann Parker, CPA, financial controller at The Morton Arboretum in Lisle, Ill., recommends reaching out to other departments “to see if there are any financial deliverables that can be improved upon and develop a plan to address needs.”

Emley has found it important to pitch in or help another manager on a project that doesn’t fall under his purview.

“This builds knowledge and lets your team members know you’re willing to take on more responsibility,” he said. “This may seem obvious to some people, but I don’t think this sense is innate to everyone. Use it as an advantage.”

Do you have the chops to be a nonprofit controller?

“Anyone who has an interest in managing a team devoted to the accurate reporting of finances and is willing to look at the accounting from a different perspective to incorporate the unique nonprofit accounting rules would have the potential for a nonprofit controller,” Parker said.

Here’s some other advice from the nonprofit controllers I spoke to for those considering a move to that role:

1. Believe in the nonprofit’s mission and objectives. Look for an organization with a mission and vision that inspires you, said Raquel Cosio, CPA, controller at the Chicago Zoological Society.

“Working for a nonprofit organization is more than the accounting work we perform. It’s knowing that we’re contributing to something bigger,” she said.

If you’re unclear of the nonprofit’s mission, take time to research the work it does, and consider volunteering there, Emley added.

“Once you’re in the position, continue to take opportunities to step outside of your required duties and experience the hands-on work that directly fulfills the mission,” he said. “Not every day at a nonprofit is perfect, but even on a tough day, you know what you’re doing is helping make a difference in the world.”

If you invest your time and energy into what the nonprofit does, the benefits far extend beyond salary and title, McDonald said.

“That being said, working for a nonprofit will probably take a larger emotional toll on you than you’d expect,” she added. “Practice self-care, take PTO, avoid burnout, and realize that you can’t change the world all at once.”

2. Consider the entire package, not just salary. Speaking of salary, most of the controllers I spoke to said the No. 1 reason why accounting and finance professionals might not pursue the controllership at a nonprofit is because the job pays less than at a public or private company.

According to Payscale.com, an accounting director at a nonprofit organization earns an average salary of $77,909 per year, whereas the salary for a corporate controller averages around $93,000 annually.

“As a CPA, you possess a set of unique skills and qualifications that organizations are willing to pay a market rate for. You won’t be rolling in dough, but you also won’t be working public accounting hours,” said Bridget Meacham Kowalski, CPA, CFE, controller at the Pittsburgh Symphony Orchestra.

If compensation is a sticking point, make sure to always evaluate the total package, said Brian Neville, CPA, controller, director of accounting at Seattle-based PATH.

“Nonprofits have no equity or ‘profit share,’ but larger organizations often make up for this with additional retirement funding versus what’s common in the private sector,” he said. “If you’re willing to take a ‘discount’ for your services because you love a nonprofit’s mission, it’s prudent to quantify that discount in your own mind. Many I know are willing to work for perhaps 10% less than what they could earn if they looked to maximize their compensation relative to their skills. Too steep of a discount can result in a premature departure, and good nonprofits will pay for appropriate and commensurate value.”

Paul Harrison, CPA, controller at the Dallas Arboretum and Botanical Garden, said you shouldn’t pass up a controller opportunity at a nonprofit just because you wanted to buy a Ferrari instead of a Toyota.

“Live within your means,” he said. “Working at a nonprofit that provides a wonderful service to the community has so many tangible rewards that you don’t want to have to give that up just to earn more money.”

3. Match your experience with the job. Make sure the responsibilities required for the controller position are a good fit with the experience you have and that the work is challenging to keep you interested in the long term, Garcia said.

“For example, working for a museum might require accounting for earned revenue, such as gift shop retail and event revenue, and inventory of collections, as well as accounting for contributed revenue, fixed assets, and capital expenditures,” she said. “Working for a foundation might require strong investment experience and grant management.”

4. Before accepting the job, research your boss. Neville said it’s important to know a little about the person who you’ll be working for before you take the job.

“Having a strong boss is as important at a nonprofit as it is at any other type of organization,” he said. “You may love the mission, but working for the wrong person can undo all the good in being excited about the nonprofit you work for.”

5. Look beyond the 990. As any CPA with nonprofit experience will tell you, IRS Form 990, Return of Organization Exempt From Income Tax, isn’t exactly a clear representation of the financial health of a nonprofit organization, Kowalski said.

“Ask to see internal operating statements, ask questions about accumulated operating deficits, understand the debt structure, and understand the cash needs and uses,” she recommended. “Ask about funding sources—endowment, government, donors, and service fees—and whether other tax filings are required.”

6. Get to know the board of directors. “I have the opportunity to work with some incredibly brilliant business executives from all different industries,” Kowalski said. “They provide guidance, feedback, and support. I would’ve never met most of these individuals through networking alone.”

7. Be ready to learn the ins and outs of operations. Absorb everything operations-related, even if you can’t see early on how it fits into your job scope, Bassim said.

“Sooner or later, everything ends up in the world of finance,” she added. “The more clearly you can see the organization from a bird’s-eye view, the easier you can see solutions that other positions within the organization don’t have insight to. Make that your strength.”

Also, be patient. The nonprofit might not have the latest software and technology available, but make sure it’s using the resources that have been provided, McDonald added.

“Don’t be afraid to challenge the status quo and propose new ideas for technology, resources, and processes,” she said.

Image: iStock/Cameris

The post If You Want to Be a Nonprofit Controller, Be Prepared to Wear Lots of Hats appeared first on Going Concern.

It was experiences like these that gave Garcia, Cosio, and other accountants a glimpse into the nonprofit world—a world in which they would eventually work in as a controller.

And while their career paths in accounting might be slightly different, controllers at nonprofits are bonded by the same thing: working at an organization that makes a difference in their communities.

“I’m so glad that I found nonprofit work when I did,” said Paul Harrison, CPA, controller of the Dallas Arboretum and Botanical Garden, who started his career as an industry accountant. “I’ve enjoyed giving back to the communities that I’ve worked in, and to see the fruit of my labor on the happy faces of the people who we’ve served.”

“Every project, contract, and transaction is different from the one before it; every member of the staff is motivated, excited, and extremely well-suited for their role; and every day brings new projects and exciting challenges,” added Garcia, who is controller of the Houston Parks Board. “Houston Parks Board is dynamic and creates incredible change for Houston and its residents. It’s very satisfying work.”

I recently interviewed Cosio, who is controller of the Chicago Zoological Society, Garcia, Harrison, and five other controllers about why they decided to pursue a career at a nonprofit organization and what their expectations were for the controllership position. Here’s what they told me:

Ashley Bassim, Denver Museum of Nature & Science

Ashley Bassim considers herself lucky to have scored an entry-level staff accountant job during the same time she had begun her undergraduate program for an accounting degree.

“This was with a small company, and so I was able to learn the full cycle of accounting because I was also lucky enough to have a supervisor who believed in me and wanted to see me grow,” she said. “She gave me a lot of opportunities to work in all areas of the department. I would say that beginning with that job and every position since, I’ve sought out roles that would allow me to grow my skill set and especially my decision-making and judgment abilities.”

One of the roles she sought out was at the Denver Museum of Nature & Science, not just because it was a nonprofit, but also because of the organization itself.

“The position I was at prior to the museum was for a large corporation that I felt very disconnected from. I missed the small-to-midsize scale of other positions I had held, so I began networking,” Bassim recalled. “When the museum opportunity came up, it was a good match for my experience and where I was in my career. After several meetings with my future colleagues, I felt very connected to the museum’s mission and I knew the scope of the work would be fascinating and a great challenge.”

She joined the Denver Museum of Nature & Science in 2012 as assistant controller and was promoted to controller five years later. Her previous experience as controller of a Denver-based transportation and logistics company prepped her for her current role, Bassim said, “by exposing me to all sorts of financial conditions, weird industry-specific issues, and various personnel matters.”

“Basically, nothing scares me,” she added. “As a controller, be prepared to expect the unexpected. It’s definitely not all general ledger codes and spreadsheets.”

Raquel Cosio, CPA, Chicago Zoological Society

When Raquel Cosio was in college, it became clear to her that she wanted to start her professional career at a public accounting firm.

“I wanted to have exposure to different industries and experiences in different areas, such as accounting, audit, and taxes,” she said. “Working for a small accounting firm provided this.”

After college, she joined Chicago-based Prado & Renteria CPAs, which claims to be the largest Hispanic-owned CPA firm in the state of Illinois, in 2001. While she enjoyed the 12 years she spent at Prado & Renteria as a public accountant, Cosio didn’t see herself as a partner, so she decided to make a career change.

“That’s when I started looking for a controller position at a nonprofit organization,” she said. “I had experience auditing nonprofits during my years in public accounting, and I really enjoyed working with them because I got to see firsthand how committed and mission-driven their employees were.”

In 2013, Cosio became controller of the Chicago Zoological Society, which operates the Brookfield Zoo in the Chicago suburbs. When she took over the controllership, she expected it to be a smooth transition, given her public accounting experience in the nonprofit industry.

“This has been the case as it relates to the more technical responsibilities of my position. However, being a controller also requires a good understanding of the nonprofit’s operations in order to make everyday decisions for which there’s very little guidance,” Cosio said. “As a public accountant, I was used to looking for answers in guides, manuals, or publications, but in the nonprofit world, there are more judgment calls and figuring things out.”

Shannon Emley, CPA, Second Harvest Food Bank of Middle Tennessee

Like Raquel Cosio, Shannon Emley joined a small accounting firm after he completed undergraduate school. The size of the firm, Jamestown, NY-based Moore & Myott LLP (now known as Saxton, Kocur & Associates LLP), allowed Emley to gain experience in multiple fields—from tax and audit to nonprofit work, he said.

After working for the firm for nearly a year, Emley moved to Washington, DC, to work at nonprofit think tank The Heritage Foundation, starting in accounts payable and working his way into a senior accountant role. He then moved to Nashville, Tenn., where he spent two years as an accounting manager in the music industry before becoming controller with Second Harvest Food Bank of Middle Tennessee in 2017.

“The decision [to join Second Harvest] was made easier by the great reputation Second Harvest has in Middle Tennessee and knowing I could come to work each day and feel like I’m making a difference,” Emley said.

He noted that his previous nonprofit experience helped frame many of his expectations as Second Harvest’s controller.

“Throughout the interview process, I began to feel this position would have significant similarities to my time in DC, and it has in many ways,” Emley said. “Both organizations aren’t small, as far as nonprofits go, so I think that provides for a similar structure in the accounting team and the systems in place.”

One thing Emley didn’t expect was the scope of work performed by the food bank.

“I’ve been blown away by the scale and variety of projects we take on to make sure we get good food to people in need. This certainly helps keep my job as controller interesting, as nearly all of our initiatives have a financial aspect in one way or another,” he said.

Denise Garcia, Houston Parks Board

While a student at the University of Houston, Denise Garcia took a course on nonprofit and governmental accounting as an accounting elective. And needless to say, she really enjoyed that class.

“That type of work and industry really spoke to me, and I decided I would pursue a career in nonprofit,” Garcia recalled.

After graduation, she went to work at Houston-based CPA firm Blazek & Vetterling as a staff auditor, specializing in tax-exempt organizations, government entities, and employee benefit plans. That experience gave Garcia not only a true understanding of internal controls and financial statements, but insight into the nonprofit world in Houston.

After Blazek & Vetterling, Garcia joined the Houston Zoo in 2010 as a senior accountant. During her two-plus years there, she was mentored by the nonprofit organization’s controller and CFO. When a controller opportunity became available at another local nonprofit, her mentor shared the job description with Garcia and encouraged her to apply.

That opportunity was at the Houston Children’s Museum, which Garcia joined in 2012. She said it was a perfect fit.

“The finance director gave me projects that expanded my base of experience, and for the first time, I was fully in charge of an audit, accounting team, and financial statements for internal management and the board of directors,” Garcia said. “We made many improvements, including a change in point-of-sale systems for admission, adding an additional accounting database for a second children’s museum, and changing payroll systems. These experiences helped prepare me for the next step in my career: controller for the Houston Parks Board.”

The controllership of the Houston Parks Board, which Garcia took in 2015, “offered complexity, an entrepreneurial feel, accounting for three sets of books, building an accounting team from scratch, and a knowledgeable mentor, which all translated, to me, as exciting accounting work,” she said.

Paul Harrison, CPA, Dallas Arboretum and Botanical Garden

As a young man growing up in the Dallas area in the late 1980s, Paul Harrison took a job at the local electric company. After work was done for the day, he would take college classes at night to improve his career path.

“After receiving my bachelor of business administration degree in accounting, I was moved to corporate accounting,” Harrison recalled. “After four years in corporate accounting, the utility offered an early retirement program but made it available to everyone. It was too good of an offer to pass up, so I took it.”

Harrison decided he wanted to pursue a job in accounting that would allow him to serve his community, so in 1992, he became controller of a Dallas-area mental health organization.

“I loved the general idea of a nonprofit mission. Those mission statements spell out how that nonprofit will help the community,” he said. “Giving back to the community was a job benefit that I had never realized would be so fulfilling before my move into the nonprofit realm.”

Twenty-five years later, Harrison continues to serve his community in an accounting capacity. He previously held the controllership at nonprofits Dallas Museum of Art and Dallas Opera, and has been controller of the Dallas Arboretum and Botanical Garden since 2013.

“Each organization is different, sometimes in many ways, but we’re all governed on the financial side by GAAP,” Harrison said. “Besides the technical aspect of knowing what the governing bodies expect of nonprofits, my extensive experience with nonprofit accounting software [Financial Edge and Raiser’s Edge] has been extremely beneficial for me to be successful in my current position.”

Carla McDonald, Weaver Industries

After college, Carla McDonald worked at public companies within the retail and manufacturing sectors in the Cleveland area. During that time, she progressed from staff accountant to senior accountant and was looking to further her career in a management-type role, such as accounting manager, assistant controller, or controller.

“However, before I was able to progress with the existing manufacturing company I was with in Cleveland, they started to significantly downsize their corporate office and my position was eliminated,” she said.

As she began the process of interviewing and applying for positions in Northeast Ohio, she determined how her skill set and accounting background could be used in other industries, not just manufacturing. That led her to apply for the controller position at Akron, Ohio-based Weaver Industries, a nonprofit that provides vocational training and employment opportunities to individuals with disabilities.

“There were a couple things that made it an easy decision for me,” McDonald said. “I had taken government and nonprofit accounting courses in college, I had interned at the Smithsonian Institution, and I’m an active volunteer—and a current treasurer—at a few different local nonprofits in my community. Additionally, I had a 3-year-old nephew who was born with Down syndrome, and I began to think about how his future would be impacted by the work performed by an organization such as Weaver Industries, and how I could be a part of those efforts.”

McDonald, who joined Weaver Industries in 2016, said her expectations as controller were limited because it was her first foray into a professional nonprofit setting.

“I knew I would have to manage receivables and payables, process the month-end close, and report financial results to the board of directors. All of those expectations have become reality—and actually have taken more of a minor role in my day-to-day job,” she said.

“Within one month of starting, the organization went through a compliance review, and based on the results of that review, it was clear that the organization needed structure and consistency in their compliance program. I quickly went into internal audit mode and helped the organization make the necessary corrections and established a compliance program that would benefit all levels of the organization. From that point on, I was named the corporate compliance officer of the organization and would report these activities to the board of directors.”

Brian Neville, CPA, PATH

Brian Neville began his accounting career in 1996 at Clark Nuber, a CPA firm in Bellevue, Wash., which specializes in medium-to-large organizations that aren’t publicly traded.

“This niche led to an emphasis on working with the region’s larger nonprofits,” Neville recalled. “As part of my practice, I worked on some of these clients. Toward the end of my time at Clark Nuber, PATH became a client of the firm, and while never a client of mine, I became exposed to the amazing work PATH does in the world.”

After leaving public accounting in 2005, Neville wanted to work for larger, publicly traded companies to broaden his accounting experience. He landed at Washington Mutual, which eventually became part of JPMorgan Chase, in an internal controls role. And then, after spending two “intense” years as corporate controller of HomeStreet Bank, Neville was presented with the role of controller, director of global accounting at Seattle-based PATH, a nonprofit global health organization, and it felt like a perfect fit.

“I had never led the whole end-to-end controllership function,” he said. “While banking and award-funded nonprofits are certainly different industries, the annual budget/revenue size was a better indicator of commonalities that exist in the controllership function—something I was definitely able to leverage.

“The job was large enough to have interesting professional challenges,” Neville added. “I’d be able to travel for work infrequently but substantively to some regions of the globe I hadn’t been to before, and I knew of and deeply respected PATH’s mission from my time at Clark Nuber. It seemed like the perfect confluence of factors at this stage of my career. After three years, I can say with 100% confidence that I chose wisely.”

Carolann Parker, CPA, The Morton Arboretum

Carolann Parker had always wanted to be in a position that oversees the entire accounting cycle of an organization from cradle to grave, including the budget process, accurate and efficient accounting and related processes, financial reporting, and ensuring appropriate internal controls are in place.

She started her career in the regulated telecommunications industry working in a variety of roles in the disbursements organization, with the goal of transitioning to the controller’s department.

“This goal was disrupted when there was a Department of Justice-ordered breakup of the AT&T system, resulting in a reorganization which took me into internal auditing and subsequently into network budgeting for the Midwest area,” Parker said.

After starting a family, she scaled back her load and worked for a small accounting firm in the Chicago suburbs preparing tax returns. This eventually led to Parker becoming the finance director of a small, local nonprofit organization.

“This was my introduction to the nonprofit arena, and there I was responsible for the full cycle accounting operations,” she said. “When I was ready to start a full-time position, I sought out The Morton Arboretum as a larger organization that I believed would allow for additional growth opportunities.”

Parker joined The Morton Arboretum in Lisle, Ill. in 2006 as accounting manager and added the title of financial controller in late 2017. The position, she said, “utilizes all of my prior accounting experiences—from overseeing the finances of a smaller nonprofit to my experience in accounting classifications, internal controls, and budgeting within the telecommunications arena.”

“I enjoy bringing all of the accounting pieces together in a nonprofit arena that benefits the community at large,” she added.

Stay tuned for more from these controllers in a future article where they offer advice to accounting and finance professionals considering a controllership role at a nonprofit organization.

Image: iStock/Dmitri Guzhanin

The post Making an Impact in Their Communities Drove These Accountants to Become Nonprofit Controllers appeared first on Going Concern.

“I remember telling Mike, ‘Let me know when you start something, and I’ll be there,’” Sluty recalled.

And Sluty was right.

After they graduated from Syracuse in 2006, Whitmire went home to Los Angeles and joined the financial audit group at Ernst & Young, while Sluty went to work in audit for Rothstein Kass in New Jersey. But it wasn’t until 2012, while Whitmire was working as a senior accountant for Los Angeles software company Cornerstone OnDemand and saw firsthand the problems with the close management process, that the idea for FloQast was born.

“It took over two years of living the problem before I realized that this was an issue and thought, ‘Is there not a better way to do this?’” Whitmire said.

Whitmire left Cornerstone at the end of 2012 to get the ball rolling on a SaaS company that would eventually become FloQast. He pitched his idea to an investment fund and startup accelerator called Amplify and found a business co-founder in former MySpace software engineer Cullen Zandstra (now FloQast’s chief technology officer). They built the product, landed their first customer, and joined the Amplify accelerator program in July 2013.

That year, Sluty had transferred from Rothstein Kass’s New Jersey headquarters to an office in Los Angeles and was living with Whitmire.

“Mike and Cullen were pretty much talking to every accountant they knew just to validate the idea. So that’s when I got introduced to everything,” said Sluty, who is the chief operating officer at FloQast. “When they joined Amplify, I quit my job in audit and got on board.”

Nearly five years later, FloQast close management software is being used by hundreds of accounting and finance teams, including those at GrubHub, Twilio, Ancestry.com, Zillow, Nutanix, and the Golden State Warriors.

Download this whitepaper from FloQast to understand how close management software can improve your team’s efficiency while reducing the inevitable stress associated with the close.

During a recent interview with Whitmire and Sluty, we talked about how the seeds for FloQast were sown, sharing the market with other close management software providers, and why accountants make great entrepreneurs, among other things. Some of their responses have been edited for length and clarity:

Going Concern: Was there a single event or experience that drove you to want to fix the close management process?

Michael Whitmire: It was a culmination of a lot of things. I’ve always been pretty entrepreneurial and knew I wanted to start a company, but I didn’t expect it to be in the accounting space.

When I was at Cornerstone, they had acquired a really small company in New Zealand and they gave me a project to audit the entire company. When I went back in time to do the audit, they were such a young company that I was auditing their first transaction. From there, as you’re auditing and you’re putting their financials together, you get to see almost every transaction that’s occurring. So I got a really good sense of how the business grew: when they hired, how they spent their money, how they operated things, like when they closed their first customer and how much they were paid. I got all of this insight into how you go from zero to $3 million of recurring revenue.

At the end of the project, I was transitioning the work over for the close to some other team members and they had all these questions for me, like, “How’d you do this? How’d you do that? Where’d you save this?” And I said I did it the exact same way we’d do Cornerstone’s close. Everything is saved under the same methodology, and I used similar reconciliation templates. I didn’t understand why they couldn’t figure it out. I just assumed they understood how I operated. That’s when it dawned on me that it was because there wasn’t a good piece of software to help them understand how I closed the books and how things were organized. I realized there was a problem around the month-end close and that people needed to be able to collaborate better and standardize things. I then had the irrational confidence to jump ship and try to make this work.

GC: Was it just the knowledge you gained from working at Cornerstone that helped you know what components needed to be included in the FloQast product?

Whitmire: On a foundational level, it’s very much inspired by audit software. Instead of having work papers, we have reconciliations. And then the way we get organized is via a standardized folder structure. I knew the baseline for the product was that we needed to give companies a good way to document their checklist, to organize that checklist and do it in line with all of their documentation, meaning their reconciliations and underlying documents, and then give them a way to collaborate via review notes and other communication tools. That was the foundation for me; that’s what we should build and take to market. Then we started to add other things in later as we progressed as a company and got feedback from the market. So it started very simple, and from there we let companies tell us what to do. Fortunately, a lot of it lined up with what we were thinking internally anyway, so it was good validation, and we built the product on that feedback.

GC: When you were starting FloQast, what was it about the close management solutions that were on the market at that time that left you unsatisfied or didn’t meet your needs? Why did you think you could improve on what was being offered?

Whitmire: I couldn’t find a competitor for a long period of time. So I’m working on this thing probably for three or four months, and I’ve Googled everything in my accounting brain that made sense to try to find some solution that’s doing this, but I couldn’t come across anything. I was speaking with someone from Cornerstone and they said, “Oh, so this is like BlackLine?” And I said, “What’s BlackLine?” So I started to look into it. On the one hand, I was concerned there was a competitor there; on the other hand, when you think about it, having a competitor there in a sense validates the market. But the fact that I’m an accountant who should be using a solution like that and I’ve never heard of these people, despite aggressively digging through Google to try and find something, suggests there’s a big opportunity here.

From an innovation and tech perspective, it’s always good to have competition, but quite frankly, that’s not our driving factor for innovating. We’re not trying to match what they’re doing; we’re not trying to copy their solutions. We have our own motivation and drive to be innovative.

It also has helped us from an investment perspective. When BlackLine went public, and they showed that there’s an opportunity to build a multimillion-dollar company in this space, it became a very, very good thing for us from a fundraising standpoint.

Chris Sluty: We compete in the same space, but we have different customers, and different customers have different needs. We’re focused more on the mid-market and clients with the real problem of getting organized, collaborating as a team, and getting something in place so they’re ready to grow, and less focused on dealing with millions of transactions in these high-volume, enterprise businesses. So we really need to focus on the mid-market where our product aligns the best with our customers.

GC: As first-time entrepreneurs, what expectations did you have when you launched FloQast? Have some, many, or all of those expectations become reality?

Whitmire: As far as I’m concerned, we are so far living up to the expectations I’ve had to date, but we have a lot of work to do to meet my further expectations and ambitions. I want to build a public company—I saw it happen at Cornerstone and thought we could do it, too. That’s my goal, and every step along the way that we’ve seen is something I visualized back in the day, and we’re executing on it.

Sluty: When we first started FloQast, I worked more on the customer side of things. We started getting these big companies, these brand names, wanting to watch demos and see the product, and them sending me what their process was and how it would fit into FloQast. It really opened my mind about how pervasive the problem was and how old school everybody closing the books was, not just your smaller companies here in the San Fernando Valley. So when we signed up Ancestry.com, that was when it hit me, like, wow, this could really take off.

GC: What makes accountants perfect for starting a business? What are the advantages and disadvantages accountants have over a traditional tech entrepreneur, like someone with an engineering background or similar discipline?

Whitmire: I got a lot of pushback from the VC [venture capital] community. Their general take is that a founder is either going to be a sales-type person or a technical person. So me being an accountant was viewed as a positive to the extent that it was going to help the product, but everything other than that—fundraising, sales, go to market—was viewed as a negative. I wholeheartedly disagree with that. The reality is that as an auditor and an accountant, by virtue of understanding the numbers and all the transactions and everything that’s going on, we have a very good sense of how businesses are run, how they operate, and you’re going to take some of that information and plug it into your own company. You’ve got to have a very analytical mindset so you’re much better suited for things like financial planning and forecasting, and understanding your cash and your numbers, which sets you up for being successful.

A lot of SaaS startups just look at top-line growth numbers; we’re much more pragmatic as accountants. We look a lot at efficiency numbers and unit economics, as well as top-line growth information, so we’re a lot more tuned in to how the business is operating, which means we’re able to grow more efficiently, we’re able to do it with less fundraising, and do it in more of an intelligent manner. All you need to be able to do is then bring some sales skills into the fold and you’ll be a great entrepreneur.

GC: As accountants, how do you complement each other as the founders of a business? Why do you make a good team?

Whitmire: We’re a perfect contrast. I’m a type-A nut job who wants everything to be done yesterday, and Chris is the nice influence that keeps us on the right track and helps us with the good, effective strategic decision-making. My third co-founder, Cullen, fits more into my camp. We’re both very fiery personalities, we want stuff to get done quickly, and we want it done the right way, and then Chris sits in the middle as a great mediator. We’re very collaborative in our decision-making. There’s never really a decision that’s just made by one of us.

Sluty: We work really well. Without Mike pushing the vision and driving us to things I never thought we could do, we wouldn’t be here today. I think I can tell Mike when we need to slow it down and refocus a little bit, and he can push me to think bigger than I ever thought we could do. It just comes with a lot of trust. I have no problem telling Mike “no,” and he’ll actually listen to me. And it works both ways. We talk through things, make decisions, and get after it.

GC: Do you think there are currently opportunities for accountants to start businesses that solve other problems experienced by accounting firms or within accounting departments?

Whitmire: I think any accountant is going to be best suited to find a problem within private—moving out of audit and going into the corporate accounting world. I think that’s where you’ll be able to identify issues a little closer. For example, if I hadn’t left Ernst & Young, I never would’ve thought about the close and how big of a problem it is and really understood why it’s a problem. You have to live the pain point to understand it, so that’s why I think going out into private is a great way to do it. And there are a host of problems in private accounting. Accountants just have to go do it and seize the opportunity to make it happen.

Sluty: Like Mike said, there’s a lot of opportunity out there, especially if you work in a specific vertical. You probably know problems that we have no clue about. So if you know the pain points, there’s always a better way of doing things.

GC: What can we expect from FloQast in 2018?

Whitmire: To continue to deliver products that are 100% focused on making accountants’ lives easier. A big part of our investment this year is going toward product. I’m really excited about the product additions we have, making the current product that we have even better, and experimenting with a few new product lines. We’re in experiment mode, so I don’t want to speak to any specifics, but long story short, it’s going to be a really exciting product year for us.

GC: Is anything going to roll out in the immediate future?

Whitmire: Just today [Feb. 21] we launched Perm Files, a very nitty-gritty, specific thing in accounting. You have to be an accountant to really understand the issues around that: how you organize, maintain, and sign off on the perm documents. But it’s one of those things that makes a ton of sense being inside close management software, and our clients are going to love it.

GC: Is there anything else you both would like to add in closing?

Sluty: The only other thing I wanted to get across is, this is very hard. You’re not going to get a lot of respect from the VC world. You watch movies about startups or watch Silicon Valley and it’s fun and they make it seem like everything is great. But the biggest thing with us is going through every day not getting too high and not getting too low. If you’ve got that kind of work ethic and have a good attitude, you’ll go a long way.

Whitmire: It doesn’t get easier. That’s the amazing part—it gets harder, and just the ups and downs on a daily basis are insane. I’ll go home and my wife will say, “How was your day?” and I’ll say, “Well, this happened to me was horrible, and this happened to me was amazing.” That seems to be a standard day at work.

Understand what FloQast can do for your close in one minute. You can read more about Going Concern’s partnership with FloQast here.

Image: iStock/123ducu

The post FloQast Founders on Competition, Accountants as Entrepreneurs, and How Teamwork Makes the Dream Work appeared first on Going Concern.

If it was the latter, our friends at FloQast are hosting a webinar this coming Tuesday to walk you through how to prepare a formal Business Value Analysis. You will come away with key insights, ROI models and analysis; all the good stuff the top dogs will eat right up. Don’t miss out. Register here.

• Date: Tuesday, February 27, 2018
• Time: 11am PT / 2pm ET
• Cost: Free! (and earn 1 CPE credit)

Cloud accounting is transforming traditional accounting departments. No longer confined to just the general ledger, cloud technologies are emerging for numerous other accounting functions from expense reports, to accruals, to close management, and more.

Join Principal Analyst and CEO Hyoun Park of Amalgam Insights and Blake Oliver of FloQast to learn how to conduct a thorough business value analysis of a cloud accounting application so that you win your CEO’s approval.

We’ll walk through the just-released Amalgam Insights Business Value Analysis of close management software to build the case for the new technology.

From this webinar, you will learn:

• How to determine the collaborative value of new software for your team
• What key insights will help sell the value to the executive team
• How to put together a financial ROI model and analysis that you can use to make the case for new technology for your team

Featured Speakers

• Hyoun Park, Principal Analyst & CEO at Amalgam Insights
• Blake Oliver, Sr. Product Marketing Manager at FloQast

More resources

If you can’t make Tuesday’s webinar, be sure to check out the resources provided by FloQast including:

• Chaos of the Month-End Close: A Survey of Accountants
• Webinar: Master Month-End: Creating a Culture of Continuous Improvement
• Best Practice Excel Reconciliation Templates

Image: iStock/Nongkran_ch

The post Webinar: Selling the ROI of Cloud Accounting Technology appeared first on Going Concern.

Instead of cramming their advice into the article about their transition stories, we decided to make it a stand-alone feature.

So, without further ado, here’s what these 14 controllers would tell a fellow CPA considering following in their footsteps:

Be patient

Once you decide it’s time to leave public accounting, take your time and wait for the right opportunity, said J.C. Gum, CPA, vice president and corporate controller at Omaha, Neb.-based Ag Processing Inc, who is a KPMG alum.

“Throughout my public accounting career, I had many bad days, and I also was presented with some good opportunities to leave, but thankfully they never occurred at the same time. Some would have been good excuses to leave after a bad week,” he said. “Looking back, I’m thankful for the discernment, patience, and perhaps the lucky timing that allowed me to pass on those early opportunities and wait for the best one.”

Will Majic, CPA, CA, controller, corporate finance at Calian Group in Ottawa, Ontario, agrees with Gum, adding that he’s seen several people jump at the first opportunity to leave public accounting.

“The first leap that you take when you leave a firm is an important one because you have so many doors open to you,” said Majic, who spent more than six years with Deloitte. “There are so many employers that love hiring from accounting firms directly, so there’s no need to leap at the first opportunity that comes up as it may not be the right fit for the individual.”

Never make a desperate move

Make sure you’re leaving because it’s the next strategic step in your desired career path, said Drew Hester, CPA, vice president, controllership and global business services at Chicago-based Beam Suntory, who started his career at PwC.

“Public accounting careers are full of moments that can feel a bit overwhelming and chase some people out of the profession, and I’ve encountered many who regret the timing of their departure,” he said. “You get just one jump out of public to industry, and it’s really important to land well.”

As a hiring manager, Lauren Johnson, CPA, senior controller at Portfolio Advisors LLC in Darien, Conn., said she strays away from candidates whose stay in public accounting was brief.

“Staying in public for the standard two years will not serve you well in private industry,” said Johnson, who worked at BDO for nine years. “You need experience managing staff, exposure to different clients, and time to truly see an audit from start to finish before your time in public will become an asset to you while working in private. Unless you work for a company that doesn’t receive an annual audit, you’ll need audit experience in order to know how to manage your external auditors as the client.”

Learn about the company and industry you’re interested in

Think of it like a college assignment, said Tony Combs, CPA, corporate controller at Urban Airship in Portland, Ore., who cut his accounting teeth at CBIZ MHM and PwC.

“Don’t just understand the accounting, but look into the unique issues within the industry, the underlying trends, and the jargon,” he said. “Investing this time will enable you to communicate more effectively and understand your co-workers more clearly.”

Julie Brand, CPA, corporate controller at San Francisco-based Pattern Energy Group, who started her accounting career at Deloitte, recommends learning as much as you can about all aspects of the company beforehand, such as reading financial reports and learning how the various inputs to accounting operate.

“Join a business in an industry that you’re interested in,” she said.

But don’t just focus on one industry

Johnson believes it’s a good idea for candidates to broaden their job search and be open to different industries.

“I think oftentimes when you work in public accounting, you can specialize in an industry—for me it was real estate and hospitality—but when you look to make the jump, you may only focus on that same industry,” she said. “This can sometimes make it difficult to make the transition [from public to industry].”

Use your network

“It’s important to have mentors—both internal and external—who can weigh in and give perspective,” said Brian Harding, CPA, vice president, corporate controller, and principal accounting officer at Wilsonville, Ore.-based FLIR Systems, who started his accounting career at KPMG.

Harding added that your mentors might steer you toward making a career move when it’s less disruptive to the teams you work with.

“As someone who occasionally interviews candidates looking to exit public accounting, it doesn’t bother me—in fact, I appreciate the sentiment—if that candidate tells me their start date is dependent on when they’ll be able to wrap up their current responsibilities with the firm they work for,” Harding said.

In addition, don’t be afraid to have a conversation about outside opportunities with a partner at your firm, recommends Matt Nelson, CPA, vice president, corporate controller at Seattle-based Tableau Software, who worked at PwC for more than eight years.

“Most of the partners are well-networked and can help you figure out whether a role is a good fit,” he said.

People might think that talking about leaving public accounting is a career mistake, as it shows you’re not interested in your current job. But that’s not the case, Majic said.

“All you’re doing is evaluating options,” he added. “Most of the people who leave accounting firms are leaving their first real employer, and they don’t have the experience of what this can mean. People who left, or people who still work at the firm, have seen so many people leave that they can give a good perspective to those considering it.”

Have a long-term plan

Don’t expect to jump right into your dream job after you leave public accounting. Instead, seek opportunities that best qualify you for the position you’d like to have in the long-term, Harding said.

“If you know you want to be a CFO, schedule a meeting with a CFO and ask about their career progression. They probably held several lower-level positions before achieving the CFO title,” he added. “Network along the way, and be open to new opportunities that get you closer to that plan.”

Don’t be afraid to take risks

After spending 10 years at EY in Baltimore, Christopher Sullivan, CPA, left in 2015 to become controller of OpGen, a small biotechnology company. Like most startups, the business had many challenges, Sullivan said, but the growth opportunities and learning experiences he had there proved to be invaluable.

“By joining a smaller organization, I was able to report directly to the CFO, as well as have regular interactions with the CEO, vice presidents, and board of directors,” said Sullivan, who is now corporate controller at Sucampo Pharmaceuticals Inc. in Rockville, Md. “Those experiences enabled me to quickly learn aspects of industry accounting and finance and how all of the various pieces of the organization operated together.”

Know your value

Because the compensation and progression path in public accounting is fairly rigid, it’s easy to lose sight of what high-performing companies are paying, Hester said.

“Knowing what salary you can reasonably expect to pursue is critical to calibrating your personal departure timing and ensuring you don’t accept a suboptimal opportunity,” he added.

Assemble a team of recruiters

Build a network of eight to 10 recruiters, and then pare down the list to four or five you trust, said Fred Butterweck, CPA, corporate controller at New York-based Clickspring Design, who spent six years at PwC.

“This is not an easy exercise, but if you feel like you’re being sent on interviews with companies that don’t match your profile, you should cut that recruiter loose,” he said. “A good recruiter will invest the time to understand what you’re looking for and only try to connect you with opportunities that fit.”

Pay attention to the office atmosphere when you go on interviews

Does the vibe in the office seem alive, with people working collaboratively? Or is it dead silent?

“Just make sure the atmosphere matches your personality and work style,” said Butterweck, who also recommends paying attention to how the person interviewing you speaks to the person at the front desk or others he or she encounters during a tour of the office.

Gum said CPAs should definitely consider the culture of the company when investigating potential job opportunities.

“Job seekers need to realize there are times when a profitable company with opportunities for advancement isn’t always the wise choice, particularly if the culture of the organization doesn’t fit them,” he added.

Get an understanding of your work scope

Opportunities outside of public accounting are diverse, and the scope of work can vary significantly depending on the size and structure of the organization you join, said Lindsay Gorang, CPA, corporate controller at SightLife Surgical in Seattle, who served as a senior auditor at Deloitte & Touche.

“I’ve enjoyed taking on new areas, such as project financing and supporting contract negotiations as an accounting subject matter expert on M&A and key supplier contracts,” she said. “Meanwhile, I’ve learned that other areas, such as payroll and administration, aren’t a good fit for me.”

Leave your firm on good terms

Don’t hang your firm and your colleagues out to dry in the middle of busy season, which could ruin the relationships you built and the friendships you made, said Senad Mustafic, CPA, senior director – corporate controller at Bellevue, Wash.-based Smartsheet, who worked at Deloitte for nearly six years.

“In public accounting, you’re surrounded by people who can support you on a daily basis because they all know accounting. In industry, that network is smaller,” he said. “Being able to occasionally connect with an old friend and discuss an accounting challenge is extremely valuable.”

Be open to technical and operational accounting roles

Mustafic said a good controller should understand both the technical and the operational sides of accounting, and hire people who are strong in each.

“People who come out of public accounting tend to be technically strong, and public accounting prepared them for that, but lack operational experience, which can best be gained through various operational roles,” he said.

Mitra Rezvan, CPA, vice president and corporate controller at San Francisco-based PagerDuty, who started her career at KPMG, agrees with Mustafic, adding that it’s important that your manager at the company you decide to move to is willing to help mentor you in operational accounting, as well as provides you with support and training to learn the business, and gives you a chance to try new things.

Build new relationships, keep the old ones

Once you join a new organization, spend time getting to know people outside of the accounting and finance department, Combs said, and don’t be afraid to contribute in cross-functional teams.

“Make it a point to identify key people in different departments, introduce yourself, and ask questions,” he added.

In addition, Sullivan recommends maintaining your public accounting relationships after you leave. He said he attends EY’s annual alumni event, as well as other networking opportunities, such as happy hours, meeting former colleagues for lunch, and golf outings.

“My reputation with EY was important during the recruiting and hiring process as the controller of OpGen and Sucampo, and I believe that my EY network will be critical in identifying the next opportunity along my career path,” Sullivan said.

Change is good, so embrace it

You never know where new opportunities will lead you, said Paul Starrantino, CPA, corporate controller at Sparks, Nev.-based Sierra Nevada Corporation, who spent 14 years at PwC.

“You will face new challenges that will broaden your experience and make you more valuable professionally,” he added.

Image: iStock/savoia

The post Controllers Offer Tips on How to Look Before You Leap From Public Accounting to Industry appeared first on Going Concern.

I was introduced to Butterweck, corporate controller of New York-based Clickspring Design, who worked for six years at PwC, via email as a potential source for the industry articles I’d be writing for Going Concern. During our email conversation, he wrote, “Not sure if you already covered the topic, but the transition from public accounting to industry has always interested me.” I read that and thought, “That’s a great idea. Why didn’t I think of that?”

I then pitched Butterweck’s idea to Caleb, who said, “That’s a great idea. Why didn’t I think of that?”

So, I spoke to Butterweck and 13 other corporate controllers about their transition from public accounting to industry, including the biggest adjustment they had to make or challenge they had to face. In addition, I asked them whether they used their time in public accounting as a steppingstone to a career in industry, why they left public accounting, and what they took away from public accounting that has helped them most as controller.

The 13 other controllers I spoke to, and the public accounting firms they worked for (in parenthesis), were:

• Julie Brand, CPA, corporate controller, Pattern Energy Group, San Francisco (Deloitte)
• Tony Combs, CPA, corporate controller, Urban Airship, Portland, Ore. (CBIZ MHM, PwC)
• Lindsay Gorang, CPA, corporate controller, SightLife Surgical, Seattle (Deloitte)
• J.C. Gum, CPA, vice president and corporate controller, Ag Processing Inc, Omaha, Neb. (KPMG)
• Brian Harding, CPA, vice president, corporate controller, and principal accounting officer, FLIR Systems, Wilsonville, Ore. (KPMG)
• Drew Hester, CPA, vice president, controllership and global business services, Beam Suntory, Chicago (PwC)
• Lauren Johnson, CPA, senior controller, Portfolio Advisors LLC, Darien, Conn. (BDO USA)
• Will Majic, CPA, CA, controller, corporate finance, Calian Group, Ottawa, Ontario (Deloitte)
• Senad Mustafic, CPA, senior director – corporate controller, Smartsheet, Bellevue, Wash. (Deloitte)
• Matt Nelson, CPA, vice president and corporate controller, Tableau Software, Seattle (PwC)
• Mitra Rezvan, CPA, vice president and corporate controller, PagerDuty, San Francisco (KPMG)
• Paul Starrantino, CPA, corporate controller, Sierra Nevada Corp., Sparks, Nev. (PwC)
• Christopher Sullivan, CPA, corporate controller, Sucampo Pharmaceuticals Inc., Rockville, Md. (EY)

What I learned is that, for the most part, controllers have fond memories of their time in public accounting, and some envisioned they’d spend their entire careers there. But for one reason or another—whether it was not wanting to be a partner, pursuing a new challenge, less travel, or just losing passion for it—the controllers decided to make the jump to industry.

Here’s a sampling of the answers they provided me. Some of their responses have been edited for length and clarity:

Going Concern: Did you envision using your time in public accounting as a steppingstone to a career in industry accounting? Or did you have other plans?

Fred Butterweck: At the time I received my offer [in November 1999, during his senior year of college], I figured I would be at PwC my entire career. About four or five years into my time at PwC, I started to assume the role of acting manager on some of my engagements. It was at that time I began to realize being an auditor wasn’t what I wanted to do for the rest of my career.

But I wouldn’t exactly use the term “steppingstone” because, to me, that infers a one-way relationship where you take what you want and move on. If done correctly, the public experience should be more symbiotic. In other words, the firm is going to work you hard, but in exchange, you gain valuable experience and come out stronger and tougher for your efforts.

Tony Combs: When I started my career at CBIZ MHM, I seriously considered a long-term career in public accounting. At a mid-tier firm, you get to work on a wide variety of clients, and it was fun seeing and learning a lot of different things. I thought going into industry would be boring at the time.

A friend of mine helped recruit me over to PwC, and I was curious if the Big 4 was any different from a mid-tier firm. At PwC, I had the opportunity to work on a Fortune 500 company [client], which I felt gave me a real 360-degree public accounting career. I had a young family at the time and eventually decided that I wanted to move out of public and into industry. My experience at PwC gave me a nice background to exit into another Fortune 500 company to start my career in industry.

Will Majic: When I began my career, it was a requirement to obtain your professional designation [CPA, CA], which required three years of public accounting working experience. For the first few years, all I had exposure to was my colleagues receiving their professional designation and immediately looking at employment outside the firm. That’s what I thought I wanted during that time as well, because it’s what I was exposed to.

But the more I worked at Deloitte, the more I enjoyed my experience and the more the idea of staying in public accounting appealed to me. I was lucky to have interesting clients and good relationships with the partners I worked for. It wasn’t until I heard of the right opportunity that I seriously considered leaving.

Matt Nelson: My father has been a business owner for 40 years. Growing up, he turned me onto the idea of working for myself one day. So, I always knew I wanted to find a role where I could help contribute to running a company. That was motivation for me while I was working at PwC, and I took cues from the partners in our office. They helped shape me as a professional and prepared me for the role I have taken on at Tableau.

Mitra Rezvan: Earlier in my career at KPMG, I planned to eventually become a partner at the firm. But as I worked with different audit clients, I became more interested in being on the corporate side, running the business and implementing processes, systems, and controls. Above all, I wanted to learn how to set up and run a business, and how larger organizations worked. As an auditor, I felt that I could provide valuable feedback, but I never had the chance to implement that feedback and see the ultimate results.

GC: When did you know it was time to leave public accounting and take a new path for your accounting career?

Julie Brand: What prompted me to leave public accounting was a great career opportunity on a client that I had provided services to. I was also interested in a reduced travel schedule that public accounting could not otherwise ensure.

Brian Harding: While at KPMG, I’d always assumed I’d pursue a partner opportunity. When I returned to KPMG in Portland, Ore. in 2011 after spending over a year at the firm’s European headquarters in London, the recommended path to partner would involve a rotation through the national office. I was asked to consider that path and come back with a “yes” or “no” on our willingness to move to New York in the next year. After much deliberation and stressful discussions, my wife and I decided we’d be open to the New York rotation. But a little while after communicating that willingness, the landscape had shifted and I learned that the partner promotion opportunity was no longer dependent on the transfer through the national office. After wrestling with this decision and kind of putting life on hold for the next move, it was somewhat disappointing to have the rotation off the table. It also introduced another layer of uncertainty in the timing for the partner opportunity.

Shortly thereafter, I was offered the opportunity to join FLIR. The position checked many boxes for me as an opportunity for professional development with a market-leading, innovative, and growing technology company.

Drew Hester: I was missing out on the experience of building something really lasting. Teams assemble, disassemble, and reassemble very quickly in public accounting, and the audit product itself is so intangible. It can be difficult to sustain a sense of having accomplished something that is more than fleeting. It’s also been really enjoyable to have great spirits brands to talk about at parties when people ask me about my job rather than watching smiles slowly fade and eyes glaze over as I explain that I audit multinationals.

Paul Starrantino: I left public accounting in 2010 during the downturn in the economy after working at PwC for 14 years, the last four as a senior manager. I no longer had the same passion [for] the profession that I had earlier in my career and felt it was time to seek opportunities in industry that would further broaden my professional experience.

Christopher Sullivan: During my time at EY, I felt challenged with new career experiences; however, I felt the experiences began to plateau once I was promoted to senior manager. Therefore, I felt it was time to evaluate what my long-term professional goals were. It came down to whether I wanted to commit to attempting the partner path or jump over to the world of industry accounting. Ultimately, I made the decision to move to industry because becoming a CFO one day seemed more exciting to me than the thought of becoming partner.

GC: What was your transition like from public accounting to industry? What was the biggest adjustment you had to make or challenge you had to overcome?

Julie Brand: The most impactful part of the transition was not working under a level of materiality. Public accountants perform procedures in conjunction with evaluated risk profiles and a defined client materiality scope, which is not the case in industry accounting. Industry accountants must perform their procedures at lower levels of materiality, if defined at all.

My biggest challenge was to effectively integrate the strategy of the business within the constraints of accounting. In other words, the “big picture concept”—there is more to the business decisions of the company that reside outside of accounting, such as operations, legal support, and IT.

Lindsay Gorang: I had two main concerns with leaving Deloitte and was pleasantly surprised in both cases. First, I thought I would miss the variety of working with so many different team members. I moved on from Deloitte to a small company with only 40 employees and feared I was significantly slimming my work network. What I failed to consider was how many outside parties I would regularly collaborate with: joint venture partners, lenders, key suppliers, attorneys, consultants, and affiliate companies.

Second, I thought I would miss working with the caliber of talent I worked with at Deloitte, but I was delighted to discover that my new colleagues were equally bright and motivated, and from a far broader array of fields. I love teaming with cross-functional leaders; they help me learn about so many areas beyond accounting-specific matters.

J.C. Gum: In public accounting, if I came across an accounting issue with which I had no previous experience, I could walk down the hall and usually find a couple of others who had. They could provide quick references, helpful leads, and generally get me started on researching the issue. In industry accounting, I found myself being the resource of last resort. I really missed having that interaction with others, bantering concepts and pitfalls on the most complex accounting issues.

Brian Harding: One of the biggest challenges for me was stepping into a new position where I was expected to be a leader in the organization, but I initially had no direct staff members to supervise. Coming from KPMG, where we had droves of managers, seniors, staff, and interns to support each engagement, there was a challenging transition into a new reality that, while I’d regularly report and present to the board and executive leadership, I’d also be the one to roll up my sleeves and do much of the heavy lifting to complete a project.

Lauren Johnson: The most difficult challenge for me, in the beginning, was dealing with the pace of activity that exists in private industry. There is this sort of urban legend that those in public accounting talk about which is that private sector is slower-paced than public. I can say that it’s absolutely not true; private is not slower-paced than public, and that’s not a bad thing.

Senad Mustafic: I like diversity—not only in terms of race, ethnicity, or gender, but also in terms of educational backgrounds, ways of thinking, and approaching problem-solving. In industry, it’s been refreshing to work with people from different professional disciplines. When it comes to diversity, the public accounting environment is monotonous—people have the same educational background, a lot of them went to the exact same college, and their career goals are similar.

The real challenge on the industry side, in my opinion, is you fully own the numbers. You see exactly where they come from, how they’re generated, and you’re fully responsible for their accuracy and completeness. I don’t think I appreciated the full science behind that process while I was in public accounting.

Matt Nelson: The biggest adjustment has been a greater appreciation for the operational side of the business, but it’s also been the most rewarding. In public accounting, there are rules to follow for almost everything. If there’s a question, there’s probably a guide where you can look up the answer. In industry, you have to figure it out. You make hard decisions every day.

I’ve also learned how to be a better communicator. In public accounting, you generally work closely with other finance and accounting professionals who understand what you do. In industry, many of the people you interact with each day think all accountants are tax professionals, and April 15 is the busiest day of the year.

Mitra Rezvan: Perhaps the hardest part of the transition was learning the hands-on operational accounting. It’s one thing to audit and provide technical guidance, but it’s another thing to build a process, know what reports you need, and work with technical teams to build systems for running the business efficiently.

Paul Starrantino: It’s a different experience to sit on the other side of the desk and close the period, prepare financial statements, perform acquisition due diligence, forecast, or plan the year. Accounting or controllership touches all aspects of an organization. As a result, some of the challenges stem from other departments approaching matters from a different lens and the need to balance an approach within a GAAP environment without sounding like an accountant but rather a partner in a mutually beneficial situation. However, I believe the biggest challenge is change management—large organization change—and the ability to partner, persuade, and obtain buy-in with others.

Christopher Sullivan: The transition was a very positive experience. It was fun and challenging to figure out how the sausage gets made, beginning with booking transactions in the general ledger all the way through to the end result of financial reporting and improving that process. The technical accounting foundation that I gained while at EY has made me comfortable with SEC reporting and the technical accounting knowledge and research skills needed in my role as controller.

GC: What’s one thing you’ve taken from your experience working in public accounting that has helped you the most in your job as a controller?

Fred Butterweck: As an auditor, you have to be able to quickly sort through a lot of information and key in on what’s important in short order. I feel this has helped me become a quick learner and hone my ability to identify key business issues and risks and stay focused on what’s important.

Tony Combs: The work ethic you get in public accounting. I had a lot of confidence in my capabilities coming out of public; I felt I could take on any type of project.

Lindsay Gorang: Managing teams effectively, by setting a high bar and providing frequent feedback to help my team achieve lofty goals.

J.C. Gum: KPMG taught me to be an owner. From my first audit when I was assigned cutoff at my client, ownership was critical to my success in public accounting. I quickly learned no one else is assigned to my areas, and the more I owned it, the more responsibility I was given. Similarly, industry accounting requires you to fully own all aspects of your job.

Drew Hester: The sheer variety of companies, clients, partners, staff, technical accounting issues, tough deadlines, and challenges I encountered. While navigating all of that, there is an inherent breadth of experience, required adaptability, and development of a sense that you can find a successful outcome in any situation that quietly accumulates. It makes for a very solid foundation when dealing with the more focused challenges that working for a single enterprise presents.

Lauren Johnson: Public accounting teaches you the “why” behind the process and the numbers, while private industry teaches you the “how.” Understanding the why has helped me tremendously when answering technical questions, problem-solving, and implementing process improvement.

Will Majic: There are tight deadlines and numerous demands at accounting firms that cause you to make good use of your time and work a few extra hours here and there at night or on weekends. That has taught me to be effective with my time during the day and has also given me an appreciation for putting in extra hours when required.

Senad Mustafic: I learned a lot about people management at Deloitte. Working on different audit engagements, one gets exposed to different management styles. I remember one year, as an audit senior, I reported simultaneously to six audit managers. Seeing their different styles helped me understand the style I wanted to have for myself and the style I wanted to avoid.

Stay tuned for more from these controllers in a future article where they offer advice to CPAs about making the jump from public accounting to industry.

Image: iStock/oculo

The post Controllers Talk Switching Gears From Public Accounting to Industry appeared first on Going Concern.

So if you’re unable to pull yourself away from client service for 10 goddamn minutes to comb through the picked over greeting cards left at Walgreens, do yourself a favor and at least do something nice for a hapless co-worker who can’t get their act together this busy season.

You know the type I’m talking about — the person who’s always late to meetings, never prepared, keeps a nightmare of a desk, and has 11,000+ unread emails on their smartphone. This person could use an act of kindness to help them bring a bit of order to their lives, and lucky for you I have the perfect idea. Okay, it’s an idea. The idea is a notebook. Okay, it’s not a great idea. Still! It’s something and you should try to do something nice for someone else for once in your life.

The Modern Ledger Notebook is a Kickstarter campaign¹ started by Mike Linn, a 13-year veteran of public accounting, and he didn’t just slap this thing together:

I have worked in public accounting for 13 years and each year I look for ways to make the busy season more efficient. I decided that a notebook would help me organize everything I needed to know and keep track of it all in one place. I have been working with over a dozen colleagues to design and test all the different layouts that will be the most helpful.

I have used apps and spreadsheets to track things in the past, but there is something to be said for getting things down on paper. Many experts agree that the act of writing helps to remember them later and avoid open loop thought patterns. It is also nice to have a notebook with face-to-face meetings when a laptop may prove to be a distraction.

“The reason I am using this crowdfunding site is the simple fact that I want to make something accountants truly want,” he writes, and it’s good to know his heart’s in the right place. (A good number of you, I think, would take the money and run only to find yourselves featured on another website.)

The MLN is organized into seven sections for meetings, to-do lists, schedules, a time tracker, ratios, formulas, and more. Here’s the MLN in action:

You will not be able to resist doodling elaborate entity structures in this thing.

Not enough? How about EXCEL KEY SHORTCUTS?

If that’s not worth your pledge, I don’t know what is.

But, again, you should do this for someone who needs the help. Or cheering up. Hey, maybe that someone is you! If so, then TREAT YO SELF to a Modern Ledger Notebook if no one else will. You may still die alone, but at least you’ll get some work done.

[Kickstarter]

¹ We should probably mention that this thing is all or nothing and even if it’s funded, the notebooks won’t ship until after busy season, so you really can’t do anything to help anyone right now. But come on, it’s the thought that counts.

Top image: iStock/gemenacom

The post This Valentine’s Day, Get Something For That Lovable Yet Hopelessly Disorganized Accountant in Your Life appeared first on Going Concern.

In April of last year, he became corporate controller of UniFirst Corp., a uniform rental service company based in Wilmington, Mass. And even though Bello was familiar with a majority of the duties he would be required to do as controller, he wasn’t too familiar with the uniform rental service industry—but it was a risk he was willing to take. Fortunately, the job transition went as smooth as he could have hoped for, and the experience, he said, has been quite rewarding—both personally and professionally.

“Although employment transitions are never easy, the culture at UniFirst allowed me to quickly learn and understand my role—and to become part of the family,” Bello said. “Not only is this inclusive family culture found in the corporate finance area, but it is also alive and well throughout the entire company.”

From the day he first arrived at UniFirst, senior management and colleagues from different departments took the time to meet with Bello to explain and discuss the uniform rental service industry, their roles within the organization, how their duties tie into his role, and their expectations for him and his team, Bello said.

He also gained considerable knowledge of the business and the industry by spending time reading and studying financial reports and internal documentation in various areas, and visiting several of UniFirst’s field operations.

“This involved touring various servicing plant operations in our core laundry business, including one from a recent competitive acquisition, as well as our centralized distribution center in Kentucky—with the ultimate goal of discovering how all the parts of the business are tied into the overall customer experience,” Bello said.

“In addition to getting out into the field, which is something that senior management encourages every employee to do, I also attended annual budget meetings for various business units to learn about the different elements our operations need to consider to successfully run the business,” he continued.

More similarities than differences

Controllers shouldn’t let fear of entering a new industry keep them from progressing in their careers and expanding their knowledge base and depth, said Jason Page, CPA, corporate controller of Provo, Utah-based Chatbooks, a subscription-based service that automatically turns digital photos into photo books.

“You know the underlying principles, and you know how to do the research and find answers. Have confidence in yourself and enjoy the ride,” said Page, who joined Chatbooks last June after serving as controller of Backcountry.com, an online retailer that specializes in outdoor recreation gear and clothing.

Page believes there are more commonalities in the controllership across industries than there are differences. For example, the same technical accounting policies and procedures that he helped establish at Backcountry also needed to be developed at Chatbooks, such as revenue recognition, capitalization of internally developed software, leases and leasehold improvements, and stock-based compensation.

“Other similarities include common business performance metrics, such as traffic and conversion, customer cost and lifetime value, and sharing similar marketing channels, such as paid search and social, as well as a strong focus on customer experience and customer service,” he added.

Jennifer Vossler, CPA, vice president and corporate controller for Paychex, a Rochester, N.Y.-based payroll, human resources, and benefits services provider, said understanding Sarbanes-Oxley requirements, SEC reporting and disclosure rules, and technical accounting complexities are all transferable between industries.

“However, there is a learning curve involved in identifying and understanding the risk areas of a new industry or business and the complexities in the business, which drive financial results and reporting requirements,” said Vossler, a former vice president and corporate controller at eye-care company Bausch & Lomb. “In my case, Bausch & Lomb was a complex global company. Paychex is primarily U.S.-based, which does reduce risk and complexity from a controllership perspective.”

While her duties as Paychex’s controller are different than her previous responsibilities at Bausch & Lomb, those differences are driven more by the structure of the companies and finance organizations than the industry the companies are in, Vossler said.

“I have responsibility for financial planning and analysis, corporate tax, and certain treasury functions at Paychex. In my prior role, the corporate controller was focused on financial reporting, accounting, and internal controls,” she said. “Paychex has a very centralized finance function. Having all of the above functions reporting into the controller ensures that the organization has a strong understanding of what is happening in the business, which is important in ensuring that the financial statements are accurate and comprehensive, and the internal control environment is strong.”

Transition challenges

Page said the challenges of making the transition as controller of an online retail company to controller of a photo-printing startup derived more from Chatbooks being a young, emerging, high-growth private company compared to Backcountry, which was a much larger, mature company, with well-established processes and controls from having been a subsidiary of a public company.

“It was a challenge to learn and understand different business processes and company-specific nomenclature, and to work with new audit and tax firms,” he said. “We’re still working on establishing some fundamental processes and controls, including upgrading our software and tools.”

Like Bello, Page tapped the experience and expertise of Chatbooks’ executive and finance teams to learn more about the industry and the inner-workings of the business.

“They have been amazing and very helpful in sharing their knowledge base in the industry, walking me through their existing processes, and being patient with me as I learn the industry and nomenclature,” he said. “I’m also lucky to have a strong peer network, which has given me the ability to reach out to those in controller or other accounting roles in our market for knowledge and advice.”

Vossler, too, leaned on her finance team and business partners after she joined Paychex in 2009 to become more familiar with the industry and the services the company provides. She also accompanied sales representatives to understand “how they sold our services to prospects and how they leveraged referral sources.”

“The biggest challenge is just understanding the business—how it is organized, how products and services are sold and delivered, where the biggest risk areas are, and who has the authority to do what,” Vossler said.

Bello’s biggest challenge upon joining UniFirst, he said, was prioritizing his many duties as controller and determining the right documentation that he should focus on first to best understand the company’s business and industry.

“It was vital for me to narrow down all of this information and determine what is most critical for my day-to-day job so I could immediately begin contributing to and making a positive impact with the team,” he said.

More advice from those who’ve done it

So far we’ve learned that controllers shouldn’t be afraid to:

• Take risks and make changes;
• Take time upfront to understand the company’s industry and how it does business; and
• Ask questions and talk to senior management and colleagues on their team and in other departments about the industry, their roles, and how that impacts their job as controller.

Here are a few other tips from Page, Bello, and Vossler to help controllers make a smooth transition from one industry to another:

1. Do your homework and ask questions during the interview process. “I was able to learn a significant amount through the job application and interview process by being inquisitive to the point that I was probably annoying,” Page said. “I learned as much as I could by using the company website and applications, and by reading articles and social media commentary about the company and the industry.”

2. Know what other companies in your industry are reporting. “From a financial reporting and accounting perspective, we review what other companies in our industry report and review their accounting disclosures to make sure we understand differences and similarities,” Vossler said.

3. Spend time in the field. “Be sure your hiring manager will support you in getting out in the field to learn the new business, even if that means traveling to multiple locations,” Bello said.

4. Create a partnership, rather than an adversarial relationship, with your auditors. “One of the most helpful resources has been talking to and working with our current audit firm, Ernst & Young, which has a well-established presence and knowledge base in the rapidly emerging ‘Silicon Slopes’ tech market in Utah,” Page said. “They’ve provided helpful interpretive guidance, as well as conferences and training, on revenue recognition and other common accounting issues specific to our growth state and industry.”

The post New Industry, No Problem: How 3 Controllers Transitioned From One Sector to Another appeared first on Going Concern.

Wrong.

I sent nearly 30 emails, either directly to controllers and CAOs or to the press offices of the companies they work for, asking them to comment on the new corporate tax changes and how it might affect the jobs they do.

As responses began to trickle into my inbox, I kept hearing “The Price is Right” loser sound effect in my head. Nobody wanted to comment. Here’s a sampling of the responses I got:

We’re going to pass on your request.

At this time we are not interested in providing comment on this subject.

We are unable to comment on this issue.

I’m afraid we’re not able to meet this request at this time.

We would like to respectfully decline.

Now what?

Armed with absolutely nothing for my article, I wanted to find out why controllers were being so tight-lipped about the new tax legislation and why they should even care about it. They likely haven’t had time to fully digest the complex tax changes included in the bill. That’s understandable. Or maybe they’re too swamped with the month-end close to comment?

If your company is too swamped during the month-end close to answer a journalist’s questions, maybe you should invest in close management software. FloQast can help you with that.

So, I turned to CPAs from WithumSmith+Brown and MRZ LLP for some answers. Tara Nicholson, CPA, tax senior manager at Withum, had a few theories as to why controllers are keeping quiet about the tax legislation.

“Accounting, finance, and tax departments seem to be stretched for resources now more than ever, and that was before the tax legislation,” she said. “Many of our clients are still digesting the impacts of the new accounting standards for revenue and leases. Many mid-market companies have a very lean dedicated tax department, if one exists at all, and most of them are actively recruiting for experienced tax professionals and find themselves needing to outsource much of their tax function.”

“Keep in mind also that some fiscal year-end companies are still under the gun for tax return filings unrelated to the tax law changes, and by the time you add in all the federal and state tax audits, many companies just don’t have any time to look ahead or even consider what is happening right now,” Nicholson continued.

Another reason, she said, is companies might fear that any public comment on the tax law changes could negatively affect their brand.

“We’ve seen what can happen on social media and online grassroots petitions that gain national attention overnight,” Nicholson said. “I think companies are concerned any comment might be interpreted as a political affiliation and could immediately alienate half of their customer base.”

Wesley Middleton, CPA, managing partner of Houston-based MRZ, thinks that controllers and CAOs are accustomed to receiving this information and advice from their CPAs and are currently consulting with their CPAs for advice on the tax changes.

“We’re proactively reaching out to our clients. That’s been our M.O., to go to them and say, ‘There are changes you guys need to be aware of,’” he said.

What changes are corporate clients happy about?

The most publicized change in the legislation is the reduction of the federal corporate tax rate, from 35% to 21%. The rate reduction “is certainly a huge benefit and a nice win across all industries,” Nicholson said, even though manufacturers lose their preferential additional deduction for qualifying domestic production under the previous law.

“The calculations and documentation required to satisfy the tests for the manufacturing deduction were arduous, expensive, and heavily scrutinized by tax authorities, so this overall reduced tax rate is one area of simplification, albeit it’s probably the only one,” she said.

Nicholson added that it’s a good time for companies to be in a deferred tax liability position, as the benefit of a reduction in tax rates runs through its current year income tax provision.

According to Withum Tax Partner Paul Helderman, CPA, companies are required to remeasure their deferred tax assets and liabilities as of the date the new law is enacted.

“If a company is in a deferred tax liability position and the tax rate under the newly enacted law dropped from 35% to 21%, it means that when that taxable temporary difference reverses (i.e., increases taxable income in the future), it will only be taxed at 21% versus the rate at which it was originally measured (i.e., 35%),” he told me in an email. “This ‘benefit’ is included in the 2017 financial statements of a calendar-year company. If the company was in a deferred tax asset position, the opposite occurs since when the temporary deductible difference reverses, the company would only obtain a benefit at 21% versus 35%, thus resulting in a ‘charge’ in the 2017 financial statements.”

Certain industries, such as alcohol/spirits and medical devices, are happy with the reductions or moratoriums on certain excise taxes, Nicholson said. Also, businesses are pleased about the ability to immediately expense capital improvements and that the criteria for qualifying additions was expanded, which coupled with the income tax rate reduction, “is a nice benefit to incentivize expansion and investment in the United States,” she added.

And don’t forget about the expansion of bonus depreciation to 100% for qualified property acquired after Sept. 27, 2017 and placed in service before Jan. 1, 2023. Before the new tax law was enacted, bonus depreciation generally equaled 50% of the cost of the property placed in service in 2017.

“I think you’ll see a lot of fixed-asset-type equipment acquisitions because of the 100% bonus depreciation,” Middleton said. “That’s going to be huge this year because it now applies to both new and used [fixed assets].”

Don’t get caught by surprise

While maybe not directly impacting the jobs controllers and CAOs do, there are a few other tax changes Nicholson and Middleton highlighted that could impact their company’s operations, their bosses, and some employees:

1. Interest expense limitation. Not only will deductions for interest expense be limited to 30% of the taxpayer’s adjusted taxable income, the limitation will now apply to a much broader base of U.S. taxpayers, Nicholson said.

“We’ve had to deal with limitations on interest in the past, but that was primarily limited to those taxpayers that had related-party debt and didn’t meet certain debt-equity requirements. The new limitations apply to third-party debt, as well, and it’s unclear how amounts previously disallowed under the old rules will transition to the new rules, as those amounts were allowed to be carried forward and deducted in future periods,” she said. “Not only will a significantly larger group of taxpayers need to determine their adjusted taxable income, they will now have an additional difference to track between income for U.S. GAAP and U.S. tax purposes. Fortunately, any interest currently disallowed is eligible to be carried forward indefinitely, but this is just one more item to track.”

2. Research and development expenses. Nicholson said companies are disappointed in the new requirement to capitalize research and development expenses.

“New R&D costs, while deductible for U.S. GAAP purposes, will need to be capitalized and amortized over five years for tax purposes,” she said. “This will be another book-to-tax difference to schedule out and analyze each year.”

3. Excess compensation deduction. The Tax Cuts and Jobs Act eliminated a public company’s ability to deduct annual compensation paid to a “covered employee,” which now includes both the CEO and CFO, that is in excess of $1 million. In addition, performance-based compensation and commissions are now subject to the deduction limitation.

“No matter what the character of the compensation is, the amount over a million dollars is not deductible,” Middleton said. “There’s a lot of executives who are compensated by various forms of equity, and in the past, they’ve potentially been able to deduct some or all of that. Many times the compensation is based on performance in the form of commission—maybe a guy’s a producer and is making $5 million a year and the C corporation is publicly traded. The publicly traded companies are going to lose the deduction for that compensation.”

4. Unreimbursed business expenses. Employees will no longer be able to deduct unreimbursed business expenses as a miscellaneous itemized deduction, which may catch some people off-guard next tax season, Middleton said.

“I think what’s going to happen is these employees won’t realize they’ve lost that deduction; it just hasn’t clicked with them,” he said. “So come next year, when it’s time to file their taxes, they’re going to go, ‘Wait a minute, I don’t get that?’ If you’re a salesman and you have a lot of mileage and you put it on your Schedule A as unreimbursed business expenses, you will not be getting that deduction any longer. It’s going away.”

5. Net operating loss deduction. The way companies deduct net operating losses is changing, too. The Tax Cuts and Jobs Act has limited the deduction for NOLs to 80% of taxable income.

“The changes to NOLs, while at first seemed beneficial in that newly generated losses can be carried forward indefinitely, lose some of their luster when they are only able to offset 80% of taxable income and there is no longer an ability to carryback losses to a profitable year,” Nicholson said.

Did you know that 82% of accounting professionals say they are personally negatively affected by the month-end close? Find out what companies are doing to improve the close process by downloading this FloQast survey report. You can read more about Going Concern’s partnership with FloQast here.

Image: iStock/SIphotography

The post Controllers Tight-Lipped About New Corporate Tax Changes appeared first on Going Concern.

As an accounting journalist with zero accounting background, I would go to as many conference sessions as time would allow in order to educate myself about the latest accounting standards, tax law changes, and technology trends. And lo and behold, corporate controllers, who have extensive accounting and finance backgrounds, also attend these talks as a way to keep current on topics that directly relate to their position.

“I choose the seminars most applicable or valuable to me—usually a topic I am unfamiliar with, need additional experience, or when there are some changes coming, such as tax regulations,” said Karen Bacon, controller at Arcimoto, a Eugene, Ore.-based electric vehicle company.

And it’s not just accounting and finance matters that draw her attention. Bacon has attended conferences and sessions over the past few years that have focused on legal and credit law, human resources, IT, leadership, and technology.

“I always come away from conferences with new concepts and knowledge that I will be able to immediately communicate to my team or implement,” she said.

Bryan Woodhouse, vice president/corporate controller at New Castle Hotels & Resorts, a hotel/owner management company based in Shelton, Conn., said conferences and hospitality industry events help inform him of issues that may impact his group and his organization.

“The hospitality industry tends to be very collaborative, and as a result, my peers at other companies are a tremendous resource for information,” he said. “For example, discussions about current labor management applications and the platforms that integrate the various systems that other disciplines are using are key to managing the crucial data. Sharing what has worked, or not worked, for others is very helpful to me and my colleagues.”

Other learning strategies that work

Attending conferences is only one way for controllers to stay current or educated about accounting- and finance-related trends. Here are some others:

1. Social media. No, not Facebook. According to the three controllers I spoke to for this article, LinkedIn was the medium of choice.

“Combing through the posts on my LinkedIn network allows me to learn what is on people’s minds from varying industries, job functions, and regions,” said Timothy Sangiovanni, CPA, vice president/corporate controller at KemPharm Inc., a Coralville, Iowa-based specialty pharmaceutical company. “In addition, LinkedIn provides the opportunity to reach out to an individual for a one-on-one discussion to bounce ideas off of or dig deeper into a specific matter.”

2. Networking events. Bacon often attends local networking events and uses social media to connect with other professionals in her area.

“The networking events range between HR- and IT-related issues to accounting and finance,” she said. “While I also network with other professionals who are not in my area, there is additional value in networking with other local professionals because they will better understand the dynamic of our local demographic.”

3. Webcasts and in-person trainings. Sangiovanni said he participates in one to two webcasts a month on average and one to two in-person trainings a year put on by professional organizations, professional services firms, and vendors.

“Webcasts allow me to stay up-to-date on current accounting and finance topics from my desk. However, the delivery method can lend itself to distraction by other activities in the office,” he said. “The in-person trainings offer the opportunity to learn about accounting and finance topics while networking with other accounting and finance professionals. They are more substantive, even while inconvenient from a travel and time perspective, as they allow for undivided attention to the information being presented.”

4. Reading online/print publications and books. As a member of the AICPA, Sangiovanni said he often reads the organization’s monthly magazine, Journal of Accountancy.

“Print magazines not only provide a vast amount of information in one place, but also the ability to save the magazine for later reference,” he said.

But when Sangiovanni wants to “take a step back from the granular accounting and finance perspective,” he’ll read books or other publications on management techniques, economics, and other business topics.

“Reading allows me to view our business and industry from a unique, high-level perspective,” he said. “Further, these books and other publications assist with identifying how my team and I fit into the overall organization and help mold my management style, as well as assist me in becoming a better leader.”

Woodhouse said he makes it a point to “take advantage of the resources that are at my fingertips, especially trade journals and professional sites like Going Concern.” If he needs more detail on a particular subject, Woodhouse said he’ll read a white paper on that topic or attend a webinar.

5. Teaching. Bacon is an adjunct instructor at a local university and teaches business and accounting courses. She also has taught several technology/software courses at the last two organizations where she worked.

“I find teaching valuable in many ways,” Bacon said. “For one, I am using textbooks in my courses with current information, material, and case studies. I also find teaching to be valuable in my development as a leader. I am helping develop and grow the minds of my students. This will directly impact my ability as a department manager.”

“Learning is an ongoing process”

The world of the corporate controller can be dizzying, as he or she oversees the monthly and year-end closes, produces financial reports, sets strategy, executes budgets and forecasts—and that’s just scratching the surface. So, where do controllers find the time to stay current and educated?

“I probably spend an average of 10 to 15 hours a week on my own development and education. There will be some weeks where I spend more time—especially when I am attending a conference—and other weeks where the time is much less,” Bacon said. “When I am teaching, I spend 15 to 20 hours a week on the course. Not all this time would count toward my own development, but I believe I learn as much from teaching as the students should be learning from the course.”

She added that the local networking events she attends are usually scheduled at lunchtime or after work, and the courses she teaches are either held in the evening or online.

Woodhouse said he doesn’t set aside a particular time of his day for enrichment; it just happens organically.

“Learning is an ongoing process for me,” he said. “Whether I’m catching up with colleagues, reading a trade journal, checking email, or reading the Wall Street Journal, it’s an engrained part of every day.”

Image: iStock/eternalcreative

The post 3 Controllers Reveal Tactics, and, Yes, How They Make Time, to Keep Learning appeared first on Going Concern.

While accounting and finance teams don’t have to worry about large, angry auditors chasing and tackling them during the year-end audit process (at least we hope not), many have to scramble to gather the necessary documentation and files, often housed in several different areas, to avoid being hassled by those inspecting the company’s books.

“Pulling all the information the auditors require, in the format they require it in, takes a lot of time,” said Jedannah Vieira, CPA, director of accounting operations at VSCO, an Oakland, Calif.-based art and technology company. “Auditors typically ask for hundreds of reports and data points. Some requests take five minutes to complete and send over; others take days or weeks to prepare.”

Complications to being audit-ready

Startups like VSCO are often at a disadvantage for larger projects because they have smaller accounting and finance teams. As a result, audit preparation requires advanced planning and additional man-hours.

“Complicated areas of accounting, like revenue recognition and stock-based compensation, require significant review of accounting policy and analysis, complicated estimates, and conclusions that align with U.S. GAAP and best practices,” Vieira said. “At VSCO, we hold ourselves to similarly high standards of reporting, but we need to be lean and efficient with the resources we have to manage and deliver exceptional results from our accounting practice.”

Another area in which Vieira’s team works hard to finish tasks ahead of time is the close and reconciliation process, which is an important piece of the year-end audit equation.

“We aim to take as much out of the financial statement close process as possible by front-loading work. We also aim to be smart about utilizing estimates so that we can close select accounts in the most efficient way possible,” she said.

Prior to Vieira joining VSCO’s finance team, the company did what many other organizations do: rely on an Excel checklist to document and manage the close process.

“Accounting teams have survived for too long without proper tools to manage the close process. Spreadsheet checklists are stop-gaps. Even in the best scenarios, they add more tedious work than create value. Time is incredibly limited in any finance team, small or large, so all efforts need to be focused on value creation,” Vieira said. “I felt strongly that we needed a smart way to track our close process on a monthly and yearly basis, and that as a team we all needed to have visibility into the status, completeness, and appropriateness of our close process.”

Checklist dilemma

More on VSCO in a bit. Let’s shift gears to another company that also was having a checklist dilemma, which hindered its close and audit readiness. Vets First Choice, a Portland, Maine-based provider of technology-enabled healthcare services for veterinary practices, has 12 contributors to the close process, some of which are located in different states, according to Reporting and Accounting Manager Kristen Parisien.

A comprehensive close checklist hadn’t been created; instead, some contributors created their own checklists, in various forms, that weren’t easily accessible. Others had no checklist at all.

“There was no consistency around where reconciliations or documents were saved, who completed them, who reviewed them, or when they were considered complete,” said Parisien, who is responsible for ERP administration, all closes and audits, and financial reporting at Vets First Choice. “It’s hard to manage when you have contributors in multiple locations, working on different networks and drives, and responsible for different tasks.”

While auditors didn’t have much difficulty getting the documents they needed, Parisien said, it was at the expense of staff members who put in extra time and effort to gather all the right documents, from the right places.

“Version control was always a struggle,” she added.

As a result, it took 14 days on average to close the company’s books each month and more than a month to close out the year.

“Numbers are constantly changing throughout the close, and if we are not in sync, things get missed, overlooked, or unaccounted for,” Parisien said. “We had to do something different since we are a rapidly growing company. We needed a simpler solution where everything is contained in one place.”

All for one, and one for all

That all-in-one solution ended up being close management software from FloQast, which Vets First Choice implemented in January 2016.

The result? Vets First Choice is down to a five-day month-end close and a seven-day year-end close.

“FloQast has streamlined our balance sheet reconciliation process, giving deadlines for each preparer and reviewer, while always ensuring those reconciliations tie to our ERP system,” Parisien said. “It’s so much easier to see what deadlines we’re bumping up against, and it’s constantly highlighting areas where we can be more efficient and who or what the bottlenecks are in the process. It also shows how well we complete our closes. These successes are important feedback for the contributors.”

“It has been important for me to condense the close and maximize productivity, while maintaining a high level of precision,” she added.

What about checklists? “FloQast provides a baseline checklist, and it was easy to add items and modify as we went through our first few closes. It was a great exercise to document everyone’s responsibilities,” Parisien said. “It also forces all of the contributors to be on their toes in completing and signing off on their checklist items and reconciliations.”

As mentioned earlier, Jedannah Vieira of VSCO was looking to add visibility into the close process. FloQast did just that, starting in the fourth quarter of 2016.

“It really helps leadership understand the quality and completeness of the monthly and yearly close processes. Without it, I would put in much more effort to have the same amount of visibility into the status of the close. I’d be meeting with the team daily to understand the status of items. We can now skip the status meetings and focus on getting the work done together,” she said. “It also allows me to participate in the process and document my monthly review and commentary. It also allows our team to demonstrate the rigor of our close process to auditors who want to review it. And finally, it helps all team members rally around the common goal with consistent information, which is energizing.”

In addition, FloQast provided Vieira a way to implement documented controls over the close process and reconciliations.

“Our operation is paperless, so we don’t retain paper accounting files with signature sign-offs. We also don’t have our own software or system to document internal controls. Because of these reasons, a tool like FloQast helps us efficiently and effectively document and validate processes and controls,” she said.

Learn strategies and best practices for automating and improving the month-end close process at your organization during this webinar presented by FloQast. You can read more about Going Concern’s partnership with FloQast here.

Image: iStock/stevanovicigor

The post How Accounting Teams Can Avoid the Year-End Audit Scramble appeared first on Going Concern.

Many companies’ 2018 fiscal year first quarters began last fall, but the process of planning key accounting and finance priorities, goals, and initiatives for the new year started way before then.

“Typically, after we close out Q2, we’ll start to have a clearer picture of goals we may have set for the second half of the year that are likely to trickle into the following fiscal year,” said Donavon Hall, controller of Apptio, a Bellevue, Wash.-based developer of technology business management SaaS applications. “As a result, we had some preliminary discussions in early Q3 of 2017 about 2018 initiatives, but that picks up in earnest in late Q3 and early Q4.”

I recently spoke to Hall and five other corporate controllers who shed some light into their process for planning 2018 priorities, their No. 1 priority for this fiscal year, and other key initiatives they hope to accomplish:

Name: Donavon Hall

Company: Apptio

Priorities planning process: “Late October and early November is when our finance team meets with every function to summarize budget requests,” he said. “In advance of those meetings, I met with the managers on my team to brainstorm on 2018 initiatives. I then summarized the items discussed during the brainstorming session and reconvened with the management team to prioritize the initiatives we believe we can, and should, tackle in 2018.”

No. 1 priority for 2018: Preparing for ASC 606 adoption. “Much of Q1 will be focused on finishing what we started in 2017 related to the adoption of the new revenue accounting standard,” Hall said. “ASC 606 requires a number of new disclosures and will change the way we account for sales commissions, so we need to build and implement new reports to address the disclosure requirements. We’ll be implementing a new module in our commission software to address the revised accounting for these expenses. In addition, there are a number of new internal controls that we’ll need to implement and test related to ASC 606.”

Other initiatives: Eliminating redundant data entry across multiple systems and improving SOX controls related to provisioning and de-provisioning users in Apptio’s financial-facing systems; and streamlining processes related to the company’s international operations, such as payroll and intercompany settlement.

Name: Mark Harrison, CPA

Company: Cubic Corp., a San Diego-based provider of systems, products, and services to the transportation and defense industries.

Priorities planning process: “We have a series of strategic and business planning meetings with both the CEO and CFO beginning midyear to update our strategic plan, set our priorities for the following year, and prepare for implementation,” he said. “This assures alignment of our priorities with the CEO and CFO. Our fiscal year begins Oct. 1, so we are already nearly through our first quarter.”

No. 1 priority for 2018: Completing implementation of SAP software for remaining businesses. “As part of the company’s strategic plan, we are in our second year of implementing SAP software, which should be transformational for the business,” Harrison said. “We have also begun the implementation of new planning software.”

Other initiatives: Implementing shared services plan; reducing days to close; decreasing cost of finance by finding process efficiencies; and reducing the number of legal entities—simplifying organizational structures.

Name: Jennifer Howard, CPA

Company: InnSight Hotel Management Group, a Springfield, Ore.-based hotel development and management services company.

Priorities planning process: “Our organization is constantly growing, and I feel that our team does a great job in evaluating what our needs are, based on this growth, and implementing a great plan to accomplish it in the most efficient way possible,” she said. “We began to plan for 2018 in August. We discussed the areas of concern that our accounting department currently struggles with and then came up with an approach to tackle them.”

No. 1 priority for 2018: Implementing a job-costing module within the company’s accounting software. “There are three hotels that are currently under construction, and a job-costing module will help give us a better understanding of where each construction project is compared to its budget,” Howard said.

Other initiatives: Automating process for intercompany billing; and improving cash flow forecasting.

Name: Bridget Meacham Kowalski, CPA, CFE

Company: Pittsburgh Symphony Orchestra

Priorities planning process: “Our offices are all within 20 feet of each other, and we rely on real-time communication in order to work. Because of this, priorities and initiatives are discussed on a regular basis, though the effort that goes into them ebbs and flows based on the workflow due to our operations,” she said. “Typically, our priorities don’t need outside approval—anything relating to finance, accounting, and internal controls is our domain. However, this year we’re discussing the complete reworking of a few processes, including the selection and implementation of new software. Those priorities that include major expenditures are discussed with the CFO and CEO if necessary.”

No. 1 priority for 2018: Saving the trees. “My organization has been very slow to embrace the digital age. Everything from timesheets to expense reports to donation documentation to invoices is kept in hard copy. So, I am leading the charge in implementing paperless document retention and workflow solutions,” Kowalski said. “With the time we gain from eliminating inefficiencies, such as copying, filing, and chasing down missing documentation, we can provide more value-added analysis for the organization.”

Other initiatives: Eliminating double entry of data; hiring a new employee; and empowering the PSO’s departments to help themselves.

Name: Robert Ott

Company: TE Connectivity, a Switzerland-based manufacturer of connectivity and sensor products for harsh environments.

Priorities planning process: “Our fiscal year ends on the last Friday of September, and I strive to have strategy, priorities, and goals defined prior to entering the new fiscal year,” he said. “I initiate this process in early summer with my leadership team. We spend a couple days analyzing feedback from our internal customers, along with brainstorming on priorities and goals for the coming year. This conversation leads to a refreshed or refined strategy/vision that guides the entire controlling team.”

No. 1 priority for 2018: Accelerating the utilization of shared services. “Shared services is a centralized organization that is responsible for providing certain finance services to the business,” Ott said. “Efficiency or productivity is achieved through driving consistent processes and leveraging the organization to perform the same or similar services that would have otherwise been provided locally. Further efficiency is often driven through better span of control, economies of scale, and potentially labor arbitrage.”

Other initiatives: Improving and simplifying controllership processes (Lean discipline); successful implementation of ASC 606 and continued preparation for ASC 842 (lease accounting standard); and developing talent to sustain and elevate capabilities.

Name: Craig Vaughan

Company: Sonatype, a Fulton, Md.-based software supply chain automation company.

Priorities planning process: “We have a phenomenal management team and board that understands the initiatives we have to put in place and the timing by which they need to be completed,” he said. “We then utilize that to plan, essentially creating an always-moving project plan—as one project is completed, another is added. Each project is then ranked in terms of priority based on a scoring system that includes effort and assumed return on investment. That scoring relays priorities. As a team, we discuss this pretty regularly given the fast-paced nature of our company’s growth trajectory and evolution.”

No. 1 priority for 2018: Preparing for ASC 606 adoption. “This was a key initiative in 2017 and will continue to be in 2018 until adoption in Q1 of 2019,” Vaughan said. “We’ve been in close discussions with both our auditor and an external firm we hired as consultants to go through the logistics process. We’ve come to some initial conclusions based on our product offerings, selected a software to implement, and finalized our project plan, which we’re kicking off in Q1. We feel we’re going to be more than ready to act on dual reporting, to weed out all the bugs, and to make sure everything looks appropriate, is streamlined, and is set for scale well before the end of 2018.”

Other initiatives: Continued enhancement of the company’s systems and platforms, allowing for more data that can create actionable intelligence in real time for engineering, marketing, and sales.

Image: iStock/Volis61

The post 6 Controllers Share Their Most Pressing Priorities for 2018 appeared first on Going Concern.

In reality, staying until manager has been a myth that we’ve discussed at length on Going Concern. FloQast has a number of Big 4 alumni among their ranks, and they all had different experiences, and most have landed in successful careers without ascending to manager. Here’s a Q&A we conducted with just three of them: Mandy Raeder, Marc Reicher, and JC Galvez.

Ed. note: This interview has been edited for clarity.

Caleb Newquist, Editor, Going Concern: Talk a little bit about your Big 4 experience and how it prepared you for work outside of the firm.

Mandy Raeder, Business Development Manager, former PwC Assurance Associate: I interned at PwC and started applying for jobs junior year. I applied to all of the Big 4 and was offered the job after my internship. I wanted to get a CPA, but I realized that while I enjoyed accounting, I didn’t want to be auditor. I wanted to interact more with people and be client-facing but didn’t want my accounting experience to go to waste.

Going into a [large] corporate environment as a first job taught me a lot about how to interact with people professionally, and how to be in someone else’s space, respecting their space, and interacting with people you don’t necessarily work for or with.

Since I worked with multiple teams, different managers, seniors, partner, you see different dynamics and should be able to adapt to different environments and management styles. Some clients are buttoned-up, some are casual and laid back.

Marc Reicher, CPA – Software Developer, former PwC Assurance Associate: I worked at PwC for two years, auditing mostly big public clients. Working in Big 4 prepares you to work just about anywhere because you get to work with teams of all different sizes and teams of all kinds of people. In assurance, you are client facing so you really have to understand what it’s like to be in someone else’s shoes. You’re not just focused on your own job but how you fit in as part of the company.

The clear hierarchy at the Big 4 got me accustomed to the fact that things get delegated to you even if they are things you don’t want to do. When you move to different job the structure is probably less rigid and you can do more of what you want.

JC Galvez, Account Executive at FloQast, former Senior Auditor at EY; seven years as an Accounting Manager in industry: I had nonstop busy seasons with 12/31 and 3/31 year-end clients so it prepared me for the grind. I was working so much that I didn’t actually realize how much I was learning because I didn’t have time to reflect. It wasn’t until I left did I realize how much I had learned. When I left EY and went to private, I found a $3 million error; it was a simple byproduct of doing a reconciliation and understanding what the nature of the account was.

When I am speaking to folks that are in the shoes I was in I can speak about my first-hand experience. I can relate to frustrations that a number has changed after the fact during the month-end close. FloQast gives you that peace of mind that things are tied out, you are really done and you can move on.

CN: Looking back, do you think you left your Big 4 firm at the right time? How do you feel about it now versus how you felt about leaving then?

Marc: I do feel like I left at the right time; [I] was doing a pretty big career shift in my case so there was [little] value in staying much longer. It was something I was worried about: “Am I leaving too early?” because there was part of me that wanted to stay to get the promotion to senior. But it became clear that unless I was going to be staying much longer (manager or partner), it didn’t seem like it was going to help to stay longer.

JC: My plan was always to go in and get enough hours for the CPA. I left after my first senior year and I think that was enough experience. In hindsight, I probably would’ve stuck around until manager because I think you get so much more exposure to higher risk accounts and working with higher-level managers. As far as financially, it really had a negligible impact on me – people who stuck around for 8-10 years have around the same salary that I do now.

Mandy: I left after the first year. If I were to do it again, I would’ve left five months earlier. She left in December which was bad for her team going into busy season but the problem was she was always in busy season. Be respectful of your teams. She gave one month notice instead of the usual two weeks. Once you stay for a year (one busy season), you have a good idea if auditing is what you want to do. Good time to assess. If you don’t want to do accounting, I wouldn’t stay longer than year.  You can get your CPA after one year of experience.

CN: Do you think there’s any validity to the conventional wisdom that staying until manager will give access to more or better opportunities?

JC: It didn’t really have impact on salary. I have friends that stayed until senior manager that are making the same as me. Once you have a Big 4 name on your resume, that carries plenty of weight. I’ve seen people leave at the senior associate level become CFOs so that is not a hindrance.

Mandy: There is validity if you want to become partner in public or go be a controller in private accounting. If you don’t have an interest in those routes, you don’t really need to stay.

Marc: They say if you stay until manager you can get managerial positions in other companies. I don’t know anyone personally who has gone from audit manager to another manager level position not in accounting. It seems like if you stay until manager, your best career opportunities will be in the accounting industry. Because I left when I did, I’m now fortunate to have experience working as a software engineer and an accountant, which I feel makes my skillset very unique. Overall, it seems better to try different things early in your career while you have the chance.

CN: When you first joined your firm, how long did you think you would stay?

Mandy: I thought I would stay three years until I became a Senior. I was up for early promotion so that made it even harder to leave. You basically plateau in how much you can learn if you don’t want to be an auditor.

Marc: When I first joined, I didn’t know if I wanted to stay until partner or quit the next day. The first year was very hard because I was at the bottom of the pecking order. My 2nd year, I felt a lot better about staying longer. But the reason I decided to make the change was because there was zero work-life balance and it didn’t feel like a very sustainable career.

JC: Maybe three, four years. Goal #1 was to get hours in for CPA and then figure it out from there. Going to back to back busy seasons wears you down.

CN: Now that you’ve moved on to a career at FloQast, what happened that you didn’t expect?

Marc: I didn’t expect [to be] able to use my accounting knowledge as an engineer, but it obviously makes sense at a company like this.

One of the questions I asked during my interview was about the work-life balance. At PwC, I would go for months without having a weekend off and I felt pretty burnt out. The people that I interviewed with at FloQast emphasized the importance of work-life balance. I was pleasantly surprised once I started my new job and FloQast was able to deliver on that promise.

I also didn’t expect the engineering process to be as similar to the audit process as it is. Didn’t expect a lot of intangible skills to translate to this position such as planning and communication, trust but verify — when you do code review, you can’t expect it’s going to work.

JC: I didn’t expect to go home before the sun went down.

I never thought I would be doing this type of work where I am talking as much as I talk, engaging with [clients]. As an accountant that was the toughest transition for me. My conversations as accountant [were] giving people status updates. Now I don’t have as much structure to my day — days are unpredictable. Having freedom to fill my day with something I consider valuable.

Mandy: I didn’t expect to be managing a team as quickly as I did. There is so much opportunity in this company and in the software space in general. You have the ability to prove yourself, in general, more than anywhere else. At PwC, if you work really hard you aren’t really rewarded, except with more work. Everybody gets 8-12% raise no matter how hard they work.

When talking to prospects, I get a lot of respect for working at PwC and quickly build rapport with clients because of my knowledge about the close and accounting in general.

CN: What is the most valuable piece of advice you received AFTER leaving Big 4 that you wish you had learned when you first started your career?

JC: I wish I had been more open to getting experience in different industries versus focusing on one because that gives you so much more instead of being pigeon-holed. Big 4 firms can really give you that experience. You should take advantage of that. I was trying to focus on only entertainment.

Mandy: You are going to work a lot harder when you are happy and passionate about what you are doing. I couldn’t see myself being super excited about auditing. Now, I’m excited come to work and perform better, and it’s evidenced by working here and people around me.

Marc: You can’t sit around waiting for a cool opportunity to show up and a lot of people at Big 4 wait around. If you stay, you will definitely have a good career, but it will be a good career in public accounting. FloQast is an exit from the Big 4 where you can leverage a lot of your accounting knowledge, so this is a very good opportunity for people looking to make a switch and this is the right time to do it as it’s very early in our company.

CN: Mandy, how was the transition from being an auditor to sales? Was it intimidating at first?

Mandy: I think it’s really intimidating going from profession where you are hiding behind a computer, but you learn quickly how rewarding it can be. What’s also intimidating is learning how to be persistent which is a requirement in a sales role. You learn a lot of that work ethic from PwC or any other Big 4 because it’s so competitive.

CN: Marc, how did your transition happen? What is your story, how did you get interested?

Marc: I had always sort of wanted to do software engineering. I studied math and accounting in college, so I had done a little, and by the time I was leaving college I was committed to accounting (I had a job lined up), didn’t want to take more time to study engineering. Once I was working at PwC and realized I didn’t have a good work-life balance and the day to day could get very frustrating, I was considering what else can I do, and engineering was the first thing to come to mind. I spent a few months studying JavaScript on my own and talking to friends about how to break into the industry. From what I gathered was I probably need to go to coding school for three months, so I spent some time practicing for the entrance exam and one I got into the coding school. Then, I had a decision to make (I was still at PwC) and a few weeks after I quit my job, went to coding school, and applied to work here.

CN: Do you think accounting experience helped you with your career in engineering?

Marc: Definitely yes. In audit, you have a lower level employee do all work, followed by a higher level review, and that’s the same structure as engineering. One of the most frustrating parts is doing lower level work and your manager rips it to shreds even though they told you to do it that way. You get very used to asking questions upfront and making sure you know what you are doing. Trust is important. If you submit work that’s bad the next time they are going to assume that you have a lot of mistakes. You need to prove yourself and do a lot of things right so that people trust you. Public accounting very much trains you — if you are putting your stamp of approval on something, people are going to judge you based on the quality of that work. It’s your professional reputation that’s on the line.

CN: JC, what did you learn in accounting things that prepared you for a sales role?

JC: I think I managed a lot of the close process in my last role and having to report those results to higher levels. Understanding that management is not interested in the details, just the bigger picture.

In general, that teaches you to give people information that adds value. Being respectful and mindful of people’s time. Understanding your audience and being straight to the point. If someone who is extremely busy is giving you their time, you better make it worth it. People appreciate transparency and honesty, and that can help make you a better salesperson. Integrity goes a long way – you have to earn people’s trust.

Are you a Big 4 alumni or looking to transition out of the Big 4 life?

Check out these current openings at FloQast, a close management software company built by Big 4 alumni to manage the month-end close faster and more accurately.

Click here for your complimentary guide to the definitive Guide to Effective Close Management. Start improving your month-end close today!

Image: iStock/tuk69tuk

The post Think You Need to Stay in Big 4 Until Manager? Think Again appeared first on Going Concern.

According to a report from the Identity Theft Resource Center and CyberScout, 376 (34.4%) of the 1,093 data breach incidents reported in 2016 occurred in the healthcare/medical industry. And if that wasn’t bad enough, Becker’s Hospital Review crunched the report’s numbers and came up with these four eye-opening stats:

1. The healthcare sector exposed more Social Security numbers than each of the other four industries [business, education, finance, and government]. In 2016, the healthcare industry exposed a total of 10,486,900 Social Security numbers.

2. The healthcare industry had the highest number of patient records exposed due to employee error or negligence. Throughout 2016, employee error or negligence caused 1,183,893 healthcare records to be exposed.

3. Insider breaches had the biggest impact on the healthcare industry. In 2016, 43 healthcare insider breaches affected 167,263 records.

4. The healthcare industry saw the largest percentage of records exposed due to third party, contractor and business associate-related breaches. Approximately 4,014,923 healthcare records—or 11% of all the industries’ records—were exposed due to third party breaches in 2016.

“Protected health information can be very valuable to a criminal as it includes information such as a person’s Social Security number and address, as well as information about a patient’s recent visits to the doctor, which can be used by criminals to identify themselves as someone else,” said White, vice president, controller, and CAO at BlueCross BlueShield of Tennessee, the state’s largest health benefit plan company.

Five ways to mitigate cyberattacks

While the healthcare industry saw more than its fair share of cyber threats last year, the business sector reported the most data breach incidents in 2016, with 495 (45.3%), according to the ITRC report. In addition, financial losses in the United States due to cyberattacks totaled $1.33 billion in 2016, a 24% increase over the previous year, a report from the FBI’s Internet Crime Complaint Center revealed.

So, what steps have controllers and CAOs taken to prevent the bad guys and gals from winning? In my discussions with three leaders, a handful of key tactics emerged:

1. Have a good relationship with the IT team. The accounting and finance department needs to work closely with IT staff to develop security protocols and initiatives that protect their customers’ and company’s data, according to the controllers I spoke to.

“We rely on our information security team to assist us with security and ensure any and all decisions made from an IT solution standpoint are in compliance with our corporate policies,” White said.

Annette Ramsey, CPA, controller of Intelligent Retinal Imaging Systems, a Pensacola, Fla.-based provider of early detection systems for diabetic eye disease, also stressed the importance of the finance and IT departments being on the same page regarding information security policies.

“That agreement and understanding is the foundation for the right compliance practices to deal with data security and cybersecurity threats,” she said.

It’s also a good idea for controllers to meet with the company’s chief information security officer (CISO) on a regular basis, White recommended.

“The channels used by cybercriminals can change at a rapid pace, so it’s critical for the controller and the CISO to interact in order to ensure that risks are identified and proper security and controls are in place,” he said.

2. Form an enterprise security committee. BCBST’s enterprise security committee (ESC) includes representatives from each of the company’s major lines of business and support functions, according to White.

“The purpose of the ESC is to provide cross-functional oversight and direction of security-related risks,” he said. “The ESC also provides prioritization recommendations to the CISO for security projects and initiatives.”

3. Ongoing employee education is a must. White said his staff is required to complete training sessions on a quarterly basis that focus on IT security, such as common predatory tactics used by attackers and the employee’s role in preventing attacks from being successful.

“Security breaches can be very costly to an organization, so it’s important to ensure that every employee understands the role that they have in the protection of customer data,” White said.

As part of the onboarding process at Litera Microsystems, a Chicago-based document technology provider, new employees are required to read and sign off on IT policies, according to controller Elizabeth Pittelkow, CPA, CITP, CGMA. She also works with outside firms to provide cybersecurity training for her employees, such as live presentations and handouts, and participates in cybersecurity webinars with her team.

She also recommended that controllers and CAOs educate themselves by signing up for email alerts from cybersecurity experts, attending cybersecurity sessions while at conferences, and reading relevant articles.

4. Keep the discussion going internally and externally. How? Perform annual risk reviews, and have weekly conversations with your team about cybersecurity threats, according to Pittelkow.

“Ask vendors what they are doing to protect your data,” she said. “We have discussed cybersecurity with our vendors—banks, insurance company, and audit firm—and they know we care about it and have helped us design anti-fraud controls.”

One anti-fraud control she recommended is verbally confirming outgoing wires with the person who requested them. The FBI estimated that cyber wire fraud, also known as business email compromise and email account compromise, caused $5.3 billion in losses worldwide between October 2013 and December 2016.

“Put a control in place that multiple people need to be involved in approving and transmitting wires,” Pittelkow said.

5. Use technology to your advantage. “Integrate technology solutions, such as positive pay at your bank and phishing detection software at your company, to help prevent fraud and cybersecurity issues,” Pittelkow said. “Hire a firm to perform penetration and vulnerability testing to help identify ways to improve your processes. Also, keep software up-to-date, and install vendor software patches as they come out because they help to reduce vulnerabilities.”

Case in point: Had Equifax installed a patch that was available last March, 143 million people wouldn’t have needed to worry about their personal data being stolen by hackers two months later.

And if all else fails, Pittelkow has one more piece of advice for companies: carry cyber liability insurance.

“No business is immune to cybersecurity threats, but if you implement the right controls and culture in your business, you can significantly reduce your vulnerabilities,” she said.

Image: iStock/Vertigo3D

The post How Controllers Can Step Up Their Cybersecurity Game appeared first on Going Concern.

While our newsroom accomplished many good things while I was managing editor, I learned that I wasn’t really cut out for that type of responsibility—and I kinda sucked as a leader.

Maybe you’re like me and could learn a thing or two about being a good leader. So, I asked three controllers—David Bowers, CPA, of Half Acre Beer Co. in Chicago; Bernard M. Kramer of Rockville, Md.-based Goodwill Industries International; and Mark Monroe of Arlington, Va.-based services contractor PAE—about how I and others in their field can become a better leader.

“The traits that I believe you will find in every good leader include strategic vision, great team builder, unchallenged integrity, excellent listener and communicator, good decision-maker, and an affinity for change,” Monroe said.

Here’s what else they told me.

The leader as architect

Bowers, who also is the CFO of Half Acre, likens a good leader to an architect, one who has “the idea or vision and the framework of what they’re trying to work toward, but relies on the support of the team around them to make the vision come to life and achieve the end result.”

He believes good leaders exhibit the traits of empathy, fairness, creativity, and confidence. “They will also know when to rely on the opinions and advice of those who know more about a certain subject matter than they do,” Bowers said.

Because accounting is a structured field that operates within a rigid set of rules, Bowers used to think there was a right and wrong answer to every scenario and that businesses were driven solely to maximize profit for their owners.

“As I matured, I learned that decisions made for the maximization of profit didn’t always translate to being the best for the organization as a whole,” he said.

And it wasn’t until Bowers became controller of Half Acre that he was able to witness this firsthand from the brewery’s president and founder, Gabriel Magliaro.

“It is because of how he views the importance of culture within an organization that I have worked to change my leadership style to make sure I am approaching all business decisions with the same awareness and care,” Bowers said.

Monroe and Kramer agree that a good leader must be open to change and be able to adapt to changing circumstances and personalities.

“Team members change, thus the personality of the team changes, and this changes how a leader should lead,” Kramer added. “Additionally, leaders should be able to communicate.”

My failure to communicate

Ah, yes. Communication. That’s something I really struggled with as managing editor. It was always a challenge for me to lead a weekly staff meeting, for example. Communication is a skill that both Kramer and Bowers say they have had to hone through the years.

“Being able to effectively communicate a financial budget and the consequences of not staying within budget to co-workers who are not trained accountants or financial analysts is something that takes patience and skill,” Bowers added.

Another thing that I think put me at a disadvantage was I didn’t have a sensei to teach me the ways of being a top-notch leader. Yes, I’ve had bosses who I thought were very good leaders, and I tried to pattern my leadership style after theirs. But for whatever reason, I couldn’t make it work the way I wanted to.

Kramer said two people in particular influenced his leadership style.

“One taught me the importance of professional development for my staff; his goal was to develop his staff even if their development took them to new opportunities outside of the organization,” Kramer said. “The second guided me in increasing my understanding and reading of my team’s personality and matching that with the right communication method. Both skills have been very important in shaping me as a leader.”

To be (a leader), or not to be

Who knows, maybe someday I’ll find myself in another leadership role, whether leading a newsroom of journalists again or a bunch of pimply-faced teenagers at Chuck E. Cheese. Until then, here’s some more advice from Bowers, Kramer, and Monroe for both you and I to consider:

1. Recognize your team’s achievements. “Acknowledge the team’s successes—both individually and within the group,” Kramer said. “Take the things that go wrong and turn them into a learning opportunity. This does not mean you don’t hold people accountable—quite the opposite, you need to hold them accountable. The team must see that everyone is accountable, but have sensitive discussions in private.”

2. Anticipate your company’s needs well in advance. “Whether that be with insurance, benefits, financing, or reinvestment within the company,” Bowers said. “You never want to be caught off-guard.”

3. Let your managers and team members do their jobs. “If you have the right people in place, allow them to do the jobs you have given them,” Kramer said. “Nothing is more demoralizing than when a manager who expresses confidence in you then goes behind you and gives direction to another member of the team.”

4. Don’t be afraid to evolve your leadership style. “I think leadership is something you continue to develop with each passing day and year, benefited by the knowledge and experiences you gain and the lessons learned through your journey,” Monroe said.

5. Set a realistic financial budget for the next three to five years of operations. “Constantly revisit your assumptions and tweak them based on current performance,” Bowers said. “Share with other members of the management team, and make sure you’re all held accountable and working toward those shared goals as one cohesive team.”

Image: iStock/Jirsak

The post Controllers Are Leaders Too: Here Are Tips for Being a Better One appeared first on Going Concern.

Sounds dreadful, doesn’t it? But that scenario used to be a reality for the accounting department at Thrive Market, a membership-based health food retailer headquartered in Los Angeles.

That all changed in early 2017.

Cracks in the steps

The close process at Thrive Market had several moving parts, which made it extremely difficult to ensure steps had been completed and amounts were tied out, according to Ryan Frech, the company’s controller. The data lived in three separate systems—and, of course, those systems didn’t talk to each other.

“We had at least three screens to go through to complete the review,” he said. “Our checklist was maintained on a Google Doc, our reconciliation schedules were in Excel, and our general ledger was in NetSuite. Oftentimes you’d add in email for comments as a fourth.”

Even if you’re sporting three monitors on your desk, that seems inefficient. The steps in Thrive Market’s process went something like this:

• Roll forward month-end close checklist.
• Update dates to match the current calendar.
• Review checklist periodically to ensure deadlines are met.
• Review completed work when Google Doc was updated by preparer.
• Email comments to preparer.
• Re-review once comments were clear, and read through email or discuss any commentary.
• Chase individuals down for sign-offs.
• Close month-end.

If you think that’s tedious to read, imagine completing those tasks for your job.

And because general ledger activity that might impact a reconciliation was sometimes not captured, it left the door wide open for errors, according to Frech.

“An Excel spreadsheet does not get updated automatically if a journal entry changes upon review or is adjusted,” he said. “And sometimes you don’t realize your reconciliation needs to be updated until the subsequent month-end close.”

Not knowing what was ready for review right away and trudging through a manual process to ensure that review notes were cleared correctly was frustrating, Frech added.

“The worst part was trying to solve something after the close,” he said. “We’d realize a journal entry booked after review and sign-off knocked the reconciliation schedule off of the general ledger and pulled out the detail after the fact to update the schedule,” he said.

Enter FloQast

The accounting department at Thrive Market had only been in place since October 2015, according to Frech, and even though the close process he and his team were using was only a little more than a year old, a change was needed.

Frech had heard about FloQast close management software in 2014 while he was the assistant controller at Bonobos. He went through a demo of the product but decided against it at the time.

“They contacted me again when I moved to Los Angeles and joined Thrive Market,” Frech recalled. “The upgrades since the original demo looked great, so we jumped on board.”

Frech implemented FloQast during the first quarter of 2017, right around the same time other process improvements within the accounting department were being made. He said it wasn’t hard at all to sell his team or Thrive Market’s CFO on FloQast.

“FloQast had created more efficiencies to get things done with less stress in the same time period,” Frech said. “Those efficiencies were enough for everyone to get on board pretty quickly. FloQast is a good tool for communication, accuracy, and time management.”

Most importantly, the number of steps to review and the accuracy of the review have significantly improved, according to Frech.

“It has been tremendously helpful for consistency on a month-to-month basis and a great time-save from a review and reconcile perspective,” he said. “It has allowed us to spend more time on strategic initiatives rather than making sure schedules are tied to the general ledger. It also is a great way for me to check on progress and spot review areas I am not actively involved in without taking up time from the initial preparer or reviewer.”

Download this best practice month-end close checklist from FloQast and get a pre-defined template for checklist items per account, task frequencies, and preparer and reviewer deadlines. You can read more about Going Concern’s partnership with FloQast here.

Image: iStock/OcusFocus

The post Here’s How Thrive Market Woke Up From Its Month-end Close Nightmare appeared first on Going Concern.

Now the controller of the Pittsburgh Symphony Orchestra, Kowalski was working as a financial and litigation consultant for FTI Consulting at the time of Stanford’s and Madoff’s malfeasance.

“With Ponzi schemes, there are always winners (usually those on the inside or early liquidators) and losers (those who never recover their investment),” Kowalski wrote in an email. “Once a Ponzi scheme is uncovered, a clawback analysis is done to try to help mitigate the losses of everyone, even taking back proceeds from those who innocently benefited from wrongdoing.”

“For Stanford, as part of the clawback, I was tasked with searching for evidence of his use of investor money to fund cricket-related activities in the West Indies. For Madoff, I was sitting at a computer going through microfilm scans from the last 20 years and recording investment returns and customers. Looking at them, it was clear something fishy was going on. While not super exciting, it gave me a taste of how fraud and investigations impact people’s lives for the better.”

But many controllers aren’t lucky enough to have Kowalski’s experience investigating fraudulent activities. And according to the 2016 Report to the Nations on Occupational Fraud and Abuse from the Association of Certified Fraud Examiners, guess which business unit had the most cases of occupational fraud worldwide between January 2014 and October 2015? You guessed it, accounting!

So, how can controllers prevent it?

When fraud comes calling

But before we get to that, let’s take a quick look at a few types of fraud that could rear their ugly head.

According to the ACFE report, asset misappropriation was by far the most common form of occupational fraud, occurring in more than 83% of cases. Among the many forms of asset misappropriation, billing and check tampering schemes posed the biggest risks. On the other hand, financial statement fraud only occurred in less than 10% of cases.

“Asset misappropriation is more of a concern for me because as a smaller-sized entity, even a relatively minor incident comparatively could be material to my company’s balance sheet,” said Bradford Towne, CPA, controller of a small publicly traded renewable chemicals and advanced biofuels company based in Englewood, Colo.

“We recently performed a complete review of our IT and manual segregation duties controls, especially given the limited number of staff involved in our accounting and treasury functions. We were able to prove that there was no way anyone, including myself, could possibly divert corporate funds either through check, ACH, or wire without collusion.”

So, what fraud risk troubles Towne the most? “All fraud is wrong and unethical,” he said. “However, as controllers, our licenses and reputations are our currency in this business. And any situation where accountants feel undue pressure to misrepresent financial information is troubling. The obvious answer is to refuse and risk termination or resignation, but the fact these events even arise is unfortunate.”

The Pittsburgh Symphony Orchestra fell victim last year to a check tampering scheme, according to Kowalski, which led to the nonprofit organization adopting a positive pay system to prevent check fraud from happening again.

“Luckily, our bank figured out something was wrong and called to alert us the same day. (We would have seen it the next day during our regular procedures.),” she said. “It forced me to re-evaluate our check security and talk to our bank about ways to protect ourselves.”

Best practices for mitigating fraud

Kowalski believes that one of the keys to fraud prevention is just knowing what is going on within your organization.

“I walk around and talk to people. If someone makes an unusual supply purchase, I go check it out,” she said.

Here are some other fraud prevention tips from Kowalski and Towne that controllers and chief accounting officers should consider:

1. Review processes and controls over procure to pay and payroll. “Many of us are going to be controllers over medium- to smaller-sized entities, lacking their own dedicated treasury and internal audit teams, and often outsourcing IT support,” Towne said. “In addition, most of your staff, especially in the procure-to-pay area, may lack the skill set for identifying potential process or control issues that give rise to the opportunities to commit fraud. If you are in charge of treasury or payroll as the controller, take the time to evaluate the processes and systems involved.”

2. Keep a handle on your cash, especially in small businesses. “Small organizations seem like family, but trust shouldn’t trump good internal controls,” Kowalski said. “Keep cash under lock and key, and reconcile it regularly.”

3. Review key customer contracts. “In the Topic 606 world we live in now, this is an area where you need to understand how the company before you arrived came to the decisions it did on revenue recognition,” Towne said. “Revenue recognition is, historically, a significant contributor to corporate fraud and ultimate restatements. Make sure you are comfortable with the conclusions reached.”

4. Pay attention to details. “My experience in investigations taught me to listen carefully to what people say, and ask the right questions,” Kowalski said. “Sometimes what someone doesn’t say is more telling than what they do. The solution to your problems is often in the details. You have to understand the nuts and bolts of a situation in order to understand the big picture.”

5. Understand your company’s business. “I have often seen accounting teams working in a vacuum from operations,” Towne said. “When an error occurs, this often is because accounting misunderstood either a contract’s terms or the underlying economics or risks of a given transaction or estimate. But in other cases, it can result in failure to identify fraud, especially if the central accounting team relies on data or other information from operations or satellite accounting teams.”

6. Don’t forget, everything has a financial component. “Establish relationships throughout your organization so you are among the first to know of new initiatives and developments,” Kowalski advised. “Help others understand how their activities impact finance and how you can help them achieve their goals.”

Image: iStock/Masuti

The post Controllers, Don’t Skim On These 6 Tips to Thwart Fraud appeared first on Going Concern.

They want to learn what your experiences with the month-end close are. The survey is short and harmless, and you’re doing us a solid. The survey appears below or you can follow the link above.

Thanks for your time and for supporting Going Concern.

Image: iStock/olm26250

The post Survey: Tell Us Your Experiences With the Month-End Close appeared first on Going Concern.

As children, Bill Brundage had visions of being a professional athlete or musician, and John Wall wanted to be a time traveler (an idea he hasn’t completely abandoned, by the way). Who would’ve known they’d end up being CFOs of successful companies? But here they both are, leading the finance functions at Ferguson Enterprises and Cadence Design Systems, respectively.

Here’s another similarity the two men share: They both had stints as corporate controller of their organizations before being given the CFO seat—a position they said helped prepare them for their current roles.

“I volunteered for everything strategic—all the grunt work on M&A, assessing capital allocation strategies, helping any of the executive management team with their challenges, helping the investor relations team, and going on the road to all sorts of out-of-the-way places to meet investors,” said Wall, who was appointed senior vice president and CFO of San Jose, Calif.-based Cadence in September 2017.

“Picking up these tasks regularly afforded me the opportunity to spend time with the CEO and CFO to understand the top things that kept them awake at night—and try to help them find a solution.”

Early on in his career, Erich Schnaufer had a strong desire to become a CFO. As his career progressed, Schnaufer took steps to become an expert in the roles he had, and once doing so, he began looking to increase his knowledge in other areas—both financially and commercially.

“I was open about my desire to advance my career, and my manager became my advocate, involving me in meetings and giving me opportunities to learn as much about the [CFO] role as possible,” said Schnaufer, who was appointed CFO of Chicago-based Ryerson Holding Corp. in 2016, after serving as the metal processing and distribution company’s controller for eight years and two years as its director of financial reporting. “That’s not to say I didn’t have to work hard to earn my position as CFO, but I built a network of people I knew would support me in my career advancement.”

Being a controller clearly offers a path to senior management; so why then are companies slamming the brakes on controllers moving up the ranks to CFO?

Taking an alternate route

According to a 2007 analysis by executive search and recruiting firm Korn Ferry, 33% of Fortune 500 CFOs who were promoted in 2006 came from the post of controller. But controllers were slighted at companies that sought a new CFO from outside:

Only 4 percent of external hires were controllers, while 58 percent were already corporate or divisional CFOs elsewhere.

More recent data from Korn Ferry isn’t too promising either. As of the second quarter of 2017, only 17% of CFOs from the 500 largest U.S. companies came from the controller or chief accounting officer role, up from 14% in 2016.

So, what gives? “The CFO role has become increasingly complex,” said Bryan Proctor, global leader of Korn Ferry’s Financial Officer Center of Expertise. “The ability to manage the reporting and control of the organization has long become table stakes. CFOs are now adding value in more ways—commercially, strategically, and operationally. Because of this evolution, the profile and source for CFO succession purposes have expanded. This has given more competition to controllers in how they drive value compared to their functional peers.”

As controllers, Wall, Brundage, and Schnaufer wanted to be a part of strategy discussions and understand the ins and outs of business operations, which made them worthy candidates to fill vacant CFO seats within their organizations.

“The holistic understanding of the accounting and financial reporting processes was a very valuable skill set I gained as corporate controller,” said Brundage, a former PwC’er who joined Newport News, Va.-based Ferguson in 2003 and was appointed CFO in March 2017.

“But I believe it’s important to have a wide variety of skills and experiences to apply to the [CFO] role. You need to be well-versed in financial analysis, with the ability to simplify complex data into actionable information to drive the business and results. Even more so, it’s critical to have strong business acumen and to spend time in operations to ensure you really understand what makes the business tick.”

Schnaufer added that working as a controller “required a great deal of structure, planning, and organizational skills, while as CFO, the world is fluid and forward-looking, which requires flexibility and creativity.”

“The world is not black and white; there is no one right answer. I am constantly factoring in multiple variables and making decisions based on the most recent data available,” he said. “In many ways, it’s like molding a lump of clay. You need a vision and then you can begin getting to work.”

And good news, controllers: Since becoming CFO, Brundage said he’s surprised by how little time he now spends on true accounting and financial reporting activities.

“Fortunately, I have a fantastic team in place,” he said. “Most of my time is spent working with our CEO, COO, and business unit leaders, helping to set and execute strategy and focusing on M&A opportunities.”

What does it take?

It took Wall 20 years of working in the accounting and finance trenches at Cadence before he became the company’s CFO. His message to controllers: Don’t give up.

“The road to a CFO role can often require a large degree of passion, perseverance, and luck,” he said. “Treat every day like it’s an extra day of rehearsal.”

Here are a handful of other tips from Wall, Brundage, and Schnaufer that controllers should consider while cruising along the highway to CFO:

1. Ask for advice. “People are generally kindhearted, so they will be happy to give you advice,” Wall said. “You just need to ask for it.”

And after you ask for advice, be prepared to listen, he added. “I know friends who followed my guidance to ask others for advice but subsequently got upset by receiving criticism,” Wall said. “Criticism is a gift, and a way to learn and progress in your career development.”

2. Gain exposure to areas outside of the controllership function. “Learn your industry and business inside and out,” Brundage said. “Take on challenging assignments that will push you outside of your comfort zone.”

3. Look at things from the top down and the bottom up. “It’s important to see the big picture and to understand how the individual pieces of the puzzles fit together,” Schnaufer said. “Just as the space program was not built in one day, many of the issues I deal with are extremely complex and require a systematic approach to break the problem down into manageable pieces.”

4. Be a dependable leader. “Aim to solve problems, and always follow through and do what you said you would do,” Wall said. CFOs also must have the ability “to influence and connect with associates at all levels and across functions,” Brundage added.

5. Don’t stay stagnant. “I didn’t specifically set my sights on CFO, but throughout my career, I’ve always looked for opportunities to grow and challenge myself,” Brundage said.

Schnaufer agrees, saying that successful executives understand how to calculate risk vs. reward, especially when it comes to their own careers.

“When I was controller, I made my manager aware of my career aspirations and, in the process, gained a mentor so that when the opportunity arose, I was well-positioned to take on the new role as CFO,” he added.

6. Treat each mistake as a learning opportunity. “I encourage my team to take controlled risks and then quickly learn from mistakes,” Wall said. “In any field, the person with the most experience is often the person who has made the most mistakes. If you don’t make any mistakes, maybe you’re not trying hard enough. I’ve certainly made my fair share, but I learned from every one.”

7. Build a strong team. “Controllers must be both technically and managerially strong—often this second skill is the harder one to learn,” Schnaufer said. “You need to be able to know with whom and how much to delegate. Your staff will only grow and develop if they’re given challenges, which at times will stretch them into uncomfortable situations. You must learn to effectively delegate in order to advance in your career; otherwise you will get stuck doing your last job.”

8. Communicate clearly. “I’m a firm believer in the principle that if you can’t explain something simply, you don’t understand it well enough,” Wall said. “Good communication will help you develop future leaders throughout the organization.”

The post The Road From Controller to CFO Is Becoming Less Traveled appeared first on Going Concern.

It comes from a speech given by Wesley Bricker, the Chief Accountant of the SEC, and it’s just the kind of thing you need to hear when you’ve recently spent a holiday hearing about how great other people’s careers, kids, sex lives, or vacation plans are.

Without reliable financial information, supported by high quality accounting and auditing, investors cannot properly judge the opportunities and risks of investment choices to allocate capital to public companies, a key part of the American economy. Accounting and auditing may not readily grab the general public’s attention, but they are nonetheless important to the livelihoods of all Americans.

My god, Bricker should be tweeting this stuff. And since he gave this speech at the FEI’s Financial Reporting Issues Conference, I imagine more than a few people in the audience did one of these:

Feel free to bookmark this page for any time you’re questioning your value in the world.

[SEC via Matt Levine]

The post Here’s the Only Affirmation Accountants Need appeared first on Going Concern.

I know, I know, you’re probably tired of seeing or hearing the term “war for talent.” It’s overused (I’ve used it twice already; three times if you include the title), and some even call it pervasive. But if they covet victory, accounting and finance leaders must have their swords and shields ready at all times.

At the vanguard of retention

Sue Taylor, chief accounting officer at Facebook, believes employee retention is as equally important as recruitment.

“At Facebook, we are a strengths-based organization, which means that we want people in roles that they are both good at doing and that they enjoy,” she said. “Both of these are key elements of achieving fulfillment at work.”

Joseph Kehoe, senior vice president of financial management at Oak Brook, Ill.-based Republic Bank of Chicago, said accounting and finance leaders can lose sight of employee retention in the recruitment process and don’t realize the quality of the employees who are right under their noses.

“The environment for top talent has become tougher,” he said. “If we are able to hire the right individual into an entry-level position, we can groom them for advancement and hopefully not have to deal with the tug of war for talented individuals.”

Recent research backs up the importance of employee retention. A study published earlier this year by Kronos Inc. and Future Workplace revealed that 87 percent of organizations consider improved retention a critical or high priority over the next five years.

“New employees cost a lot of money—plain and simple. You have to find ways to grow the business and grow your people. Keep them engaged, and reward them with benefits, bonuses, and raises,” said Angela Pronto, assistant controller at LogRhythm Inc. in Boulder, Colo.

And Angela is right – the cost of employee turnover can give accounting and finance executives a serious case of heartburn. The Society for Human Resource Management (SHRM) explains how costly turnover can be:

Research suggests that direct replacement costs can reach as high as 50%-60% of an employee’s annual salary, with total costs associated with turnover ranging from 90% to 200% of annual salary. Examples include turnover costs of $102,000 for a journeyman machinist, $133,000 for an HR manager at an automotive manufacturer, and $150,000 for an accounting professional.

Whoa, $150,000 for an accounting professional? Remember that next time you’re questioning your value.

Mission accomplished?

It goes without saying that having an engaged and happy workforce results in professionals who are not as stressed out, less likely to leave their job, and who are better performers.

But how can accounting and finance leaders win this crusade? Good question. This white paper from Oracle provides some insight:

Because low talent retention produces a substantial drain on corporate resources, leaders need to know which practices work and what they should focus on to retain and motivate their workforce. For instance, a talent management strategy that allows employees to build a network, seek and find mentors, and help them grow and develop while feeling more connected and engaged is one means of retaining talent.

Another approach to increasing retention is hiring based on culture and values, according to Brent Gleeson, a Navy SEAL, speaker, and leadership consultant. He wrote in Forbes:

Employee retention starts with first being able to clearly articulate what the organizational culture is. What are the aligned values, beliefs, behaviors, and experiences that make up the organization’s environment?

Hiring employees that don’t mesh well with the existing or desired company culture leads to poor work quality, decreased job satisfaction, and a potentially toxic environment. This results in turnover which has high costs—both hard and soft.

And you can’t discuss employee retention strategies without mentioning compensation and benefits. Compensation is king for both recruiting and retention, Dan Schawbel, research director at Future Workplace, wrote in Fortune, and “if you don’t pay employees fairly, they will leave—and no perk will change their mind.”

Sure, I’d like to make just as much money as the next guy or gal, but I don’t agree that compensation is the end-all, be-all factor in why a person might leave their job. Personally, I was unhappiest in the jobs that paid above what I thought I was worth and I didn’t stay there long. The jobs where I made less were often the ones where I was the happiest because of the people I worked with and the perks offered: working at home, flexible schedules, and more vacation time.

And according to the SHRM, compensation and pay satisfaction “are relatively weak predictors of employees’ decisions to leave,” and offering pay increases or bonuses “may not be the most efficient way to address retention.”

Here are five other strategies from Joseph Kehoe, Angela Pronto, and Sue Taylor that can help controllers, CAOs, and other accounting and finance leaders take the tension out of retention:

1. Invest in training. Work with your employees and train them the way you were trained, Kehoe said. “You’ve been successful in your career for a reason; this is the opportunity to pass it on,” he added.

2. Make communication clear about how employees can grow into their next role. “Find out from them what they want that next role to be,” Pronto said. “Attempt to fit that into your team structure as you grow.”

3. Provide the resources employees need to do their jobs well. And actively remove any roadblocks that hinder their success, Taylor said.

4. Don’t be skimpy on praise and recognition. “Tell employees regularly they are doing a good job and that you appreciate them,” Pronto said.

And provide opportunities for employees to shine and impress senior management, Kehoe added. “You want to make sure your employees are recognized for what they offer the company,” he said. “This will make them feel more a part of the organization and that what they do matters.”

5. Show care by understanding what is most important for each person’s experience at the company. “Building a strong community at work should be a company-wide effort, and leaders across various organizations should work collaboratively on this,” Taylor said. “That said, leaders and managers play an important role in defining the experiences employees have every day.”

The post Don’t Let Employee Retention Be a Casualty in the War for Talent appeared first on Going Concern.

Going Concern’s been at this for the better part of a decade, and one of our big goals for awhile now has been to produce more content for our readers who leave public accounting for industry. Which, let’s face it, most of you are going to do.

You hear about us when you’re at an accounting firm, then move on to become senior accountants, accounting managers, controllers, VPs of finance, CFOs, or whatever. When that happens, we still want you to find useful content on Going Concern.

That’s what this little missive is all about. We’re excited to tell you that today we’re announcing a partnership with FloQast, a Los Angeles-based startup built by CPAs.

We like the team from FloQast a lot. They build close management software for accountants who work at businesses like GrubHub, Stack Overflow, DocuSign, even the Golden State Warriors. They have CPAs working in all functions of the company, including the co-founders, product development, customer support, and sales. We decided to partner with FloQast to help bring more readers to technical accounting topics, and hopefully you’ll learn more about FloQast in the process. Both sides want this to be about great content, not over-promotion, although we wouldn’t do this if we didn’t think FloQast was great already.

Okay, now that that’s out of the way, we’ll try to address a few questions you may have about this partnership:

1. What kind of content will be posted? We’re going to start writing more technical features that will help you in your daily work, including articles for controllers, chief accounting officers, VPs of finance, and CFOs. Also, FloQast will sponsor the Industry section of the site.

2. Who’s going to be writing these features? We’re excited to announce that Jason Bramwell has joined our team. You may have seen Jason’s byline over at AccountingWEB, where he spent four-and-a-half years writing and editing content for accounting and tax professionals.

3. How will this affect Open Items? Okay, maybe you’re not asking this question, but it’s worth mentioning that tomorrow we will be expanding Open Items with technical sections for discussions and Q&A on audit, financial reporting, and tax issues. You’ll be able to crowdsource solutions to your most vexing accounting problems in Open Items. We think this will come in extra handy when you’re afraid of looking stupid at work.

4. Why are you doing this? We’re always trying to make the site better. Our partnership with FloQast will help us do that. Plus, this kind of business relationship reduces our need to put ads on the site. We think that makes for a better user experience, and we think you’ll agree.

Of course, we want you, our audience, to be involved. You’re on the front lines, so your feedback and article ideas are going to help us craft the most relevant and useful content possible. Let us know what kind of topics you want us to cover and how we can continue to improve the site. You can send your ideas and questions to editor@goingconcern.com or leave them in the comments.

Thanks again for your support of Going Concern.

Image: iStock/Peshkova

The post Announcing Our Partnership with FloQast, the Startup Built by CPAs appeared first on Going Concern.

Every time the FASB drops a new Accounting Standard Update (ASU), it leaves you feeling weary. Maybe all the U.S. GAAP decluttering and other guidance purging only sparks joy for standard setters?

Sure, it’s meant to make your life easier, and maybe long-term, it will, but right now, it definitely doesn’t.

Enough already?

There have been many “completed FASB projects” in recent years that have modified how we recognize revenue, leases, investments, inventory… and the list goes on and on. In 2017, there have been 13 ASUs issued. 20 in 2016. 17 in 2015. It’s a hassle to keep up.

When I last covered standard overcomplication, it seemed like the FASB’s simplification initiative had hit a wall.

Lawrence Smith, a FASB member, alluded to the fact that resistance to change is crippling them from proceeding with the initiative… “When we started the simplification initiative we had a list of roughly 65 to 70 items that were suggested improvements–things that we could simplify. We probably did about five of them with relatively little resistance and everything we’ve tried to do since then has met with some resistance in one way or another.”

It may be picking up the pace again. Another couple of simplifications dropped in ASU 2017-11. Or, if it isn’t, at least the FASB is still shaking things up, whether it’s officially part of the simplification or not. Some changes, like dropping the temporarily restricted category from not-for-profit accounting seems easy enough: just combine temporarily restricted and permanently restricted net asset classes into one net asset class and, bingo, you’re done.

Others make your eyes cross. For example, the changes to revenue recognition still seem a little ominous even with Tim’s expert portrayal of the separation of performance obligations. But, we need to learn to love these five recognition steps ASAP. They start becoming mandatory for lots of companies in a little over a month. The one-year deferral graciously granted by the FASB flew by; the first deadline for public companies is December 15, 2017.

How did we get into this mess?

Not only did we let this complexity happen, we asked for it like a grande, iced, sugar-free, vanilla latte with soy milk. Written almost 20 years ago, this 1999 Journal of Accountancy article spells it out:

The main reason for the increase in the volume and complexity of accounting guidance is that many auditors, corporations and regulators ask for it. They want to have clear answers for nearly all possible situations they might encounter. While most business people and senior partners of audit firms support general principles in theory, they often ask for much more detailed standards in practice.

One explanation for this is what I call the show me syndrome: the tendency for many companies or auditors to treat accounting standards as a book of laws and take the position that an accounting treatment not explicitly prohibited must be permissible. Thus, we sometimes hear clients say to their auditors show me the specific rule that says I cannot do so-and-so.

I’m glad at least we started dumping everything into one spot: the Codification. That was a massive step in the right direction. It’s basically the guest-room closet for accountants, so full you can’t close the door. If it’s somewhere, it’s in there.

The problem is that it’s really not fun to start going through the closet, to continue the analogy, and decide what to ditch.

And, we — as accountants — don’t just have one messy closet. We’ve got at least two. Dare I throw in taxes? Ugh, tax reform. Can we pick on another profession for a little while?

Is it worth it?

Is all of this consternation worth anyone’s time? On one hand, the reluctance to make changes could end up hurting us and we will have a convoluted set of standards forever, and never reach convergence with IFRS. As an aside, I remember when my professor in college said that would happen around 2011. I think 2030 is more like it.

But is that pace too fast or too slow?

Too much rapid change is bound to result in comparability and consistency issues. Right now, we may be tottering on the side of too much, and there are bound to be lots of reporting mistakes made over the next couple years. But, would slowing down help? We are known for standard update procrastination, so it may not matter. Unless someone conjures up some urgency like this guy suggests for ASC 606 (and I don’t know how you’d manage that), we’re dealing with quite the catch-22.

Image: Photo by Jeffrey Wegrzyn on Unsplash

The post Simplifying Accounting Standards Still Complicated appeared first on Going Concern.

The post Exposure Drafts: It’s Not You, It’s the Time Value of Money appeared first on Going Concern.

It may feel natural to some accounting firms to resist this trend. After all, how can you monitor your employees and their workflow if you can’t physically see them?

But embracing remote CPAs and accountants can have a positive effect on your bottom line and your ability to achieve business goals. Here are four ways the remote work trend can improve your business.

Reduced overhead costs

When employees provide their own workspaces and technology, the cost savings for businesses can be substantial. Companies can maintain a smaller office—or even no office at all—cutting down on rent and equipment costs. Remote work can also slash your IT budget, as you may not need to purchase and manage as many computers, smartphones, routers, etc.

“Companies have caught on that not only are their employees happier being able to work remotely, but that it also saves them money,” says Patti Scharf, Co-Founder, and COO, Catching Clouds.

More competitive recruiting

Today’s accountants know that with the ubiquity of connected technology, they can perform much if not all of their work from anywhere. More and more, the best talent is valuing the ability to work remotely in their career decisions.

“Employees are asking why they can’t work from home, and that’s putting pressure on companies to offer alternatives to remain competitive,” says Scharf.

Millennials are even more likely to seek a position that allows them to telecommute. A 2015 study showed that 68 percent of college grads would weight a potential job more favorably if the company allowed remote work at least some of the time.

Accountingfly keeps an eye on what happens in the accounting labor market, and in 2016, a remote CPA job got 7 TIMES more applicants than an in-the-office CPA job on Accountingfly.

Today’s talent is valuing remote work and a stronger work/life balance. And if you’re not paying attention to this, then they won’t pay attention to you.

More effective business strategy

With employees working in a physical office, it’s easy for managers to get distracted by factors that don’t affect the bottom line. For instance, it’s almost impossible for the boss not to notice who shows up on time and who leaves early, regardless of those workers’ performance.

“It can be painful for a lot of companies and managers to have to shift to paying attention to metrics that matter,” says Scharf. “When a company has remote workers, they have to get extremely clear about their expectations and how they’re going to measure performance, and they need to be able to effectively communicate those expectations to their employees.”

According to Scharf, this shift in strategy can be cumbersome, but the results are worth it. “It’s a very difficult dynamic to master, but if a company can do it successfully, the rewards are great,” says Scharf.

Better employee engagement

Strange as it sounds, remote employees are often more engaged with co-workers and supervisors than their in-office counterparts. According to Harvard Business Review, 87 percent of remote workers feel more connected through the use of video conferencing. We can only offer conjecture as to why this is, but perhaps the comfort and freedom of working from anywhere helps employees connect with each other more openly and honestly.

If you’re a firm that embraces remote CPAs or high-level accountants, Accountingfly can help you highlight that competitive advantage to the best accounting job candidates. Click here to reach out for more information.

The post Embracing Remote Accountants Can Benefit Your Business appeared first on Going Concern.

“Revenue recognition feels like a big, big issue,” said Zuora CEO Tien Tzuo, whose company specializes in software for managing subscriptions. “This feels as big or bigger than Y2K or SOX. SOX was a big heavy cost, but it wasn’t like you were in danger of missing your earnings call, or you had to report earnings that differed from expectations, not because anything changed in your business but because of accounting standards. We should be a little worried. There’s a surprise looming when earnings season kicks off at the start of next year and I don’t think we’re ready for it.”

Back in June we learned that more than one-fifth of companies admitted that they weren’t going to be ready. Here we are, three months later, and Tzuo’s concerned that there’s still not enough urgency. Naturally, he has a solution:

Tzuo suggested it might get more attention from companies if it had a catchier name.

“When we say things like ASC 606, the problem is you just don’t have an Enron, a Y2K,” he said. “ASC 606? I don’t know what you’re saying. We’ve got to give this thing a sexier name. It should be called ASC 666.”

I think he’s onto something. Giving anything an END TIMES twist will always get people’s attention. Just look at all the press this quack is getting for saying that “the beginning of the end of the world as we know it” will commence on Saturday. If he’s right maybe FASB will call the whole thing off. No one is going to care about the deliverability of a contract if the Tribulation is going on.

[AT]

Image: William Blake/Public Domain

The post The New Revenue Recognition Standard Needs a Sexy Nickname, Okay, Sure appeared first on Going Concern.

Double-o Gearty wraps things up with allocation and revenue recognition. Just watching him talk about this stuff makes you smarter. It might also help you fall asleep at night, so set it on a loop under your pillow if you’ve been lying awake at night.

Thanks for checking out our series with Tim Gearty. You can binge-watch it anytime on our YouTube channel.

The post Accounting for Stuff With Tim Gearty: Allocation and Revenue Recognition appeared first on Going Concern.

Now, you might think you already know everything there is to know about transaction prices under the new revenue recognition rules. And, hey, you just might. But you don’t know them the way Tim Gearty does, and you sure don’t spit out mnemonics like it’s your job. It is Tim Gearty’s job. Literally. We’ve seen his contract, and the mnemonics clause runs three pages.

Get down on this revenue recognition wisdom. It will make you a better accountant.

Tim Gearty will return in Part IV of this series in the coming weeks. Subscribe to our YouTube channel to be the first to receive updates.

The post Accounting for Stuff With Tim Gearty: The Transaction Price Under the New Revenue Recognition Rules appeared first on Going Concern.

Earlier this year, we discussed a tradecrafty story out of The Wall Street Journal of a BDO auditor who “casually wandered around the accounting firm’s New York offices, striking up conversations with colleagues.” Little did anyone know, the auditor recorded those conversations for the Federal Bureau of Investigation with “a tiny recording device disguised as an ordinary Starbucks gift card” about AmTrust Financial Services, an audit client.

You see, AmTrust’s accounting practices have come under scrutiny of many interested parties besides the FBI, including the Securities and Exchange Commission, Harry Markopolos’s merry band of fraud-busters, and a slew of short-sellers. This scrutiny has put lots of pressure on the company. AmTrust announced a big restatement back in April, and its stock has been trading near its 52-week low ever since.

And now a new story from the Journal reports that some “mysterious strangers” have been popping around AmTrust’s most notable critics. One of these involved an analyst at research firm at GeoInvesting, and his suspicions grew for a very obvious reason:

Chris Irons, an analyst at research firm GeoInvesting LLC, which has published several reports critical of AmTrust’s accounting practices, said he was contacted in July by a woman who identified herself as a London-based consultant to a European software multimillionaire seeking contributors to a new investment website. He agreed to meet at a Philadelphia-area restaurant.

At the dinner, Mr. Irons said, the woman, whom he described as gorgeous, plied him with drinks and slipped in several questions about critiques of AmTrust and its accounting methods. “It was the second or third follow-up question on AmTrust that gave me a lot of pause,” he said, adding that she “laughed at many things I said that probably weren’t that funny.”

Okay, maybe we took some liberties with the headline, but if a gorgeous woman is throwing liquor at you, asking questions about a company’s questionable accounting, some corny wisecracks are going to get thrown in. That’s just a fact. Of course, if she keeps asking about the accounting, and the jokes keep getting worse, even the densest of men will recognize when the laughs start ringing hollow.

In this case, the analyst’s suspicions were right. “Diana Ilic” turned out to be a phony name and the consulting firm she purportedly worked for had a mailbox drop as its London address. This suspicious encounter was one of many experienced by critics of AmTrust since last summer, but the only one that we suspect to have involved the  enjoyment of accounting humor under false pretenses.

[WSJ]

Image: iStock/Bobex-73

The post Analyst Rightly Grew Suspicious of Gorgeous Woman Who Laughed at His Accounting Jokes appeared first on Going Concern.

This time Lord Gearty covers the separation of performance obligations. So pay attention, you’ll learn something.

Stay tuned for more on the new revenue recognition rules from Tim Gearty and Going Concern in the coming weeks. And subscribe to our YouTube channel to be the first to receive updates.

The post Accounting for Stuff With Tim Gearty: Separation of Performance Obligations appeared first on Going Concern.

Anyone interested in becoming a PCAOB member? It sounds like there’s a bunch of change coming, based on the public statement from new SEC Chairman Jay Clayton:

I am very pleased that Chairman [James] Doty has agreed to continue to serve as the Chairman of the PCAOB as we commence the process for appointing his successor and new Board members. I believe this will ensure the continued execution of the PCAOB’s mission as the PCAOB transitions to new leadership.

The statement also points out that “of the five PCAOB Board seats, one is vacant, two are held by members whose terms have expired, and one is held by a member whose term will expire in two months.”

To recap: Jay Hanson’s seat needs to be filled, Chairman Doty will be replaced, and the possibility remains that two other seats could have new members.

If you consider yourself worthy of one of these seats, you can drop the SEC a cover letter and résumé by September 1.

[SEC]

The post The PCAOB Could Look Very Different, Very Soon appeared first on Going Concern.

Going Concern has teamed up with CPA review legend Tim Gearty to present a series of videos to help educate you on the new revenue recognition rules without combing through the FASB website.

Not that you should ignore the FASB! They’re the ones in charge after all. But it never hurts to have a little Tim Gearty in your life.

Stay tuned for more on the new revenue recognition rules from Tim Gearty and Going Concern in the coming weeks. And subscribe to our YouTube channel to be the first to receive updates.

The post Accounting for Stuff With Tim Gearty: The New Revenue Recognition Rules appeared first on Going Concern.

This CNBC report details the testimony of Corey Massella, who was a partner at Citrin Cooperman, the firm helping Shkreli’s company, Retrophin, get ready to go public. Shkreli is currently on trial for securities charges. According to Massella, Shkreli’s business is the stuff clients from hell are made of. Highlights include:

• Retrophin’s accounting described as “very chaotic.”
• Shkreli repeatedly sending “changes in the stock ownership tables,” that caused an exasperated Massella to write “WTF?” in an email.
• Shkreli getting testy over Citrin Cooperman’s questions about contractors and their requests for Retrophin’s agreements with them.
• Numerous head-scratching debit card transactions for “iTunes, Starbucks and travel expenses.”
• Compensation payments to Shkreli that didn’t run through payroll, including “a $575,000 transfer from Retrophin to Shkreli’s personal bank account” that was explained as “back pay and ‘bonus pay.'”

Then there’s this doozy:

[A] year after beginning work for Retrophin, Massella said, his accounting firm flagged a $4,130 expense to Retrophin paid to the Borgata hotel in Atlantic City, New Jersey.

When Shkreli was asked about it, Massella said, he replied, “Martin’s trip to Atlantic City.”

When the accountants asked Shkreli the purpose of the trip, he replied, ‘No business, Shkreli to refund to company,’ ” Massella said.

The final straw for Citrin Cooperman wasn’t another brazen transaction or ambiguous justification, but seems to be Shkreli’s sister’s email decorum:

Joel Cooperman, managing partner at Citrin Cooperman, in his email resigning the firm’s work for Retrophin, blasted Shklreli’s sister for her “outrageous and rude” email to one accountant, according to testimony Monday.

Of all the indignities that accountants have to suffer, you’d think dealing with rude emails would be pretty small potatoes. Although it does make for a fine capstone to putting up with a bunch of shady behavior.

[CNBC]

Correction: An earlier version of this post erroneously stated that Citrin Cooperman was the auditor of Retrophin.

Image: Wikimedia Commons

The post Egad, Pharma Bro Martin Shkreli Was an Insufferable Client appeared first on Going Concern.

The Association and CPA.com Startup Accelerator will seek to support as many as five early-stage companies during the next year. The focus will be on startups in two key areas:

• Technology and financial information, which could include advances in artificial intelligence, automation of routine tasks, and the application of blockchain/digital ledgers; and
• Professional competency innovation, which could encompass machine learning to personalize professional education, collaboration tools for mentors and experts, and improvements in measuring professional competency, among other categories.

“The Association and CPA.com have a deep base of knowledge and resources to offer entrepreneurs looking to find a foothold in the accounting ecosystem,” Lawson Carmichael, the Association’s executive vice president for strategy, people, and innovation, said in a news release. “And for us, the startup accelerator offers a chance to ‘see around corners’ and take a more long-range view of opportunities in business transformation and innovation. There’s a compelling business case for collaboration.”

Whoa, an AICPA Startup Accelerator? How did you totally miss the opportunity to call this XYZ Combinator? Come on, you guys!

Anyhoo, you’ll notice that first bullet point is especially dangerous, as so many careers within the profession are based solely on routine tasks. But hey, if someone can figure out to automate that process, awesome. Software doesn’t need a vacation, it doesn’t get pregnant, it doesn’t sue for sexual harassment, and it definitely doesn’t go on Going Concern trashing its employer. In other words, exactly what the firms want so they don’t have to put up with your crap.

Funnier still is that CPA.com’s president, CEO and weekend larper Erik Asgeirsson refers to this initiative as “Shark Tank” for startups. If you recall, Mr. Shark Tank himself Mark Cuban told SXSW in March that he believes automation will totally change the way we work, in a way that leaves those without critical thinking skills in the dust. “I would not want to be a CPA right now,” he said. “I would not want to be an accountant right now.” That statement did not sit well with the AICPA, who wrote a strongly-worded blog post in their own defense addressed to Cuban. (Because they do not mind getting defensive and then setting others straight.)

And yet, here they are just a handful of months later going all in on automation that could potentially demolish a large chunk of the profession. Think Fallout 5: Spreadsheet Jockey; melty-face ghoul accountants wandering the wasteland desperate for just one last tickmark.

We get it, accountants have to be relevant and innovation-y. But let’s remember who makes up the majority of your member base: human robots built on largely routine tasks. You might be wise not to elbow them out of the way so enthusiastically.

Image: iStock/leremy

The post The AICPA Is Trying to Innovate You Right Out of a Job appeared first on Going Concern.

This is from last week but seems worth sharing. Dick’s Sporting Goods announced in a SEC filing that it made a $23 million “computation error” that overstated its “adjusted earnings” and that’s mildly embarrassing:

The company discovered it had inadvertently included its asset impairment charges in two places, in effect double-counting the costs, said Lee Belitsky, chief financial officer for Dick’s Sporting Goods.Mr. Belitsky emphasized that those calculations occurred outside of the company’s official earnings reported using generally accepted accounting principles, known as GAAP.

“It’s a correction of a supplemental reporting table,” Mr. Belitsky said in an interview.

“Since it was incorrect and it had been provided to investors, we figured we would correct that,” Belitsky also said. I wonder how many people looked at that table before they sent it out. I wonder if anyone feels the need to apologize. In the end, it’s just a mistake, but it’s still a $23 million mistake, which may have affected someone’s decision about investing in a monster sporting goods store, but probably didn’t.

CEOs

Grant Thornton announced that Peter Bodin will be its new global CEO, succeeding Ed Nusbaum on January 1, 2018. Bodin led GT Sweden for 16 years and also served as the Chairman of the Board of the global firm for five years.

Criminal masterminds

Remember way back in 2012, when everyone was demanding that then-presidential candidate Mitt Romney was demanding he release his tax returns? Oh, man, those were good times. If you recall, at one point, someone claimed to have stolen Romney’s returns from a PwC office in Tennessee and held them for a 1 million Bitcoin ransom. That turned out to be a hoax, of course, and clues that included pictures of cats led investigators to a man who was eventually convicted of various extortion-related crimes.

Well, that guy, Michael Mancil Brown aka Dr. Evil, has successfully appealed his four-year prison sentence. A report from The Register explains that a panel of judges agreed that the possibility that someone else may have used Brown’s computer was enough to “vacate the sentence.” Of course, the best stuff was the comical details of how he was caught:

All three flash drives contained a file named “Romney1040-Collection.7z.” … The unallocated space on the drives also held text strings and two photos of cats. The PricewaterhouseCoopers flash drive held the text string, “5276 dolphin kathryn.” … The Democratic Party drive had the string “4154 dolphin KnightMB.”

A series of Google searches using “KnightMB” revealed an email address, knightmb@knightmb.dyns.org, and that a 33 year-old Tennessean named Michael Brown made online posts connected to that address.

“Dr. Evil” had used that email address for his AT&T account, his wife’s name is Kathryn, and he’d posted videos on YouTube as KnightMB.

Obviously the moral here is: Mitt Romney shouldn’t have released his tax returns.

Previously, on Going Concern…

Marsha Leest wrote about how to make a job search plan. In Open Items, someone’s asking about pricing for a startup CPA firm.

In other news:

• New AIG CEO Brian Duperreault Says He Won’t Break Up the Company
• Study finds signs of accounting manipulation in revenues reported by companies
• About those “tax deductions for birds flying across America.”
• Stop eating avocado toast, if you want to buy a house, says a real estate guy.
• This remote island in the South Pacific is covered in 18 tons of our trash

Get the Accounting News Roundup in your inbox every weekday by signing up here.

The post Accounting News Roundup: Computation Errors and Grant Thornton’s New Global CEO | 05.16.17 appeared first on Going Concern.

I had no idea that International Management Accounting Day was on May 6th. Did the management accountants have to recognize the holiday by going into work?  That seems more likely than a management accountant march or a management accountant Derby party.

Anyway, if you weren’t aware of the holiday, then I’m sure most of you management accountants out there in Internetland can observe the holiday today by…working.

Creative tax arguments

Creative ideas are essential to successful tax planning, even if those creative ideas go beyond the range of plausibility sometimes.

Strip clubs, for reasons we won’t get into here, tend to stretch the bounds of creative financial ideas of all kinds. In the case of the Penthouse Executive Club in New York, it claimed:

its dancers are love doctors offering the same nontaxable services that a massage therapist or a sex shrink provides.

I understand the argument, and in certain contexts, it might be compelling, but finding a sympathetic taxing authority would be pretty difficult.

Accountants behaving badly

You’d think that with the high demand coupled with the (seemingly) short supply, there’d be little dissatisfaction about compensation among the accounting class. But life consists of human nature, not just economics, so every once in awhile, an accountant unhappy with her pay may take matters into her own hands.

That is what’s alleged in the case of Sarah Batenhorst of Lincoln, Neb. who was an accountant at the Nebraska Rural Electric Association:

Batenhorst adjusted account ledgers to increase her salary in 2014, 2015 and 2016 and adjusted printing rates charged to members for the magazine, Rural Electric Nebraskan, and used the added fees to pay her personal credit card.

Of course, it might be less trouble to find another job that pays better, but again, human nature’s worst tendencies play a role for some people.

Elsewhere, an ABB story out of Minnesota includes this sentence: “Police were initially tipped off when the CEO of the company reported a check missing,” and, sure, the CEO turned out to be right, something suspicious was going on, but hopefully none of your superiors are that impulsive.

Brought to you by Accountingfly

The featured job of the week was an Accounting Manager at ORBA.

Previously, on Going Concern…

Megan Lewczyk wrote about cyber espionage. Adrienne Gonzalez wrote about the state of recruiting and the talent shortage in accounting. In Open Items, someone is curious about “preferred” qualifications.

In other news:

• Accounting estimate audit risks get uneven scrutiny, study says
• Warren Buffett: I was wrong on Google and ‘too dumb’ to appreciate Amazon
• Email phishing has a bright future.
• “An Alaska attorney and his domestic partner formed French Lick LLC in 2007 and bought a house where Mr. Bird had once lived. They began operating a bed-and-breakfast there.”
• Accidental pineapple art.

Get the Accounting News Roundup in your inbox every weekday by signing up here.

The post Accounting News Roundup: Management Accountants and Creative Tax Arguments | 05.08.17 appeared first on Going Concern.

Get your accounting majors! Get your accounting majors here!

The Bureau of Labor Statistics projects 11% growth in the accounting and auditing sector between 2014 and 2024, with 142,400 projected new jobs over the same period. And the most recent data available from the AICPA in their 2015 Trends in the Supply of Accounting Graduates and Demand for Public Accounting Recruits report tells us that enrollments in undergrad and graduate accounting programs increased in the 2013-14 academic year. Additionally, accounting firms hired a record number of accounting graduates in 2014, representing a seven percent increase from the previous survey. 91% of firms responding to the survey said they plan to hire at the same or higher rate for the following year. Meaning business is booming, you guys, and they need bodies to fill those chairs.

Master’s enrollment is particularly strong. Enrollments in the 2013-14 academic year saw a nearly four-fold increase over enrollments in such programs 20 years ago. Seems that 150-hour rule is working out great for purveyors of fine accounting education.

The CPA exam gap

Despite this explosive growth, concerns abound. A big one that keeps AICPA CEO, President, and hobby herpetologist Barry Melancon up at night is the CPA exam gap: the difference between those who graduated with accounting degrees and those who go on to sit for and pass the CPA exam. The leading accounting biker gang in the world is concerned they aren’t recruiting enough junior spreadsheet gangbangers to support the demand for CPAs. “We’ve been looking into this issue in great detail and are considering a number of profession-wide initiatives to complement our existing programs and ensure that qualified accounting graduates are earning their CPA license,” he said in 2015 when the most recent Trends report was released.

We find ourselves on the precipice of a potentially apocalyptic fan-meet-feces situation here: Too many jobs, not enough accountants to do them. Add in a mass retirement of Baby Boomers who stuck around far past their prime and a shortage of PhDs to teach accounting at the university level and what do you get? Popcorn. Popcorn is what you get. Just sit back and watch firms start handing out iPads and vacation days to new hires like Oprah gifting cars to her audience.

“If employers continue to struggle to find qualified accountants in the coming years, it will have real impacts on the health of the American economy,” said Steve Gunderson, president and CEO of Career Education Colleges and Universities (CECU) in 2016. Ya think? Accountants are the invisible machine keeping America’s economy afloat, kind of like how flowers just sit around being pretty and make bees do all the pollinating work. You guys are the bees, there are no pretty flowers without your hard work.

What say you?

Because the Going Concern faithful are such a reliable source on the pulse of the accounting profession, we surveyed them a few weeks back to get an idea whether or not things really are changing. If firms and private industry are that desperate for top talent, it means you guys are the ones holding all the chips. And, consequently, firms are going to have to step up their game past foosball tables and jeans every day if they want to keep you around.

We asked our survey respondents which year they received their most recent accounting degree and I don’t know about you but I was a bit surprised that we have readers who graduated way before I was even born. So while they go all the way back to 1973, the majority of survey respondents graduated this century.

99.07% of survey respondents have worked for an accounting firm, and of those, only 3.6% stayed in public accounting for 16 years or longer. The majority — nearly 40% — spent 1-3 years in public and 31% put in 4-6 years. The number one reason for leaving public accounting won’t surprise any of you: Those who jumped ship did so in search of better quality of life. The second most popular reason for leaving: higher salary.

Anyone interested in filling open accounting positions would be wise to offer A) money and B) a quality of life superior to that in public accounting. This isn’t hard, people.

Perks abound

If accounting firms would like to retain talent, it is our humble opinion that they would be wise to listen to what their loyal little bees are trying to tell them here: accounting professionals aren’t satisfied with the personal toll the job takes on their lives, though they may be willing to accept it if more money is involved.

From offering unlimited vacations their associates will never be able to take, to flex time under that same category to generous parental leave policies, firms are stepping up their game to recruit and keep top talent, we all know that. We know it because firms spend an awful lot of time talking about it, because in this if a tree falls in the forest… scenario, unlimited vacations no one actually takes are only as valuable as the sound they make when a recruiter talks them up.

Of the numerous Big 4 perks, paid maternity — or rather, parental — leave is also a big one. EY just upped theirs from 12 to 16 weeks last year, while KPMG offers 18 weeks to primary caregivers. Both firms also support adoption and surrogacy, with KPMG, in particular, reimbursing those expenses up to $10,000. Not quite ready to have kids? No worries, EY will cover up to $25,000 to put your gametes on ice until you’re in a better place to start popping out kiddos. “These new benefits will not only continue to attract and retain the best talent, but help us to deliver exceptional client service, while also encouraging our people to live fulfilling lives,” said Carolyn Slaski, EY Americas Vice Chair of Talent. That’s easily the creepiest thing I’ve ever heard from an accounting firm.

Senior accountants and managers at the three-to-five-year mark are particularly in demand, PwC Diversity Strategy Leader Jennifer Allyn told Monster because “that’s when you become marketable, because we’ve given you training.” In fact, PwC has seen turnover in audit and compliance drop to 20% from 26% in 2014 for staff at the three-to-five-year mark. What this means is fewer accountants are seeking greener grass in industry, non-profit, or government after they’ve put in their time in public. Also notable, PwC brought on nearly as many experienced hires in FY 2016 (26,430) as they did graduates (26,780). So not only is the firm trying hard to retain talent they’ve put time and effort into, they’re snatching experienced hires trained on someone else’s dime.

Whether it’s foosball tables or a special program that ships milk back home for breastfeeding mothers on work trips, whatever the firms are doing seems to be working to keep talent past the two year mark.

We’re working on it

Not everyone is overly concerned with the potential shortage of qualified talent being felt by corporate accounting departments. “Top talent in accounting and auditing is always at a premium. We know this, and remain focused on both retaining our super talented pool of inspectors, and searching for those who would be a good fit for our mission-oriented, driven team,” said David DeBardelaben, Senior Manager, PCAOB Strategic Recruitment.

Gordon Krater, Managing Partner at Plante Moran, tells us that his firm is so hungry for top talent they, like other firms, are going into high schools to encourage students to consider the accounting track. It seems the big push for STEM has had an unintended consequence — steering candidates away from business and accounting fields into science and tech. Which again means better bargaining chips for those who can potentially fill in-demand positions.

The WSJ article on desperate corporate accounting departments quoted Ralph Lauren’s controller as saying his company is paying out an annual salary of up to $250,000 to technical accountants on their small team, so if it’s more money that experienced hires want, it’s certainly out there. Don’t get too excited; nationally, senior accountants in corporate positions are pulling in an average of $65,000. We imagine if firms can throw money at the problem and put salaries over foosball, they should be able to continue to keep attrition rates down-ish.

So what do we make of all this? A recent survey by recruiting software company iCIMS Inc. says a whopping 81.3% of employers are looking to hire graduates with business/accounting degrees. That means competition for accounting grads remains fierce, despite record numbers of them graduating year-over-year. Additionally, more and more professionals are choosing to stay in public up to and even beyond the three-to-five-year mark, putting extra pressure on industry accounting departments, which up until now relied on their unhappiness to serve as a pipeline straight into corporate’s loving embrace. Perhaps some of these industry types are overreacting when they run to the

Perhaps some of these industry types are overreacting when they run to the Wall Street Journal to cry that it took them six months to fill an open position, but it’s clear supply is not meeting demand at all levels. If I were a high school student right now with a deep desire to feel needed and never run out of job prospects, I’d be seriously considering a career in accounting right now.

Save

The post The State of Accounting Recruitment and Talent Shortages in 2017 appeared first on Going Concern.

The post Exposure Drafts: Some SEC Whistleblowers Do It for Love, Not Money appeared first on Going Concern.

Combined, Amazon, Microsoft and Alphabet doled out $31.54 billion in 2016 in capital expenditures and capital leases, according to company filings. That is up 22% from 2015.

I continue to wonder if the market can support the hefty depreciation expenses that are on the horizon. That’s not to mention the potential for impairment. Technology does tend to become obsolete quickly, after all.

Is it just a bottomless pit that these companies have to keep throwing money into? As companies who hop on the cloud happily shift from capital expenditures to operating expenditures to protect themselves from obsolescence and unpredictable future hardware needs, it’s not as if these inherent risks disappear. It’s just the cloud computing companies’ problem now, so it’s still a gamble. A gamble to the tune of $31.54 billion in 2016.

Investor optimism

Investors seem to be taking a lot of big gambles lately in the realm of tech. Tesla leapfrogged GM for a time and continues to have a crazy-high valuation. The WSJ says that “investors are willing to tolerate the hefty tab, as they often do for energy exploration, or by telecommunications companies unfolding vast networks of fiber” hoping for a big payday.

Again, I am still skeptical whether the infrastructure-as-a-service business model has long-term staying power as the infrastructure starts to age. Fortunately for these companies, they have a lot of stokes in the fire to manage the risk.

A deep moat

One thing is for sure in our cloud-dependent environment, these companies have a lot of power. Our reliance on the cloud enables the spending, and total industry domination, to be “concentrated in the hands of a few companies.”

And challenging the dominance of the big players is out of the question. The Wall Street Journal doesn’t give startups much hope:

The massive investment is creating a barrier for would-be rivals that would need to spend tens of billions of dollars to match the computing capacity Amazon, Microsoft and Google already have, Deutsche Bank Securities Inc. analyst Karl Keirstead said.

“They’ve created a powerful moat,” he said.

No kidding, Karl. I don’t know of many companies that can even dream of competing with these big players. Oracle may be the only one trying to catch up with a $1.7 billion capex spending this year. And Oracle isn’t small, of course. It’s a Fortune 100 company with an $180+ billion market cap. But even Oracle, a company not know for its modesty, has been called brash for challenging Amazon.

Public accounting déjà vu

This situation reminds me of another industry we all know and love: public accounting. There is a huge moat around the Big 4 and large regional firms. Caleb reported earlier this week that  “the seven largest firms — Big 4 + BDO, Grant Thornton, RSM — audit 96.5% of the large accelerated filers.”

It would be very unlikely to claw your way into that stratosphere unless you got bought out by one of the bigger firms. Which could happen — in both IaaS and public accounting — so maybe it’s not all doom and gloom?

Eh, who am I kidding? That’s still like winning the lottery, but more a lot more work.

The post Infrastructure-as-a-Service Giants Own the Cloud with Lavish CapEx appeared first on Going Concern.

The post Exposure Drafts: Keep Your Eye on Section 751 Hot Assets appeared first on Going Concern.

Anyway, a survey by WalletHub found that some Americans are so intent on not paying taxes that they’d entertains some bizarre options to opt-out of taxes forever:

[D]isdain for filling out forms and forking over funds to the government drives many of us to contemplate some pretty kooky alternatives. For example, one in five Americans would get an “IRS” tattoo in return for a tax-free future while 6% would name their first-born child “Taxes.”

The “IRS” tattoo doesn’t go far enough. If these people don’t want to pay taxes ever again, the tattoo has to go on their face. Or maybe the tattoo should be the internal revenue code rather than just “IRS.” Sure, the whole code wouldn’t fit, but that seems like a more appropriate trade-off.

Even the 6% who would name their first-born child “Taxes” aren’t really suffering enough humiliation. It’s their child who has to walk around with the name forever. The individual that wishes to get out of taxes should have to legally adopt the name “Taxes” or “1040” or “Non-deductible Hobby Loss.” Naming  your kid “Taxes” is only going to result in parricide.

[WalletHub]

The post The 20% of Americans Who Would Get an ‘IRS’ Tattoo to Never Pay Taxes Are Getting Off Too Easy appeared first on Going Concern.

As accountants, you probably think that you’re going to earn more over the course of your career just based on your highly-sought-after skills. And it’s true, your skills allow you to demand more compensation, especially as you gain experience, but interestingly enough, where you work likely makes a big difference too.

Here’s a Bloomberg View column by Peter Orszag that discusses a study that “figure[d] out the wage premium associated with working at different companies” and the employer you choose has an even bigger difference than you think:

High-paying companies, they found, not only pay low- and medium-skilled workers more than others do, but are also significantly more likely to keep such workers moving up the wage distribution.

A low-skilled worker at the top end of the earnings distribution who is employed by a low-paying company earns an average of $67,000, compared with $73,000 at a top-paying firm. For high-skilled workers in the top part of the earnings distribution, the premium associated with working at a top-paying firm is even larger: The average wage is $81,000 at the bottom end and $143,000 at the top.

All companies like to say, “Our pay is competitive,” which might be true. It’s just that they pay competitively in the shallow end.

Diversity

Here’s an interesting article about how Facebook is requiring its outside law firms to be more diverse:

Facebook is requiring that women and ethnic minorities account for at least 33 percent of law firm teams working on its matters.

Numbers alone, however, are not enough, under a policy that went in effect on Saturday. Law firms must also show that they “actively identify and create clear and measurable leadership opportunities for women and minorities” when they represent the company in litigation and other legal matters.

The article also mentions that HP now requires “outside law firms to have at least one diverse so-called relationship partner” or  “[one] woman and one racially/ethnically diverse attorney each performing at least 10 percent of the billable hours worked on HP matters.”

I’ve not heard of companies requiring accounting firms to meet diversity thresholds, but perhaps law firms are whiter and duder? It’s hard to imagine something whiter and duder than accounting firms, particularly partners, but maybe the accounting profession’s lack of diversity pales in comparison to their legal brethren.

Some people might scoff at this idea, but the New York Times article quotes Facebook’s general counsel as saying, “Firms typically do what their clients want,” and he’s not wrong about that.

How’s tax reform coming along?

Well, it appears that it’s in the “all things are on the table until we say they’re not” stage:

The White House on Tuesday disavowed two controversial options for their planned overhaul of the tax code, after two Trump administration officials earlier in the day said the president’s team was exploring a value-added tax to raise government revenue.

One of those administration officials also earlier Tuesday said the White House was considering the creation of a carbon tax, but a Trump administration spokesperson later said that idea was also  no longer under consideration.

It has to be frustrating to work in an environment that constantly undermines what you’re trying to do. Or maybe it’s great! I’m sure some gluttons for punishment would enjoy it.

Previously, on Going Concern…

I wrote about Grant Thornton’s unlimited PTO and also a horrible boss at Fox News.

In other news:

• SEC Pick Jay Clayton’s Nomination Advanced by Senate Panel
• Corporate Payments Still Attracting Fraudsters
• Richmond Fed President Resigns, Admitting He Violated Confidentiality
• How Trader Joe’s Wine Became Cheaper Than Bottled Water
• Hamilton police ask public to ‘romaine calm’ after $45K lettuce heist

Get the Accounting News Roundup in your inbox every weekday by signing up here.

The post Accounting News Roundup: Higher Salaries and Client-Mandated Diversity | 04.05.17 appeared first on Going Concern.

It’s not unusual to hear about bosses demeaning their employees, but the allegations against Slater are pretty shocking. Here’s an example:

The women — Tichaona Brown, a payroll manager, and Tabrese Wright, a payroll coordinator — accused Ms. Slater of making numerous racially charged comments, including suggestions that black men were “women beaters” and that black people wanted to physically harm white people.

They also said that Ms. Slater claimed that black employees mispronounced words, such as “mother,” “father,” “month” and “ask,” and that she urged Ms. Brown to say those words aloud in a meeting. Ms. Wright said Ms. Slater once asked if her three children were all “fathered by the same man.”

Also! Slater is alleged to have “made disparaging comments about Ms. Wright’s hair and credit score” mocked Black Lives Matter, “and referred to their majority-black department as the ‘urban’ or ‘Southern’ payroll department.”

“That’s all pretty deplorable,” you might say, “But there are lots of racist asshole bosses out there, what makes this racist asshole boss so much worse than the others?”

I’ll tell you what! It was widely reported today that a third plaintiff, Monica Douglas, has joined the lawsuit and  alleged that Slater not only made racially charged comments to her but also mocked her for after undergoing treatment for breast cancer. Heavy has a rundown of the worst:

• Constantly mocking Ms. Douglas for the size of a breast that was removed as part of her cancer treatment;
• Saying to Ms. Douglas, “your boobs look like they are different sizes – oh, that’s right, you only have one boob;”
• Referring to Ms. Douglas as “boobs girl” or the “one-boobed girl;”
• Telling Ms. Douglas that her “boobs look crooked;”
• Referring to Ms. Douglas as “cancer girl,” among many other discriminatory statements; and
• Regularly saying aloud to Ms. Douglas and other employees that Ms. Douglas’s breast cancer treatment and chemotherapy was responsible for “increasing everyone’s” healthcare premiums.

Yeesh. Fox News fired Slater last week after the lawsuit was initially filed, but said in a statement that it’s “disappointed that this needless litigation has been filed.” No word on why Fox News needlessly employed Slater for so long.

[NYT, Heavy]

Image: Wikimedia Commons

The post As Far As Horrible Bosses Go, The Ex-Fox News Comptroller Is Up There appeared first on Going Concern.