You’re not an auditor, you’re a financial detective…

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I’m an accountant and I’m proud of it.

I think the education and knowledge that you acquire both during your studies and continuing professional education are fantastic.

At the start of my career when I worked for one of the Big 4 I spent several years in the Audit department and this was a great opportunity to find out how a variety of different companies worked.

Sometimes though it has to be said that the term “auditor” doesn’t always have the most exciting of images to the general public. People may think that an auditor is merely somebody who checks other people’s work.

To be honest though a simple piece of rebranding whereby “auditors” were known as “financial detectives” would go a long way to removing some of the negative perceptions that some people have in terms of the excitement of the profession and could create a whole new generation who want to become auditors financial detectives.

Now, whilst most people have heard of the term “auditor” a lot of people don’t really fully appreciate how it works.

The Institute of Chartered Accountants in England and Wales (ICAEW) have got a website called “True and Fair” which in their own words aims to “help you find out anything you would like to know about the process known as audit – or to use its full title “Audit of Financial Statements”.”

I think it’s an excellent site and if you are an auditor and want friends or family to find out what your job entails then you should direct them to it (although admittedly if you’re on a first date with somebody and they ask you what you do then maybe say you’re a financial detective).

For any of you that are attempting an ACCA or CIMA paper with an auditing content it also makes for very good background reading.

The site can be found at www.trueandfair.org.uk

It may seem obvious that auditors sell audit opinions. But that’s like saying top restaurants only sell calories.

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I was having an interesting discussion with a group of students on Friday about a previous blog entry concerning “truth and fairness”.

It’s important to remember that an auditor does not make an absolute promise of accuracy.

The existence of audit risk means that a competent auditor will occasionally issue an audit opinion that proves to be inappropriate; most frequently because an unqualified opinion has been given when a qualified opinion would have been more appropriate.

We stake our reputation as a profession on perceived failures being very rare.  This means that we need to make sure we’re using tools that are up to the task.

In order to state whether financial statements give a true and fair view, it is necessary to have a system of GAAP that adequately defines truth and fairness.  It appears that the spectacular failure of Lehman Brothers in the USA happened as a result of window dressing financial statements, but which complied with US GAAP.

In a highly globalised market for audit services, perhaps we need to more explicitly state true and fair as true and fair (EU) and true and fair (USA)?  This is attempted already within ISA 700 by stating “..true and fair view in accordance with…[insert system of GAAP]”.

However, reputational damage happens to the profession globally as a result of perceived weaknesses in one nation’s system of GAAP.

Maybe we need to amend the wording of the audit opinion to make this clearer?

Do you ever feel tired at work? If so, then maybe you should…

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…wear a tie.

Japan is famous for the long hours that some of their office workers undertake but there is now an invention that will maybe ease things a little bit for hardworking office staff.

A new tie called “Nemuri Tie” is now on sale in Japan.

Nemuri Tie means pillow tie in Japanese and if the advertising is anything to go by it will enable hard pressed office workers to grab a quick sleep at their desk.

It’s a relatively simple design in that it’s a normal looking tie but it’s got an inflatable pillow in it which can be blown up to provide a handy place to rest your head when you fancy a nap.

It can be inflated when the user is wearing it so there’s no need to keep on taking your tie off and putting it back on every time you fancy a sleep.

The Sleep Tie is currently on sale for just under £20.

It’s not clear whether the tie is stain proof for anyone that dribbles in their sleep.

Look on the bright side. At least it smells nice…

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Have you ever dropped a cup of coffee at work? What about spilling a glass of water?

Maybe a more interesting question to ask a forklift truck driver that (currently) works for the Kerry Logistics in Australia is “have you ever dropped a container full of 462 cases of a customer’s wine that were worth £664,000 and all the bottles were smashed?”

Unfortunately for this unlucky forklift truck driver the answer is yes.

The container held 2010 Mollydooker Velvet Glove Shiraz bottles of wine produced by winemaker Sparky Marquis which sell for £122 each.

Mr Marquis told reporters that he was “gut wrenched” that the wine bottles had been smashed. The container held one third of his winery’s annual production and was destined for delivery to the United States.

There are two important business lessons to be learnt from this.

Firstly, always make sure that valuable items are insured. Sensibly the wine was insured so the winemaker won’t be out of pocket.

Secondly, there’s no harm in having a sense of humour.

Mr Marquis was quoted as saying that when the logistics company opened up the container “they said it was like a murder scene.” With a touch of classic Australian humour he added “but it smelled phenomenal”

Author Robert Louis Stevenson once wrote “Wine is bottled poetry”.

I can imagine the words that came out of the forklift driver’s mouth when the container was dropped were anything but poetry.

Will her next murder mystery novel involve an accountant?

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She is one of the most successful authors in the world and has sold over 100 million books featuring the character Dr Kay Scarpetta. She’s earnt a lot of money from her writing and has estimated earnings from her writing career of £300 million.

Patricia-CornwellIn the 4 years to 2009 alone she earned more than $40 million but when she checked her records from her accountants that were looking after her affairs, the famous author Patricia Cornwell found that her fortune was reduced to just $13 million.

As a result of this discovery the author sued her advisors Anchin, Block and Anchin, a New York accounting company for negligence and breach of contract.

Amongst other things she argued that her accountants had borrowed millions of dollars in her name without telling her, that money from the sale of one of her Ferraris was unaccounted for and she had had to unnecessarily pay taxes of $200,000 on the purchase of a private helicopter.

Perhaps the most important claim by the unhappy author was that the negligence caused by the accountants was so distracting that it caused her to miss a deadline for writing one of her books. This missed deadline cost her $15 million in non-recoverable advances and commissions.

One of the fundamental principles of codes of conducts for accountants around the world is “professional competence and due care” and although I haven’t followed this case in detail it does seem that the accounting company involved hasn’t followed this principle particularly well.

Ms Cornwell’s case against her former advisers reached a conclusion this week in Boston over in America and the judge presiding over the case agreed with the author and she was awarded $51 million for breach of contract and negligence.

After the drama of this court case I wonder whether we’ll see one of Patricia Cornwell’s future murder mystery novels involve the victims being accountants that lost a lot of money for one of their clients…

When is a foot not a foot?

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Fast food is big business but for Subway, the world’s largest restaurant chain with 38,000 restaurants in 100 countries, something isn’t quite big enough.

Subway is famous for their “Footlong” sandwiches whose name implies should be a foot long (12 inches / 30 cm).

Their “Footlong” has been the backbone of their advertising for a number of years and any company’s advertising should be accurate and shouldn’t be misleading.

Well up step Australian Subway customer Matt Corby who purchased a Footlong and measured it before eating it. He then took a photo and posted it on Subway’s Facebook page with the request “subway pls respond”.

The photo is shown above and as can clearly be seen the Footlong isn’t in fact a foot but is 1 inch short at 11 inches.

Was this evidence that Subway had been deliberately misleading their customers by calling it a Footlong when it should have been called an “11 inch long”?

Does the extra inch matter?

Well, things took off quickly on Facebook and there were soon more than 100,000 likes and over 5,000 comments to Matt’s post. The shock discovery that the Footlong was an inch short of bread soon spread around the world.

Subway quickly supplied the following statement to the Chicago Tribune newspaper:

“We have redoubled our efforts to ensure consistency and correct length in every sandwich we serve. Our commitment remains steadfast to ensure that every Subway Footlong sandwich is 12 inches at each location worldwide.”

Is this going to be a good enough solution to the problem of the missing inch of bread?

Unfortunately for Subway within hours a number of lawsuits were filed in America in connection with the missing inch.

One of the lawsuits filed by Mr Buren from Chicago for example is claiming that the Footlong sandwich product is false advertising and as a result he is suing the company for $5 million.

Now, I’m an accountant and not a lawyer but if he’s successful the $5 million will buy an awful lot of 1 inch pieces of bread…

Should Ernst & Young have done this?

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I think truth and honesty in business are vital.

I can therefore say in all truthfulness and honesty that I think Ernst & Young is a great company.

They have some tremendous people working for them and the students I’ve met over the years have all been fantastic.

If I’m really honest and truthful though I have to say that in my opinion there is a bit of a question mark over some of the performances in the video below.

The video was apparently taken at an EY recruitment day event and I’ll leave it up to you to decide whether you think that EY did a good job on the song-writing side of things and whether the employees that joined in with the singing, hand clapping and swaying with such rhythmic precision should stick to doing consulting and client work.

Now to be fair it has to be said that the recruitment event where the EY song was filmed was held 12 years ago so things have no doubt changed since then with the recruitment techniques used. It’s not clear though whether there was a slump in people applying for positions with EY 11 years ago.

Now, all of you that have just had a great weekend and are reading this in the office on a Monday morning, join together and start singing “Oh Happy Days, Oh Happy Days…”

Who was taking the biggest risk?

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Ok, so he jumped from a height of 39 km (24 miles) and he’s travelled faster than the speed of sound but surely Red Bull was taking more of a risk than Felix Baumgartner.

If you were like me and were one of the millions around the world who last night watched the inspirational (or some would say mad) Austrian break world records by parachuting from the edge of space then I think the risk was surely with Felix.

As I watched it I was so impressed. Not only by the bravery of Felix but also the technology that allowed people around the world to watch live footage from the edge of space.

If you look at some business concepts around the event though there are a couple that spring to mind.

First of all, whilst it turned out to be a huge success for the sponsors Red Bull, if there had been some problems for poor Felix and he didn’t make it back to earth in one piece the negative publicity would have been pretty bad (admittedly not as bad a feeling for Red Bull compared to what Felix would have felt but still pretty bad none the less).

The business risk of undertaking such a stunt by Red Bull would no doubt have been reviewed in detail and numerous precautions put in place. One simple precaution was that the live footage was in fact with a 20 second delay so that in the unfortunate event of something going dramatically wrong, the live feed could be cut before millions around the world saw Felix explode into thousands of small pieces live on TV.

Red Bull is an energy drink that has a brand image of “speed and adventure” and have sponsored numerous events such as aerobatic flying and extreme mountain biking. This was their most ambitious event yet though and its success has been reported as being equivalent to £100 million of advertising spend.

In other words, the publicity that Red Bull got from the event was equivalent to them spending £100 million on advertising.

The second business issue that occurred to me was that I saw the event live on YouTube and I wasn’t the only one. A record number of 8 million viewers saw the event live on YouTube.

Is this going to be the way forward for viewing live events?

Will more and more events be shown live on YouTube and will more and more people watch things on YouTube?

If you’re working in the strategy department of a TV company for example then you should definitely be reviewing the rise of importance of sites such as YouTube.

On the subject of YouTube I’m delighted that we’ve recently put some free ACCA, CIMA and FIA courses onto YouTube at www.youtube.com/theexpgroup

One thing for certain though is that we will never get anywhere near the number of YouTube views that Red Bull’s historic event received but then again making our videos wasn’t quite as dangerous…

Is this the best or worst resignation letter ever?

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Here’s an interesting question. If you resign from your job, what should your resignation letter look like?

Should it be simple, brief and straight to the point or should it be sent to the whole office and include various accusations about your boss including a certain, how shall we say it but, adult liaison in a meeting room with a colleague?

Well if your name is Kieran Allen then the second option appears to be the correct answer.

Mr Allen used to work for MEC, one of the leading media agencies in London. Yesterday he resigned and his resignation letter contains some pretty juicy accusations.

Now whilst this isn’t the first resignation letter that contains some juicy accusations it is the first resignation letter with juicy accusations that has gone viral on the Internet and as a result has been seen by millions around the world.

To avoid a knock at the door from some lawyers, I’ll keep the manager’s name anonymous (although if anyone wants to see the full letter then a simple search on the Internet will reveal it!) but Mr Allen claimed that he left MEC after 2 1/2 years of “loyal service” because of the treatment he received from his manager.

Mr Allen claimed he was forced to take time off work due to stress after being overloaded with work by the manager and he claimed the manager made him feel like a complete outsider on his return.

We’ve all been overloaded with work at some stage or other so this is initial claim isn’t that exciting.

The more interesting accusations though were when he claimed in his letter that the manager “regularly made sexist and other bigoted remarks” and “took a female colleague out for a drink on the day he interviewed her, then took her back to the MEC offices that night and had sexual relations with her in the meeting room on the 3rd floor”.

Mr Allen then went on to say that all of these allegations were “common knowledge throughout the team”.

Some people will applaud Mr Allen for his resignation letter whilst others (no doubt including his manager) will say that he should have kept his issues to himself.

Either way there are some serious lessons to be learnt from all of this. For example, it’s probably advisable to make sure you knock on the door of the meeting room on the 3rd floor at MEC before opening it…

Should this former Deloitte accountant become a doctor?

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One of the key attributes of finance and business people should be ethical behaviour. Note that I say “should be” as not everyone seems to agree with this approach.

Former Deloitte UK employee Nahied Kabir seems to have a slightly different view of what is acceptable in terms of ethical behavior.

Here’s a quick multiple choice question for you to see how ethical you are compared to Mr. Kabir.

Question – You’re struggling a bit with your professional exams and your employer’s policy is that if you don’t pass your exam within 2 attempts you’ll lose your job. Do you:

a) Focus your efforts on passing your exams. Or,

b) Focus your efforts on forging two doctor’s certificate.

Now, in my opinion (and hopefully in your opinion as well!) the correct answer is (b) (a).

Alas for former Deloitte employee Mr. Kabir he chose option (b).

In summary, Mr. Kabir failed an exam twice and at a meeting to discuss terminating his employment contract with Deloitte he produced a forged doctor’s note.

Deloitte let him sit the exam again and he passed this time. He then had a further 3 exams to sit and you guessed it he failed all 3.

At the next meeting to discuss things with Deloitte he claimed that he failed due to the ill health of his mother. He then produced a second forged doctor’s note from another doctor claiming his mother was suffering from ill health.

Proving that as well as being a pretty rubbish accountant he was also pretty bad at forging letters, the forged letter from the second doctor was exactly the same as the forged letter from the first doctor with the exception of only 4 words!

It’s probably no surprise to you that Mr. Kabir is now no longer working with Deloitte and the accounting body he was sitting his exams with (ICAEW) have published their report on the disciplinary action they took against him.

Again, it’s probably no surprise that he was “declared unfit to become a member of ICAEW”.

There’s no news yet whether Mr. Kabir is planning a successful career as a bank note forger…