Published on: 25 Jul 2014
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.
Published on: 10 Feb 2014
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?
Published on: 06 Feb 2014
…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.
Published on: 02 Oct 2013
I’ve been a qualified accountant for a fair few years now.
I had the pleasure of bumping into my first auditing lecturer last week. It was at a business mixer event and even though it was a long time since we last saw each other he really hadn’t changed that much.
We got talking and I reminded him of something that he told me that I’ve remembered ever since and to me is a great way of explaining what is meant by “True and Fair”. Those of you that have studied financial reporting papers will be aware of the importance of “True and Fair” in connection with financial statements.
In summary, financial statements should provide what is generally understood as a true and fair view of the reporting entity’s financial position, performance and changes in financial position.
I always remember my lecturer telling me the story of the ship’s captain that was having a problem with his first mate who was always drunk. In the end the captain wrote an official entry in the captains log saying “Today, the first mate was drunk.”
The first mate was upset about this and the next time he took charge of the ship when the captain was asleep, he wrote in the log that “Today, the captain was sober”. This of course implied that on other days the captain wasn’t sober as he was drunk.
Now, the statement “today, the captain was sober” was clearly true but I’ll leave it up to you to decide whether or not it was fair!
Published on: 08 Jun 2013
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.
Published on: 18 Mar 2013
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.
In 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…
Published on: 28 Feb 2013
But how far can this computer use go? Will they be able to predict when accounting fraud is going to take place as opposed to tracking transactions that have already occurred?
The film Minority Report starring Tom Cruise was based around software that could predict when a crime was going to happen and the culprits would be arrested before they actually committed the crime. Although this film seemed well and truly within the realms of science fiction, two police forces in the UK have recently begun trials of a sophisticated computer software package which aims to predict where and when future crimes are likely to occur.
The software is known as Crush (Criminal Reduction Utilising Statistical History) and is used to identify potential crime hotspots based on a variety of data including crime reports, offender profiles and strangely enough even weather forecasts.
Once these upcoming crime hotspots have been identified then the police can allocate resources accordingly.
The system is produced by IBM and the UK tests are based on a successful roll out of the software in the US by the Memphis police force which resulted in a reduction of serious crime by 30%.
Back to auditing though and will the next step be predicting when a fraud is likely to occur using statistical analysis based on industry, profit movements, director’s personal life and spending habits (plus the weather of course)?
Given the reliability of some computers though, one thing for sure is that is if you happen to live in a town called “Syntax Error” then you may have a surprise visit from a Tom Cruise lookalike with a briefcase and a calculator.
Published on: 24 Jan 2013
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…
Published on: 21 Jan 2013
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…”
Published on: 15 Oct 2012
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…