Rita Keller, an award-winning and widely respected voice to CPA firm management, is uniquely positioned to help CPAs and their teams face rapid and significant change.
“Don’t be fearful of risks. Understand them, and manage and minimize them to an acceptable level.” – Naved Abdali
Here is some information I received from the AICPA about risk assessment in a financial statement audit:
The AICPA has published a new audit guide, Risk Assessment in a Financial Statement Audit. The authoritative guide will help auditors implement Statement on Auditing Standards No. 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, which takes effect for audits of financial statements for periods ending on or after Dec. 15, 2023, with early application permitted. SAS No. 145 implements several changes to the risk assessment process, including:
A revised definition of significant risk
A new requirement to assess control risk at the maximum level such that, if the auditor does not plan to test the operating effectiveness of controls, the assessment of the risk of material misstatement is the same as the assessment of inherent risk
Revised requirements relating to audit documentation
New guidance on scaling the risk assessment process.
The guide is available in e-book format.
Risk Management lets you apprecite the risk while you let somone else shoulder all the worry.
“If you’re offered a seat on a rocket ship, don’t ask what seat! Just get on.” – Sheryl Sandberg
Yesterday I listened in on a “Thought Leader Debrief” from the AICPA. Barry Melancon, Erik Asgeirsson, and Tom Hood spoke about issues affecting the profession. This is their preview of what will be discussed in more detail at this year’s ENGAGE conference.
One discussion point was, of course, attracting talent. Undergraduate enrollment was down by more than 20% in looking at the December 2021 semester. Of course, part of that 20% is accounting majors. I hope your firm leaders are going into high schools and talking about the benefits of becoming a CPA. There are many!
I have observed and the AICPA leaders agree that CPA firms are not offering entry-level salaries that are high enough to attract talented young professionals looking to quickly excel in their chosen career path.
Inside CPA firms, there isn’t much talk about how you become an owner until you have been with the firm for a substantial number of years. This generation will expect the conversation in the first few months of their employment. Or, even before they accept your offer. They want a clear picture of their career path.
Find out what you like doing best, and get someone to pay you for doing it.
“Strength and growth come only through continuous effort and struggle.” — Napoleon Hill
The following is a press release from the AICPA.
Impact of Unfilled Jobs: Staff Restructurings, Delayed Projects and Deferred Expansions
AICPA & CIMA Survey Polled U.S. Executives on Recruitment and Retention Struggles
NEW YORK (March 30, 2022) – Almost one in four U.S. business executives said the ongoing impact of unfilled jobs had forced them to restructure staff to protect core operations or limited the pursuit of new projects or bids, according to an AICPA & CIMA survey.
A dearth of skilled job candidates had been a top concern for businesses for years before the pandemic and quickly reemerged as the recovery progressed. Business leaders list “availability of skilled personnel” as a challenge second only to inflation in the latest AICPA Economic Outlook Survey, which polls CEOs, CFOs and other senior-level CPAs and management accountants in the finance function. Top-line results of the quarterly survey were released earlier this month.
Some 82% of business executives said their organizations were having at least some difficulty with recruitment and retention, with 17% characterizing it as extreme difficulty. The latter is actually an improvement from the fourth quarter last year, when it stood at 25%.
Some 31% of survey takers said mid-level staff openings have been the most difficult to fill, while 28% said the problem is across the board. One in four identified entry level positions as the most challenging category to recruit.
While 40% of business executives said unfilled jobs have not had a significant impact on operations, a majority said the problem had manifested itself in several ways within their organizations. The most common outcomes (survey takers could choose more than one):
Restructured staff to protect core operations (24%)
Limited new projects or bids (23%)
Delayed service expansions (16%)
Slowed customer/client acquisition (9%)
Reduced hours of operations or work shifts (7%)
Closed some work locations (3%)
“We know from our survey that 57% of business executives report they have too few employees,” said Ash Noah, CPA, CGMA, vice president and managing director of CGMA learning, education and development for the Association of International Certified Professional Accountants, representing the AICPA and CIMA. “Pandemic-related trends such as the Great Resignation have complicated an already difficult hiring situation, and that can exacerbate burnout and disaffection among remaining staff if the situation isn’t managed carefully.”
To combat the tight labor market, companies have adopted a number of recruitment and retention strategies, principally higher wages and more flexible work arrangements, although the former has been driven in part by inflationary pressures. Signing bonuses are also increasing as a tactic to attract new talent.
Methodology
The first-quarter AICPA Business and Industry Economic Outlook Survey was conducted from Feb. 2-23, 2022, and included 461 qualified responses from CPAs who hold leadership positions, such as chief financial officer or controller, in their companies. The overall margin of error is less than 3 percentage points. A copy of the report can be found on aicpa.org.
Don’t feel entitled to anything you didn’t sweat and struggle for.
“Be happy in the moment, that’s enough. Each moment is all we need not more.” – Mother Teresa
I love working in the CPA profession. I loved my work inside a firm and love the CPA firm clients that I now advise and coach.
Maybe you should stop and think about all there is to like about being a CPA and working in public accounting. Read this flashback post encouraging you to share all the things you like about your work.
The art of being happy lies in the power of extracting happiness from common things.
“If you can’t explain it simply, you don’t understand it well enough.” ~Albert Einstein
If you have been working in public accounting for even a short time I bet you are using accounting jargon. We all know what, “Are we doing their 1120-S?” means. Cash or accrual are common terms. Actually, many phrases we use can be considered accounting jargon.
Definition: Noun: Jargon – special words or expressions that are used by a particular profession or group and are difficult for others to understand.
According to a Quickbooks report (a few years ago), only 40% of business owners surveyed considered themselves to be very knowledgeable in the areas of accounting and finance.
Things like GAAP, IFRS, AR, AP, Accruals, Accrual Basis, Cashflow Statement, even Balance Sheet are unfamiliar terms to many of your business owners. Now, we have PPP and CARES (Coronavirus Aid, Relief, and Economic Security Act). Could you even recite the official name?
And then there is all that stuff that follows your name on the website: CPA, CITP, CGMA, PFS, ABV, ASA. All of that might be overwhelming to a new client, even scare some away!
Never forget that many clients (that pay you a lot of money), might not be very clear on exactly what you are saying.
The AICPA even has a resource called CPEA. Of course, that stands for Center for Plain English Accounting.
Always explain things simply and thoroughly. Save the jargon for conversations between peers inside the firm.
You want the word on the street to be that you, always explain things clearly and you take the time to help clients understand the services you provide.
Our life is frittered away by detail... simplify, simplify!
“Everybody gets so much information all day long that they lose their common sense.” – Gertrude Stein
I always look forward to reading the AICPA PCPS Top Issues Survey results.
The PCPS CPA Firm Top Issues Survey gathers insights from practitioners in firms of all sizes to understand the significant issues facing firms across the country.
The survey responses are broken down by firm size, with separate lists released for sole practitioners and for firms with 2 to 5, 6 to 10, 11 to 20, or 21 or more professionals. The AICPA and its Private Companies Practice Section (PCPS) team use the biennial surveys to pinpoint areas where new tools and resources may be needed to help practitioners address current challenges. Below are the results. Follow this link to read the commentary and learn about resources for firms to use.
SOLE PRACTITIONERS:
Keeping up with changes and the complexity of tax laws.
Keeping up with COVID relief programs, such as PPP, EIDL, ERC, etc.
Challenges when working with the IRS.
Seasonality/layering of deadlines.
Keeping up with changes in technology and managing associated costs.
2-5 PROFESSIONALS:
Keeping up with COVID relief programs, such as PPP, EIDL, ERC, etc.
Keeping up with changes and the complexity of tax laws.
Challenges when working with the IRS.
Seasonality/layering of deadlines.
Finding qualified staff.
6-10 PROFESSIONALS
Finding qualified staff.
Keeping up with changes and the complexity of tax laws.
Keeping up with COVID relief programs, such as PPP, EIDL, ERC, etc.
Challenges when working with the IRS.
Developing the next generation of firm leadership.
11-20 PROFESSIONALS
Finding qualified staff.
Developing the next generation of firm leadership.
Keeping up with COVID relief programs, such as PPP, EIDL, ERC, etc.
Keeping up with changes and the complexity of tax laws.
Challenges when working with the IRS…. and… Effective staff utilization & management
21+ PROFESSIONALS
Finding qualified staff.
Retaining qualified staff
Keeping up with COVID relief programs, such as PPP, EIDL, ERC, etc.
Developing the next generation of firm leadership.
“A well-written cover letter can be the difference between winning or losing a job opportunity.” – Larry Sheftel, Aprio
It is always great to be featured in The Journal of Accountancy. Thank you to Teri Saylor for contacting me to discuss the power, lack of power, and use of cover letters for resumes.
Do you expect a cover letter when someone submits a resume? Do you even care? Some beneficial information can be obtained from someone who writes an exceptional cover letter if the hiring manager at your firm actually reads it.
I believe that cover letters have almost become a thing of the past. Everyone seems to be in a hurry these days and do not think of including a cover letter. Those doing the hiring are also in a hurry too and don’t even read a cover letter if it is included.
I asked one of my clients if they always expect a cover letter with a resume. He said yes because they ask in the ad, “submit your resume and cover letter to…. ” They don’t care about the cover letter but they just want to see how many people follow instructions!
I hope you take the time to read the article. It was also nice to be featured along with my friend, Larry Sheftel of Aprio (pictured).
In looking for people to hire, look for three qualities: integrity, intelligence and energy. And if they don't have the first, the other two will kill you.
“Students are struggling to afford that fifth year of school.” – Daniel Hood
There are a lot of discussions recently about the difficulty of passing the CPA Exam and requiring five years of education (the 150-hour rule) to become a CPA. These are the reasons college accounting majors are giving for not going into public accounting.
Accounting Today editor-in-chief, Dan Hood puts this dilemma in question form to all of you out there. He asks, “Is it too hard to become a CPA?” He notes that CPA profession leaders/consultants say that the number of students in accounting dropped from 2% in 1990 to 1% in 2000. The 90s is when the 150-hour rule became prominent in many states. The Exam itself is widely known to be very grueling. What could be the answer?
Read the article and give him your personal feedback.
In my personal opinion (and please note, I am not a CPA but have worked with them for over 40 years), the extra year of education is a waste of money and effort. I have never been able to see how that extra year made incoming recruits any better prepared than those that came before them. The CPA Exam should be on the “grueling” side. Clients rely on CPAs for their amazing expertise and advice. If they want to remain “the most trusted advisor” they not only have to prove their current knowledge, they have to commit to LIFE LONG learning to add to that knowledge.
The CPA profession is facing serious staffing challenges and long-term threats around its ability to attract future professionals.
“Whatever you are, be a good one.” – Abraham Lincoln
The AICPA is encouraging all of us working in the profession to urge high school students to consider becoming a CPA. I have advised practitioners to do that for many years. Practitioners need to not only give presentations to college students but also to high school students. Speak to them about the awesome opportunities when you become a CPA. Many famous people have accounting/finance in their backgrounds, as do many CEOs.
Here’s a recent quote from Barry Melancon:
“Because today’s high school students have spent more time with their parents and experienced more uncertainty, they’ll be making career decisions earlier. The profession’s pipeline efforts must move into every high school in the country.” – Barry Melancon
There is only one thing wrong with this activity. I believe that you need to go into middle schools and even elementary schools.
If you Google “encouraging kids to be architects” or “encouraging kids to be engineers” you will see many books for kids on the topic. Do the same for accountants and you won’t see near as many kids’ books.
If you want to continue to have very talented people in the accountant pipeline you better get busy this fall and speak to elementary, middle, and high school students. Maybe you should write a book for kids!
You don't have to be great to start, but you have to start to be great.
“Bad news travels at the speed of light; good news travels like molasses.” – Tracy Morgan
I recently heard an old song by someone called The Big Bopper. He died on the famous plane crash with Buddy Holly. It happened on February 3, 1959, and has been called “The Day the Music Died.” It was referred to in Don McLean’s classic American Pie. If you are not old enough to remember or have never heard of Buddy Holly, click here.
Anyway, The Big Bopper (J. P. Richardson) had a novelty song that became a big hit titled Chantilly Lace. In the song he says, over and over, “Oh, baby you know what I like.”
I told you all of that so that I could talk about this – a recent article by Dan Hood of Accounting Today – “Accountants need to explain themselves.” Dan was on a recent Zoom session the AICPA leaders conducted last week. They (the AICPA leaders) urged all of us in the meeting and all CPAs to communicate what is good about the CPA profession. Dan’s article will be helpful to you.
They didn’t need to convince me. I love the CPA profession. But, are you, people working in a busy CPA firm, actively talking about all the good things to LIKE about the CPA profession? Talk to your kids, talk to students, talk to your spouse, your aunts/uncles, and especially your clients about the great rewards of being a CPA.
Read Dan’s article and keep in mind, “Oh, baby, you know what I like!”
If anyone asks you what kind of music you play, tell him 'pop.' Don't tell him 'rock'n'roll' or they won't even let you in the hotel.
