Pledge reminder
I have a "pledge reminder" taped to my wall reminding me of the $1,500 I pledged to donate to my school over by first few years in the workforce. I pledged $100 the first year, probably something like $500 the second year, and the remained the third year. And yet, it seems like a lot more money to fork out now. I obviously thought when I signed this that these would be small amounts to pay once I was working full time. Instead, I seem to be valuing each dollar more and more, as I realize how difficult it is to "get ahead" and increase my salary by more than inflation each year.
Of course, the longer I put off paying this pledge, the more guilty I feel, and the more I owe at once. I think I just need to decide on an amount that I think I can afford this year, and tell myself its an unavoidable expense. Maybe an unavoidable expense that I don't need to pay until... say... July?
By the way, busy season is not a good time for budgeting. I end up being owed thousands in reimbursements at the end of each month, and it's tougher to keep track of with all of the traveling. I think I will post budget updates again in March, when I'm not traveling anymore. I am out of town again next week, back for a week, and then gone for the rest of February. It'll be March in no time!
I've been spending time thinking deep thoughts recently instead of blogging - do I want to commit to making it at my firm? Do I want to switch firms and try to get a bump in salary in a year? Do I want to do a PhD?? That last one is a tough question, and probably deserves a whole post of its own.
Anyway, busy season is keeping me focused on just working - which is actually much more interesting and fun when there is so much to do! I'm glad I'm not a senior yet though, because they are already slammed and stressed out... ah, a bright future ahead of me, right?
Recruiting season
University is back in session, and so is recruiting for public accounting! As you're meeting the firms for the first time, here are a couple of pointers:
RESEARCH THE FIRMS (okay, just one pointer for this post.)
I know, people tell you to do it, your college hands you a guide to the accounting firms that recruit in your area, and there are 200 firms to look through, and you don't even know where to start looking. I always looked up accounting firm websites and just didn't know which information to pick out. Part of that was because I knew that I wanted to work audit, and I wanted a job, and beyond that I didn't really *care* so I didn't know which information remember and ask about!
Your mission: get familiar with what is "the norm" for accounting firms in your area, and take note of things that make each firm different than the norm. You don't need to memorize the firm's history, you just need to be able to say "I was looking at your website, and saw xyz about you." It's best if you have a question to follow this factoid up with, but if delivered right, you can get away with just saying the fact "Oh, your firm specializes in health care clients, right?"
At the last recruiting event I went to, I explained our basic differences from other firms to about 25 students. Only one of those students said "Oh I read on your website that..."
It does make you stand out. Of course, you probably don't want to memorize a factoid for every single firm, but do your homework, figure out which firms you're most interested in, and go prepared with some basic knowledge on those, plus a few other firms. At these events, you never know which firm you're going to end up talking to, and it's hard to pick out from just looking at websites which firm is the right fit for you.
I'm going to provide a couple ideas to help you know which information to study and bring up at accounting recruiting events.
Be familiar with firm size and location.
Most local accounting firms have only one office. If a firm that would otherwise be a local firm has another office in the city, mention that they have another location. Maybe ask why that came about. I would say that you don't need to memorize every firm's address, but it you really can't think of anything else to ask a small firm about, you can always say "Oh you guys are located up on xyz st, right?"
If the firm has a couple of locations throughout the country, ask "so you have offices in Chicago and NYC too, right? So does the firm have clients all over the country, or just in these 3 areas?"
If you're talking with a firm like Reznick Group or BDO Siedman you need to be familiar with the fact that they are big and nationwide! Just because a firm is not Big 4 does not mean that it does not expect you to recognize its name, and that it is a large company (just not huge like Big 4.)
Website Hint: Check out the part of the accounting firm's website called "Locations." Remember that just because a location is listed, doesn't mean that it's a large office. That can be another question to ask.
Be familiar with firm client base
As a student, I didn't know if I would prefer auditing health care clients, banks, or non-profits. But if a company specializes in banking audits, or construction audits, that is a very valuable factoid to throw out there. Another key to asking questions is not to lose your flexibility. Sure, their website says that they focus on health care clients, but most firms will have clients outside of their focus area too, and you may be talking to a professional at the firm who has never had a healthcare client.
So ask "I read on your website that you focus on healthcare clients. Do you work on only healthcare clients, or do you have a lot of clients in other industries too?" And then depending on how the professional answers, you have a follow up question.
But don't make it sounds like you're only interested in healthcare, and don't make it sound like working on 100% healthcare is your worst nightmare. Chances are, at a firm with a specialty, there are some people who will work 100% on the specialty, and others who will hardly touch it, so you don't want to commit to either one without knowing more.
Website Hint: Check out the part of the accounting firm's website called "Our Clients" and read the blurb there - even if it is directed at the clients themselves, it should tell you something about the type of clients that the accounting firm is targeting.
Take note of a firm's practice areas
If you're really interested in forensic accounting, make sure you tell that to the firms that actually have a forensic accounting arm. Our firm does a bit of investigation into fraud, but that is NOT anyone's full time job here. Plus, at a firm like ours where we mostly do tax and audit, and then will help out a client with looking into employee fraud, you'll typically get to work on the fraud case after you're experienced with audit and that particular client. So, there's a chance for it, but if you are aiming for a masters in forensic accounting, we know that we're not the right place for you. If it's just something you think you might interested in, I suggest not making a big deal out of that to a firm that doesn't have it listed as a practice area.
Website Hint: Check out the part of the accounting firm's website called "Services" for more information about the firm's practice areas. But, be careful because the firm may list services that aren't a huge part of their offerings - again, it gives your a starting point for asking informed questions, but don't assume anything.
Life of an Auditor: Billable Hours Target
I've written about billable hours and realization before here, but this post deals with some examples of billable hours targets, and situations that I've run into recently where it can be tricky to decide how much to bill.
Hitting the magic number
At my firm, we are expected to reach 1,600 billable hours per year. This may be lower than some other firms (anyone care to comment on their firm's target?), but quite a lot of our people hit this target, or even get a few hundred hours over. I know at some firms, they try and set the target out of reach a little, so that few people hit it, but based on how many people reach the goal, it seems reasonable to assume that we're really expected to get the full 1,600.
Working the hours
Last month I set up an excel spreadsheet to track how many hours I have so far, and how many I think I can get for the rest of the year. The spreadsheet my company sends out to us assumes that you will get 12% of your hours each in January - April, and 7% each other month (this adds up to over 100% by the way.)
However, I know that in October through December, we have very little work to do. I maybe lucky to to 150 total during the fourth quarter.
So instead of 112 hours for each month of non-busy season (1600 * 7% = 112), I have figured out that I need to work 140 billable hours each month for the rest of the summer, and then 70 hours each month of October, November, and December.
How many billable hours per day?
With 19 workdays in July, in order to hit the 140 hours target this month, I'll have to bill about 7.5 hours per day. That's trickier than it sounds, since in a typical busy 8 hour day at the office, I may only get 6 billable hours. When you start tracking how much time you spend working on client projects, you realize that it's pretty tricky to spend every hour you work on something billable when you by necessity need to spend some time asking around for more work, or get new projects explained to you. Especially during the summer when we have a few hours of training every couple of weeks, it can really easily eat up the time left for billing.
However, I think it gets easier to bill more consistently when you have more experience, and don't have to spend as much time asking around for work (which invariably results in getting sucked into chatting with the people you ask for work from.)
Fudging the numbers
I have heard folks from other firms talk about how it's the norm for the staff to bill more hours than they actually work on jobs. (See this post here from "Last Year's File" about how he got fired when he started billing his true hours.) I don't think that happens at our firm - I see that my coworkers around me are legitimately busy all day long. I also see (when I asked how many hours I could expect to get during our slow months) that people really did record their low billable hours during those months.
Unlike at Last Year's File's firm, if you do the work in half the time here, you will be given more work, rather than just being fired for not billing enough. You do have to go out and let people know you're available BEFORE you run out of tasks though - this can also be tricky to manage because you can feel completely swamped all week, and then come Friday realize you made it, you finished it all, and now you have no work and no one wants to assign you a new project on a Friday afternoon!
Tracking your time
I treat billable hours like my budget - keeping a close eye on my numbers keeps me motivated. Sometimes I feel like I've been working a ton, but if I really track the billable hours I find that I'm still falling short quite a bit, so it keeps me more aware of how late I should expect to be staying, and if it's worth it to come in on a Saturday to finish up some projects so that I can get new ones on Monday (yes, it's worth it.)
Life of an Auditor: Inventory Counts
Today was pretty much exhausting. I flew to a client location and back in one day for an inventory count. It was surprisingly less hassle than I thought it would be, considering how messed up my flights were last time I traveled, but I still had to get up really early for the flight out!
What are inventory counts and why do you need to fly there?
For those who don't know, inventory counts are what manufacturing companies do around the end of the year to see exactly how much inventory they have. The inventory count must be done after production for the past year ends, and before production for the new year begins, otherwise it becomes much more difficult to keep track of what to count as inventory as of 12/31.
As auditors, we participate in inventory counts soon after the client has finished counting the inventory. We only have this small window of opportunity, because in a few days, the inventory levels will be different. We want to make sure that the inventory records are correct as of 12/31.
Inventory Counting Process
The client's employees will spend a few days counting everything in the warehouse (or warehouses.) When the client's employees count the inventory, they keep track of what they count on count sheets. They should also put stickers or tags on each piece of inventory to make it clear which pieces have already been counted.
Inventory Audit Test: Sheet-to-Floor
Our first inventory count test is called "sheet-to-floor." For this test, we selected inventory items from the count sheets. Then we traced these sheets to the actual inventory on the floor, and recounted it. For inventory, auditors are most worried about the existence assertion: Does the inventory recorded on the books really exist?
Inventory Audit Test: Floor-to-Sheet
However, as auditors we are also making sure that they count was done well. We perform a second test called "floor-to-sheet" where we select an item of inventory out on the warehouse floor. We count the items, and then trace them to their count sheet to make sure that the client's counters recorded to same number that we did. This tests for completeness: Is all the existing inventory recorded on the books?
In the case of fraud, it is much more likely that a company would overstate inventory, so existence is the most important test. However, counters can also make mistakes, and auditors are also checking for errors - in fact, most of the discrepancies we find as auditors are due to errors, not fraud.
Read more "Life of an Auditor"
Billable Hours
Thinking of getting a masters degree in public accountancy? Read about the top 3 accounting masters programs here. You can find additional information about being an auditor, including average salary information, here.
First Audit – Prelim Work
I went to my first audit on Monday and Tuesday of this week. It was preliminary audit work, so we will be going back to this client later in the audit season to finish it up. It was a nice opportunity to see some audit tests without the pressure of busy season looming over us.
I got my hands wet with testing fixed asset additions, repairs and maintenance expenses, legal and accounting expenses (get to see our audit fee in there!), and prepaid expenses. I also got to tag along on the walkthroughs, which was fun. I liked learning how their business works.
It's hard knowing if you've got all of the information you need -- until you sit down to type it up and realize that you need to go and ask a couple more questions!
Luckily this client has many friendly and helpful employees, so it was easy for us to get everything we needed while we were there. I'm looking forward to going back there during the audit season.
Check out the poll in the sidebar - What's your favorite Thanksgiving food?
First Audit Work
Next week I'll be heading out to my first client with this firm to do some preliminary audit work. I'm excited about having some real work to do for a few days. I'm also interested to see what the client is like, and how working on an audit at my current employer compares to my internship.
I had an internship almost 2 years ago with one of the Big 4. Following that, I went back to school for my masters, got a job offer from my current employer, and passed the CPA exam. So, a lot of things have happened in my life since I was last out at a client learning how to audit.
My current employer has much smaller audits than Big 4 has, so I'm excited about being able to see more of the whole picture during our audits. Also, my internship at Big 4 was rather unusual in that I got to be on 5 clients while I was there. Most interns were only on 2 or 3. Most staff, from what they told me, seem to have one big client and then a few little ones to fill in the gaps. So, at Big 4 I did get to see quite a few different types of audit tests, but it was still tough to see the big picture of what the client's financial state is.
We also mostly have manufacturing clients, which I'm excited about too. I like going to plants and meeting the people who work there. It just seems much more interesting to me than going to a client who is involved in banking, or software, or other more intangible products.
Is anyone else heading to their first audit this season? How about you experienced folk? Do you remember your first audit season? Do you have any hints or suggestions for us newbies?
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