Betsy's Pretty Good Blog

Rebecca Otto Goes Too Far

June 11, 2015

If you've been following the tirades of State Auditor Rebecca Otto over the last weeks, you have probably been appalled at her attacks on the integrity of "private CPA firms". In Tweets, interviews on radio and TV, she has blatantly lied about CPAs. At first when the conversation started at the end of session I gave her the benefit of the doubt and attributed the comments to the stress and craziness that takes place at the end of a legislative session. But now, almost a month later, the misstatements and slams on the profession continue. To me she sounds desperate.

She clearly makes "misstatements" and goes out of her way to insult CPAs. She says private auditors can be bought, essentially that they will give you the outcome you want.

  • "Do you want cheap audits?" Otto asked. "You get what you pay for." MPR, Otto, June 10
  • "Auditor shopping for some can be like a child parent shopping to see which one will give them the answer they want." Otto Tweet May 19
  • "Who would you rather have audit you -- the nice guy on Main St or the IRS? I know the answer and so do you." Otto Tweet May 18
  • "Have nice guy on Main audit you or the state? Bet you chose neighbor. Gvt auditors audit with your interests in mind not bottom line." Otto Tweet May 18
  • "Who would you rather have audit you - the nice guy down the street or the IRS? I'm sure first one. Gov ensures acctblty." Otto Tweet May 18
  • "I would rather have audits done by someone accountable to MN'S than some third-rate outfit that's lowest bidder." , retweet by Otto May 18

CPAs don't sit down with clients and say "Tell me how you want this audit to come out." (I can't believe I have to write this!) Standards and Ethics demand independence and CPAs support the actions taken against rogue CPAs who violate those standards. In addition, County Commissioners who choose the private auditor are accountable to the voters. Ms. Otto thinks that she's the only one who serves the public.

Private CPA firms, who currently do 28 county audits, have to follow the "Audit Guide for Financial and Compliance Audits of Minnesota Counties" issued by the State Auditor's office. Page 1 -- "The specifications in this manual apply to all audits of counties, whether conducted by the Office of the State Auditor or a certified public accounting (CPA) firm." So CPA firms and the auditors in the State Auditor's office are doing EXACTLY the same work in EXACTLY the same way.

Shame on Rebecca Otto for attacking the honesty and independence of CPAs. Sliming others doesn't make you look good.

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Lots of accounting graduates. Not enough CPAs.

April 6, 2015

Did you know than less than 50% of accounting students express an interest in a career in public accounting?   Did you know that only 1/3 of accounting graduates take the CPA exam each year?   
These figures are upsetting and definitely a threat to the health of the profession.  So what’s going on?

Barry Melancon, CEO of the AICPA, points out that there has been an attitudinal change, with accounting students feeling that the CPA is just another credential, not a profession.  He remarks that students are likely to say “I want to get a CPA” rather than “I want to be a CPA”.   

In the “good old days” accounting professors were pretty much all CPAs themselves.  This is definitely not the case today.  Some accounting programs have formally bifurcated their programs into two paths – public accounting and management accounting.   Students listen to their professors and the guidance has changed over time, with much less emphasis on the CPA.

There are other factors at work too.  Many students today have large loan balances that they are nervous about.  They want to get to work and start earning money to pay off those loans.  The 150 hours required to become a CPA could be an obstacle for some because the extra hours can mean extra debt.

There are some issues with the exam too.  Once you start, you have only 18 months to pass all 4 sections.   If it gets busy at work, that can interfere with the best of plans.  If you exceed 18 months, then passed sections start dropping off and you have to take them over again.  Many firms would like to see this window lengthened.

Of course, students hear stories from their friends who have graduated about their experiences working in CPA firms and many of those stories are not very positive.  Excessive hours, lack of any work/life balance or support, can discourage anyone’s enthusiasm about joining the profession.

Lots of issues.  Not a lot of easy solutions.   What do you think the profession should be doing about this problem?

Want to read more on this issue?

"The TALENT WARS -- they're baaaacckk!" (April 2015 Footnote)

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Success leads to happiness ... or does happiness lead to success?

January 30, 2015
Put on a smile

If you're successful, then you're happy. Right? Well, maybe, for the short term. You get something you wanted and it makes you happy ... for a while and then you're back where you started. What makes you happy in the short term is always changing.

Let's look at it the other way -- that happiness drives success.  According to Shawn Achor in the January 2012 Harvard Business Review, "People who cultivate a positive mind-set perform better in the face of challenge ... Every business outcome shows improvement when the brain is positive." He points out this isn't just his conclusion. A meta-analysis of 225 academic studies "found strong directional causality between life satisfaction and successful business outcomes."

Shawn worked with tax managers at KPMG before the 2008 tax season to test engaging in one brief positive exercise every day for three weeks to see if they became happier.  He asked them to choose one of five activities that correlate with positive change:  

  1. Jot down 3 things they were grateful for. 
  2. Write a positive message to someone in their social support network. 
  3. Meditate at their desk for two minutes.
  4. Exercise for 10 minutes.
  5. Take 2 minutes to describe in a journal the most meaningful experience of the past 24 hours.    

At the end they evaluated the participants and a control group. A The experimental group showed higher scores on every metric -- optimism and life satisfaction. On the 35 point life satisfaction scale (widely accepted, he says, as a great predictor of productivity and happiness at work), the activities worked 1 week after exercise and still persisted 4 months later.

A misconception is that our genetics and our environment, or a combination of the two, determines our happiness. Those things do have an impact. "But one's general sense of well-being is surprisingly malleable," says Shawn.

If you want to learn more, here are some resources:

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The eternally debated question...debated once more

December 18, 2014

A recent article in The Economist questions, one more time, the value of the audit.

The points being made in the article:

  • Ongoing failures to detect fraud
  • The questionable value of the audit as currently defined by the profession
  • Self-regulation of the profession combined with a guaranteed- by- the- government franchise to do the audits sets the bar so low that it is all but impossible for auditors to “fail” at their jobs

Just what an audit should entail remains a debated question. The article points out that the “modern audit does not even provide an opinion on accuracy"...An auditor’s opinion really says, “This financial information is more or less OK, in general, so far as we can tell, most of the time.”

The article suggests a new solution to many of the audit problems – “financial statements insurance.” Firms would buy coverage to protect shareholders against losses from accounting errors, and insurers would then hire auditors to assess the odds of a mis-statement.

Take a look at the article and see what you think. Is this a workable way to address these issues surrounding audits?

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Enjoy a really good Chautauqua lecture on the financial crisis

December 14, 2011

I heard this recently on Midday on Minnesota Public Radio and it is very, very good. Bethany McLean is a business writer who wrote the seminal book on Enron The Smartest Guys in the Room, and has a new book; co-written with Joe Nocera, on the recent financial crisis All the Devils Are Here. Settle back and enjoy – the lecture plus Q&A takes about 1 hour 11 minutes and it’s worth the time. (The icing on the cake is that she is from Hibbing!)

Listen now

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Private company financial reporting - Same old story?

November 3, 2011

How confident are you that FASB has really changed? I mean really really changed? After all of the hard work of the Blue Ribbon Panel the response of FAF and FASB has been less than exciting.

What we have now is a “new” advisory committee to FASB called the Private Company Standards Improvement Council ( PCSIC), whose job is to “identify, propose, deliberate, and formally vote on specific exceptions or modifications to U.S. GAAP for private companies.” Sound familiar? It should. It is the Judy O’Dell Committee redux. Remember that? It was called the Private Company Financial Reporting Committee and began meeting in 2007. FASB had the veto then and FASB still retains the veto now.

So, tell me, are you confident that this is the beginning of a new positive era at FASB where the needs of private companies will really be seriously considered, or do you think this is “same old story”?

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Some interesting things to ponder about that commute

November 1, 2011

Working isn’t cheap. Once you add up all your expenses, it gets kind of crazy. Take a look at this realistic estimate of your commuting costs from the suburban McMansion….

And then, lots of folks think that they have to move out to the ‘burbs and commute because they want their children to do well in school. Here’s something to think about --

“Ann Hobbie has seen jaws drop when people find out she sends her children to St. Paul Public Schools. The Merriam Park resident and former teacher said some of her shocked friends or acquaintances can't believe it because, they say, students' test scores in St. Paul are so much worse than in suburban public schools. But do suburban kids really post better test results than their peers in city schools? Not if they're from middle- and upper-income families. Scores are virtually the same for those students on statewide reading and math tests, no matter where they live, according to a Pioneer Press analysis.”
Learn more

Do you have a long commute? Is it worth it?

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Mr. Money Mustache

October 27, 2011

Meet a new blogger I really like -- Mr. Money Mustache. He's a young guy with a great writing style and his blog is targeted towards younger people (20s-30s or so) and his goal is to help them move up through the "Spectrum of Financial Idiocy", which is:

  1. Retired, and my money situation is perfect
  2. Still working, saving max in 401k, no loans on cars or credit cards, paying regular mortgage payments
  3. Same as above but add one or more car loans
  4. Same as above but not quite able to max out 401k plans due to life’s little expenses
  5. Same as above but have a few credit cards that I’m making payments on
  6. Can’t always make all my payments, got some bad marks on my credit score.. I’d be screwed if I lose my job now
  7. Everything has collapsed – losing my house and possessions, can’t find work, debt is more than I can pay off in a lifetime, why is the world so cruel to me!?

I don't fit his demographic but I find lots of good stuff in here for anyone interested being money smart. Let me know what you think.

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iPad - Do I really need one?

October 25, 2011

There sure doesn’t seem to be anything definitive on whether we all need tablet computers or not. I certainly haven’t been moved to rush out and buy one. I admit that I’m not known to be an early adopter, nor do I worship at the feet of Apple, but I definitely adopt what I find useful. I just haven’t been able to find anything so compelling that I could do with a tablet that I can’t do with my slick little ThinkPad.

But I’m sure there are many of you out there using tablets and loving them. I’d love to hear what you think and why I should join you.

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What do you think about moving to the cloud?

October 17, 2011

A survey by researcher IDC found that fewer than a third of IT executives feel the benefits of cloud computing outweigh its risks. Nearly a quarter of the 500 executives surveyed said they don’t fully understand the regulatory and compliance issues in cloud computing, and 47 percent say cloud services present a security threat.

Although moving to the cloud has often been presented as inevitable, it seems many decision-makers have doubts about whether this is a good idea, at least right now. One of the attractions has been lower costs than maintaining all the servers on your own property. This has grown more attractive as a reason during our economic downturn. There are also reliability issues to consider.

So what do you think about moving to the cloud? Have you done a partial move? No move at all? Why?

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