Onto the February 2012 questions (only answering questions that I can shed some insight on, or have not already answered before...)
What happens if you do not attain a CPA within 2-3 years?
The pressure starts to build. Your final ratings for the year can potentially get knocked down if you don't have your CPA, i.e. when two individuals are rated the same, but one has to be rated higher, the one with the CPA gets the nod. Also, and more importantly, the longer you stay at the Firm, the harder it is to find time to study. It starts to weigh on you, and you will always have it in the back of your mind. For some of the Firms, you can't be promoted to manager if you don't have your CPA. If it's a good economy, you will be a "super" senior since your promotion isn't official even though you've put in the time, if it's a bad economy, like it was in 2009, you could get laid off.
Sunday, 1 April 2012
Saturday, 31 March 2012
client discussions
Sorry for the infrequent posting, when I do end up getting downtime, I try and stay away from computers. Still backed up on questions - on to the December 2011 questions...
When you encounter errors during your testing, how do you address it to the client in a nonconfrontational manner? As gentle as I try to be, as non threatening and polite as I try to phrase any questions, it's still always a difficult topic to breach with clients and some people get defensive(yelling, being generally dismissive, or sometimes shutting down conversation completely!). Since this is anonymous I don't feel the need to be modest...I can't help thinking that part of this problem is I happen to be pretty cute and the menfolk don't like looking incompetent in front of the hot auditor lady. It's hard because sometimes I find myself playing dumb and speaking in a lower tone as to not come off aggressive or condescending in any matter and still be able to get the information I need, but honestly, I die a little inside every time I do this, and I'm a little sick of placating people's egos. Any advice? And how do your hot lady coworkers handle this sort of thing?
How does one tell the client that they messed up? Do not act like you found something huge and do not take pride it in front of them. Understand that we are independent but at the end of the day we are in the client service business. I've dealt with all sorts of client personalities, and it gets really hard. Be very nice to them and say something on the lines of - 'I think this is off', or "I may be wrong, but there might be a mistake here." If they get defensive and say there's nothing wrong, ask if they can explain their thought process behind the issue, and correct them where necessary. Avoid doing this through emails, tones sometimes never come off the way you want it to be conveyed. If they keep getting defensive and you're not getting through (trust me, I've been there), just go up to your superiors and tell them the issue at hand, so they can talk to the client. It's good practice doing it yourself. I've had clients who I've had really good discussions with, so we can walk through the guidance and I can point out where they're wrong, and I've had clients who know they are wrong but just get defensive and say they are not going to change it. It gets really frustrating, but it's part of the client service game, as much as we want to yell at them, we can't. At the same time, be assertive in your answers, and be confident, so they understand you know what you're talking about.It's a fine line.
As far as the second part of the question goes, 70% of me thinks this question is in jest, but let me humor you. Attractive coworkers have what's called the halo effect going for them. The Halo effect, according to Wikipedia (yes, yes, not a true source, but whatever, this isn't a paper), is "a cognitive bias that involves one trait influencing others in one's judgement of another person or object. Although numerous interpersonal dimensions are involved, the halo effect is most commonly observed along the dimension of physical attractiveness. Using this as an example of the halo effect, the benefits of physical attractiveness are implicitly assumed to pervade all aspects of an attractive person's life. In this case, the halo effect states that physically attractive individuals are assumed to possess more socially desirable traits, live happier lives, and become more successful than unattractive people. Similarly, physically unattractive individuals are assumed to be less intelligent, friendly, happy, and successful than their attractive peers." I think this explains itself. At the end of the day, as long as you are assertive and convince them that you know what you're doing, they'll start respecting you more. The more the intelligent conversations you have with them, the more their respect level for you goes up.
When you encounter errors during your testing, how do you address it to the client in a nonconfrontational manner? As gentle as I try to be, as non threatening and polite as I try to phrase any questions, it's still always a difficult topic to breach with clients and some people get defensive(yelling, being generally dismissive, or sometimes shutting down conversation completely!). Since this is anonymous I don't feel the need to be modest...I can't help thinking that part of this problem is I happen to be pretty cute and the menfolk don't like looking incompetent in front of the hot auditor lady. It's hard because sometimes I find myself playing dumb and speaking in a lower tone as to not come off aggressive or condescending in any matter and still be able to get the information I need, but honestly, I die a little inside every time I do this, and I'm a little sick of placating people's egos. Any advice? And how do your hot lady coworkers handle this sort of thing?
How does one tell the client that they messed up? Do not act like you found something huge and do not take pride it in front of them. Understand that we are independent but at the end of the day we are in the client service business. I've dealt with all sorts of client personalities, and it gets really hard. Be very nice to them and say something on the lines of - 'I think this is off', or "I may be wrong, but there might be a mistake here." If they get defensive and say there's nothing wrong, ask if they can explain their thought process behind the issue, and correct them where necessary. Avoid doing this through emails, tones sometimes never come off the way you want it to be conveyed. If they keep getting defensive and you're not getting through (trust me, I've been there), just go up to your superiors and tell them the issue at hand, so they can talk to the client. It's good practice doing it yourself. I've had clients who I've had really good discussions with, so we can walk through the guidance and I can point out where they're wrong, and I've had clients who know they are wrong but just get defensive and say they are not going to change it. It gets really frustrating, but it's part of the client service game, as much as we want to yell at them, we can't. At the same time, be assertive in your answers, and be confident, so they understand you know what you're talking about.It's a fine line.
As far as the second part of the question goes, 70% of me thinks this question is in jest, but let me humor you. Attractive coworkers have what's called the halo effect going for them. The Halo effect, according to Wikipedia (yes, yes, not a true source, but whatever, this isn't a paper), is "a cognitive bias that involves one trait influencing others in one's judgement of another person or object. Although numerous interpersonal dimensions are involved, the halo effect is most commonly observed along the dimension of physical attractiveness. Using this as an example of the halo effect, the benefits of physical attractiveness are implicitly assumed to pervade all aspects of an attractive person's life. In this case, the halo effect states that physically attractive individuals are assumed to possess more socially desirable traits, live happier lives, and become more successful than unattractive people. Similarly, physically unattractive individuals are assumed to be less intelligent, friendly, happy, and successful than their attractive peers." I think this explains itself. At the end of the day, as long as you are assertive and convince them that you know what you're doing, they'll start respecting you more. The more the intelligent conversations you have with them, the more their respect level for you goes up.
Saturday, 25 February 2012
toll
When people say that every year in this practice feels like 7 human years, they really are right. Busy season just takes a heavy toll on you - physically and mentally. The amount of caffeine and unhealthy food that you ingest and digest is just borderline dangerous. Life just stops for 3 months, you start questioning why you're doing this, whether it is really worth it, you start getting sick of people since you see them for 12-14 hours every single day, your room gets dirtier, errands stay unfinished, you get into fights with your significant other because of a lack of time for life...and on and on....
Much respect to the lawyers and the bankers of the world putting in crazier hours than us, don't know how they do it.
Saturday, 28 January 2012
Big 4 partners
What does it take to make the jump from senior manager to partner?
Good question. Let's break it down, in order--
1) People Skills - You have to have really good people skills, you cannot be awkward. You have to come across as genial and amicable, and exhibit the personality of someone that others want to do business with.
2) Perception that you can network and pull in clients - At the end of the day, the Firms were created to make money, and the partners need to keep adding more money in the pool. If the partners think you can go in, network at charity events, golf events, etc, and pull in new clients, you're in, it goes a loooong way. Develop a personality that will make people want to ask you to join them for a drink
3) Perception that you understand audit and that you are good at what you do - You do not have to be an audit superstar, but as long as you have a good reputation, and the client likes you, that's what matters.
4) Reflect your demographic - If you want to be a partner in a place like say Minnesota, odds are being white will help you. If you want to be a partner in Miami, being hispanic will help. Look like your clients and your potential clients out there, and that helps give them a sense of comfort. Hey, I'm not advocating this one bit, but don't blame the messenger, blame the message.
5) Concentrate on 1-2 industries where you can become really knowledgeable in the technical guidance related to that industry, and ideally where there's not a glut of partners already in that industry - Manufacturing and software are notorious for having a ton of partners, so it's tough in cities where there so many partners dedicated to this area
6) Take over certain jobs completely, to such an extent that all the partner needs to do is sign off. This takes a huge burden off his/her shoulder
7) Develop a strong relationship with the CFOs of your current clients, strong enough that they come to you for everything instead of the partner
8) Take a lead role in an IPO
9) Schmooze the partners, they're the ones who can promote you, so try your best to get them to like you
10) Dream..there's a 10% chance of becoming partner, so you better know you're good enough to be partner and be prepared to stick it out as senior manager until you make it (6-10 years as snr mgr).
Remember..it's not the quality of your audit, but your ability to bring in money...
Good question. Let's break it down, in order--
1) People Skills - You have to have really good people skills, you cannot be awkward. You have to come across as genial and amicable, and exhibit the personality of someone that others want to do business with.
2) Perception that you can network and pull in clients - At the end of the day, the Firms were created to make money, and the partners need to keep adding more money in the pool. If the partners think you can go in, network at charity events, golf events, etc, and pull in new clients, you're in, it goes a loooong way. Develop a personality that will make people want to ask you to join them for a drink
3) Perception that you understand audit and that you are good at what you do - You do not have to be an audit superstar, but as long as you have a good reputation, and the client likes you, that's what matters.
4) Reflect your demographic - If you want to be a partner in a place like say Minnesota, odds are being white will help you. If you want to be a partner in Miami, being hispanic will help. Look like your clients and your potential clients out there, and that helps give them a sense of comfort. Hey, I'm not advocating this one bit, but don't blame the messenger, blame the message.
5) Concentrate on 1-2 industries where you can become really knowledgeable in the technical guidance related to that industry, and ideally where there's not a glut of partners already in that industry - Manufacturing and software are notorious for having a ton of partners, so it's tough in cities where there so many partners dedicated to this area
6) Take over certain jobs completely, to such an extent that all the partner needs to do is sign off. This takes a huge burden off his/her shoulder
7) Develop a strong relationship with the CFOs of your current clients, strong enough that they come to you for everything instead of the partner
8) Take a lead role in an IPO
9) Schmooze the partners, they're the ones who can promote you, so try your best to get them to like you
10) Dream..there's a 10% chance of becoming partner, so you better know you're good enough to be partner and be prepared to stick it out as senior manager until you make it (6-10 years as snr mgr).
Remember..it's not the quality of your audit, but your ability to bring in money...
valuation, M&A diligence
I wish to pursue a career in audit or transaction advisory services. Wanted to know if you can give an insight into both departments with regards to the career prospects, work life balance and monetary factors.
Transaction advisory services can be a pretty broad term, depending on the Firm. Assuming you mean m&a commercial due diligence work and valuation related work.
M&A commercial diligence- To get into m&a diligence, you'd need to put in 3-4 years in audit, because they usually like people with audit experiences and CPA certifications. People who usually do a stint in commercial due diligence go onto some rather interesting jobs - joining the acquisitions group of different companies, private equity analysts, other specialized valuation companies (duff & phelps, etc). W/ regards to work life balance, it is really unpredictable. You can be in your office doing nothing for weeks but still have to stay in the office in case a deal is in the works and your Firm has been hired. Then when you are on the deal, it can initially be 8:30-5 days crunching numbers, and then when the deal is in full swing (talking to the target, writing reports, deeper analyses), you can end up working as late as 2-3 am for 2 weeks straight, yes, I said 2-3 AM. And the schedule is really unpredictable. You never know when you have to travel, at times just knowing about it a day before or day of. Monetarily, it's 15-20% higher than audit. Another big problem is the lack of job security. If there's a slow down in m&a deals, the Firms will be looking to cut people in that group. Back in '08-'09, when there was zero m&a activity, the m&a group was absolutely massacred, a visceral bloodbath. If you like unpredictability, traveling, meeting the heads of top targets, and working under pressure, you'll like the rush this group offers you.
Valuation - This is more predictable, there's more job security, the pay is good, work-life is not bad. It's tough to get into though, you'd need finance/economics masters degrees/CFAs from top 40 schools to get in usually. Audit clients usually require valuation of different tangible and intangible assets every year - investments, goodwill, companies, real estate, recent financings (stocks and debt, etc), so the group gets some steady business every year. This is in addition to some new deals that the group gets to work on. Given the expertise you gain/ have looking at financial models, your pay is a solid 15-20% above your respective peers in the audit practice.
Transaction advisory services can be a pretty broad term, depending on the Firm. Assuming you mean m&a commercial due diligence work and valuation related work.
M&A commercial diligence- To get into m&a diligence, you'd need to put in 3-4 years in audit, because they usually like people with audit experiences and CPA certifications. People who usually do a stint in commercial due diligence go onto some rather interesting jobs - joining the acquisitions group of different companies, private equity analysts, other specialized valuation companies (duff & phelps, etc). W/ regards to work life balance, it is really unpredictable. You can be in your office doing nothing for weeks but still have to stay in the office in case a deal is in the works and your Firm has been hired. Then when you are on the deal, it can initially be 8:30-5 days crunching numbers, and then when the deal is in full swing (talking to the target, writing reports, deeper analyses), you can end up working as late as 2-3 am for 2 weeks straight, yes, I said 2-3 AM. And the schedule is really unpredictable. You never know when you have to travel, at times just knowing about it a day before or day of. Monetarily, it's 15-20% higher than audit. Another big problem is the lack of job security. If there's a slow down in m&a deals, the Firms will be looking to cut people in that group. Back in '08-'09, when there was zero m&a activity, the m&a group was absolutely massacred, a visceral bloodbath. If you like unpredictability, traveling, meeting the heads of top targets, and working under pressure, you'll like the rush this group offers you.
Valuation - This is more predictable, there's more job security, the pay is good, work-life is not bad. It's tough to get into though, you'd need finance/economics masters degrees/CFAs from top 40 schools to get in usually. Audit clients usually require valuation of different tangible and intangible assets every year - investments, goodwill, companies, real estate, recent financings (stocks and debt, etc), so the group gets some steady business every year. This is in addition to some new deals that the group gets to work on. Given the expertise you gain/ have looking at financial models, your pay is a solid 15-20% above your respective peers in the audit practice.
Friday, 9 December 2011
which auditing group should you join?
Is there any particular industry you recommend for an associate to being with?
I wouldn't recommend any one industry, it all depends on your interest. The core sectors are - Technology/Software, Manufacturing, Hedge Funds and Mutual Funds, Insurance, Banks, Retail, Government, Real Estate, Entertainment, Biotechnology, Energy, Alternative Energy and Non-Profits. I'm sure there's more. I started breaking down why you'd want to join each industry, but then realized it all came down to one more thing - your interest in that particular industry. If you see yourself in that industry long-term (after your stint in auditing), choose that industry. Simple as that. One thing you'd want to take into consideration is specialization. For example, if you go into the financial service industry, it will be hard to transition to manufacturing, retail and technology. Consider the similarities between the industries if you don't know what you want to do and want to keep your options open. Hope this helps.
I wouldn't recommend any one industry, it all depends on your interest. The core sectors are - Technology/Software, Manufacturing, Hedge Funds and Mutual Funds, Insurance, Banks, Retail, Government, Real Estate, Entertainment, Biotechnology, Energy, Alternative Energy and Non-Profits. I'm sure there's more. I started breaking down why you'd want to join each industry, but then realized it all came down to one more thing - your interest in that particular industry. If you see yourself in that industry long-term (after your stint in auditing), choose that industry. Simple as that. One thing you'd want to take into consideration is specialization. For example, if you go into the financial service industry, it will be hard to transition to manufacturing, retail and technology. Consider the similarities between the industries if you don't know what you want to do and want to keep your options open. Hope this helps.
big 4 jobs vs other jobs
How often do big 4 auditors compare how their situations are with others working in Fortune 500s, Investment Banking, Consulting, etc jobs?
Sadly, a good amount. Let's break it down -
Fortune 500 - I'm going to group in all public companies here. This is what most employees compare their jobs to. When you audit these companies, you get to say their payroll reports, and so you know exactly how much each individual makes. You get mad when you see people who are not as competent but make a ton more than you. Then while you're slaving away through 8-9 pm, you see these guys jet faster than Usain Bolt at 5:30 pm, so they can enjoy life, and work to live rather than live to work.
Ibanking: You know it's a miserable job but you get riled up when you see how much they make, be it 5x, 10x or 20x the amount you make. It hits you when you audit banking fees on certain transactions, and you look at the amount of money they make for each transaction. You barely ever see them outside of the occasional nights "at the printer" when they walk in in their armani and gucci suits, acting like everyone else around them (the non-ibankers) are peasants. It either turns you off (many of them are glorified douchebags) or makes you want to be them.
Consulting: This is one of those jobs that everyone thinks is ideal. People think you don't pore over the details, and that you're very high level, like Bob and Bob from Office Space.
It's a tough transition though, you'd probably need an mba to go from auditing to consulting. When people realize this, and that you're basically living in hotels 75% of the time, they cut back on their need to join the consulting world.
Basically, every time you compare your job to someone else's, there is a 75% chance you'll feel miserable. I try to avoid it, but fall into this trap a lot. Just shake your head, stop thinking about other jobs unless you really want to leave and can leave, and move on.
Sadly, a good amount. Let's break it down -
Fortune 500 - I'm going to group in all public companies here. This is what most employees compare their jobs to. When you audit these companies, you get to say their payroll reports, and so you know exactly how much each individual makes. You get mad when you see people who are not as competent but make a ton more than you. Then while you're slaving away through 8-9 pm, you see these guys jet faster than Usain Bolt at 5:30 pm, so they can enjoy life, and work to live rather than live to work.
Ibanking: You know it's a miserable job but you get riled up when you see how much they make, be it 5x, 10x or 20x the amount you make. It hits you when you audit banking fees on certain transactions, and you look at the amount of money they make for each transaction. You barely ever see them outside of the occasional nights "at the printer" when they walk in in their armani and gucci suits, acting like everyone else around them (the non-ibankers) are peasants. It either turns you off (many of them are glorified douchebags) or makes you want to be them.
Consulting: This is one of those jobs that everyone thinks is ideal. People think you don't pore over the details, and that you're very high level, like Bob and Bob from Office Space.
It's a tough transition though, you'd probably need an mba to go from auditing to consulting. When people realize this, and that you're basically living in hotels 75% of the time, they cut back on their need to join the consulting world.
Basically, every time you compare your job to someone else's, there is a 75% chance you'll feel miserable. I try to avoid it, but fall into this trap a lot. Just shake your head, stop thinking about other jobs unless you really want to leave and can leave, and move on.
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