All posts by joelfrancia

Why Accountants are Risk-Averse

A few weeks ago, MPAC had an opportunity to hear from a couple local entrepreneurs. It was an insightful conversation as Robert Varela and Kristian Zak of UMeTime app shared their experiences in being with a start-up company. They described the depth of business knowledge they gained in the process and also the quick turnaround they have from idea generation to actual execution. They shared their plans to expand and grow the company in other parts of the country and how the business makes money, touching on future opportunities they are considering. It was fascinating to hear all of this from young entrepreneurs who clearly have already accomplished so much. Their work experience sure sounded different from ours as accountants.

It was from this conversation that I started thinking about why we don’t seem to hear a lot about entrepreneurial accountants. When pressed, accountants have some cool ideas on how to solve life’s problems and make things more convenient. There are ideas but not a lot of action it seems.

So is an entrepreneurial accountant really an oxymoron? I don’t think so. Accountants are just as able to start companies, but we are naturally risk-averse for a reason. It’s because of double entry accounting. Thank you Luca Pacioli!

Consider this: When a transaction happens, we are taught to record the debits and its corresponding credits. The reason is simple and that is to keep the books balanced. It goes back to the accounting equation: Assets = Liabilities + Owner’s Equity. As accountants, this is so deeply ingrained in our thinking that before making a decision on something, we are unconsciously trying to make sure we have the correct debit and credit accounts. There’s the drive to get the proper accounting treatment.

Entrepreneurs are different. Take for example Kristian when he said, “If you have an idea, just go for it and do it.” One has to admire that free-spirited attitude. It is not to say that entrepreneurs don’t take calculated risks because they do. But in general terms, they don’t obsess about getting everything right. The folks at UMeTime even appreciated making mistakes  early on because it helped them tweak their operations.

As a life premise, accountants would agree with the importance of learning from mistakes. But as a business proposition, I don’t think we are inclined to accept mistakes in “accounting treatment.” I sure don’t want to be in violation of AICPA, PCAOB, SEC, GASB, FASB, IRS, IFRS and a whole lot of other standards out there. Generally speaking, we just want to make sure that everything balances in the end. Contrast that perspective with an entrepreneur who is committed to bringing an idea to the market, with no assurances that such efforts would pay off, yet still attempts to do so. We are wired differently and there’s nothing wrong with that.

But in spite of such differences, I really think accountants are just as able to pursue entrepreneurial passions. A background in accounting is a great launching pad to so many different opportunities. It exposes us to various businesses and industries in a way that other professions don’t. As exciting as that is, however, I hope that we don’t discount making those opportunities ourselves. As accountants, we have the tools to operate and understand businesses. Sometimes what we need is just the encouragement to start building them.

Disclaimer: The following assertions are my personal hypothesis. These are unscientific and general claims that are meant to offer an alternative perspective on how we view entrepreneurship and accounting.

What is a CFP?

Too often we find ourselves in a certain track, not realizing there are other paths out there also worth exploring. Accounting students are prone to this mentality with so many thinking that a CPA is the only certification worth pursuing. While this may undeniably be the Holy Grail for accounting, there are other worthwhile careers like a Certified Financial Planner or CFP that is also worth looking into. My fellow MPA student Brooks Butler has written some on this topic but I’d like to delve deeper into this particular certification, especially since we just had a speaker talk about that in our most recent MPAC General Assembly Meeting.

Mr. Pilgrim and I

CFP is a certification for those who are looking to help clients, mostly individuals and families secure their financial future. Mr. Alan Pilgrim, coordinator for the UT Professional Development Center, visited with MPAC this week and likened the profession to that of a doctor-patient relationship. A CFP is someone who helps clients in planning their finances for life events, such as having kids, paying for school, saving for retirement, etc. With the recent financial crisis in 2008 and the marketing push initiated by the CFP Board, this role has never been more important. Mr. Pilgrim asserted that this profession would be in the top five in demand careers in the next decade, especially when you consider the retiring baby boomers needing help with their finances.

There are a few caveats to a CFP, however. First, as eager as MPA students may be to jump in this opportunity, the profession and the clientele mostly reward seasoned folks. Those with significant work experience will succeed and our young age right now, according to Mr. Pilgrim, is not going to be an advantage. This is understandable because I wouldn’t trust a 21-year old with my retirement nest egg, assuming that I have one. Nonetheless, I think it is important to be aware of this, because the demand for CFP is only going to get higher and this would be an excellent opportunity 10 or 15 years down the road.

Second, with more women handling the family’s finances, Mr. Pilgrim also observed that women CFPs have become even more in demand. Given the highly personal nature of the profession, it is not far-fetched to expect clients to be able to relate to their advisors, especially the ones helping with their finances. There’s a lot of client interaction in this profession, so solid relationship building skills are absolutely imperative.

All in all, I think a CFP is a rewarding career because at the end of the day it is about helping people. It is about creating a financial security for clients and lending one’s expertise so that they may live the life they envision for themselves. The good news for us accountants is that this is a path we can take and it’s not about collecting an alphabet soup of letters just because. One has to really examine whether a certification is suitable for one’s goals and ambitions. Because in the final analysis whether it is a CPA or a CFP or something else, it is about the value we derive from it.

First Impressions of Being a TA

One of the exciting things I’m doing this semester is serving as a TA for ACC 310F – Foundations of Accounting. I have never worked as a TA before so this is a completely new experience for me. So far, I’m really enjoying it. This class is mostly for non-business majors who are getting their first introduction to accounting. There’s something appealing about this for me because of the prospect of winning converts and possibly future MPAs. While that might seem far-fetched, I once was a pre-med major who switched to business after one accounting class. Just one. Conversions do really happen. I saw the light! Well, of course, that’s not the main goal here, but nonetheless, it motivates me to help students understand the basics of accounting.

Even though it may still be early in the semester, I have to say that my favorite part of the job is the office hours. Contrary to what I heard about office hours from my fellow TA friends, I actually had a few students drop by and ask questions. I used to question the need for TAs because I’d never consulted with one. But now that I get to help other students in this capacity, I understand the role TAs play. It’s a rewarding experience to see students understand the material better and express relief that they can ask questions they are afraid to raise in class.

Overall, I would recommend applying for a TA position to anyone interested in helping professors teach. I dream of teaching one day and I have to admit that I’m learning a lot from watching Prof. Verduzco conduct this class. He holds the class’ attention and brings the concepts to life through practical and sometimes even personal applications.

For example, to get the class acquainted with accounting jargon and financial statements, we are playing Lemonade Tycoon. It’s an app that simulates a lemonade stand business, where users get to make decisions to make it profitable. Although I was skeptical about it first, I myself am getting into the whole game. didn’t realize that you can use an app this effectively. 

I once heard it said teaching is the profession that creates all others. There’s so much truth in that. Although I would never dare classify my current position as teaching, nonetheless I’m part of the process and I’d like to think that I can make a difference.

Anyway, I wonder how many lemons we’ll sell next. I can’t wait to see how our business would fare.

Why a Statement of Purpose

If there was one requirement for admission to the MPA Program that I struggled with the most, it would be the statement of purpose. I can’t remember the actual number of days it took me to write it, but I do know that it felt like an eternity to fill two pages explaining my intentions for pursuing an MPA degree. The brevity and substance of the work posed a serious challenge, which not only required so much thought but also due time.

Looking back, I’m glad that it’s part of the admission requirements because it helped me really think about how an MPA would be helpful in my career and assess the main drivers of my decision to forego work and go back to school.

The statement of purpose asks basic and straightforward questions: Why an MPA? Why here and why now? It sounds simple yet daunting at the same time. I have found my answer to these questions to not only be helpful but also essential in guiding my decisions during recruiting and even within my own MPA experience.

From time to time, I read over my statement of purpose and reassess where I was to where I am today and whether the steps I have taken thus far are consistent with what I planned to do. In my response, I talked about my short term and long term goals and the overall trajectory I would like for my career to take. I discussed the values that I hold dear and that will never be up for compromise. I set lofty goals for myself and aimed high.

This exercise reminds me of time capsule activities I used to do back in college as part of retreats and workshops I attended. At first, I found them to be cheesy projects looking for a grand purpose to support. How naïve was I! Even though I haven’t been in the program for that long, I relish my statement of purpose because it reminds me of why I’m doing what I’m doing and the goals I have set for myself. So many things have happened from when I wrote it to the present time, which can make me forget about the big picture. In a way, it is like figuring out one’s true north.

Writing a statement of purpose is no easy task. It shouldn’t be. But I would assert that it is worth all the time and effort. Overall, I think the statement is designed to encourage us when we feel like we are at a loss and to remind us of our reasons and values in making such an important decision.

ARK in Austin

On a beautiful Saturday morning, I went to Starbucks to get my caffeine fix for the day. Everything was fine, normal, and actually boring until a car cut in front of me in the drive-thru lane. I didn’t know you could do that but it happened. What a way to start the day! Someone has apparently removed the orange traffic cones on the corner that were supposed to keep peace and order in this little community.

Now we have chaos. I was miffed.

I almost honked my horn, when a confused beautiful girl came out of the car, replaced the cones, and gave me a nice apologetic smile. Aha, the culprit! Thanksgiving just passed, Christmas is coming, and the end of the semester is approaching. After a mental flip coin, I decided to let it go, smile, keep my cool, and let the car proceed.

I didn’t think much about this incident afterwards. With Nat King Cole and Bing Crosby in the background, I realized it was no big deal. Christmas music just has a special way of putting me in merrier spirits. So I ordered my normal drink and pulled to the counter to pay for my caffeine  addiction.

I was handing cash to the barista, when in a very sweet manner she pointed to the car in front that was driving away and said, “They paid for your drink. Have a happy thanksgiving.”

So the people in front of me, the very same folks who just cut in line, gave me a free drink. That was totally unexpected and even as I write this post and finish that cup of coffee I still can’t believe it happened. Overwhelmed. Thankful. Speechless. That’s how I felt as I drove away from the counter, sipping coffee freely given by a thoughtful stranger.

I’ve heard about stories like this on the radio, but it has never happened to me until this day. In Austin last year, there were so many pay it forward stories on the air that I have to admit I was a bit skeptical. But now, I’m a believer. Acts of Random Kindness (ARK) do happen and some times in the most unexpected places and situations. This just warmed my heart and encouraged me so much. I am grateful, not only because of the free coffee, but because people, in spite of the pressures of this world, still know how to give and bless others. This is such a great reminder, especially for this season.

I wonder if things would have turned out differently if I frowned on that girl and did not let them pass. I wonder if instead of a nice morning, I would have ruined it for everybody. I still think about this sweet encounter and realize that this shows how the little things really do make the difference. A simple smile, a humble perspective, a grateful heart, go a long way.

Now, if I can only let somebody pass in front of me when paying for tuition at McCombs that would be a huge ARK I’d be forever thankful for. I can only imagine my reaction. I see a few high jumps happening. But jokingly aside, the point is in this season of thanksgiving and cheer, small acts of random kindness go a long way in making a positive change.

The strangers on that car may never know who I am, what my name is, or how much what they did meant to me. But on this day, they put a smile on my face and reminded me to keep paying forward.

That’s a memorable impact and one that would stay with me for a while.