Category Archives: MPA Council

Events, MPA Council, MPAC, Olivia, Student Life

The Tower and Study Spots

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IMG_1675 copyAs previously planned, I went on a tour of the UT tower with the MPA Council. The view was great despite the overcast weather (it hailed later that evening!) and is one of the best I’ve seen in Austin alongside those at Mount Bonnell and the 360 bridge overlook. During the summer, the tower also hosts sunrise and sunset tours, which sound awesome. If you have a chance, book a tower tour.

Once the study break was over, I went back to hit the books. This time I went downtown to Cafe Ruckus where a heated giant cookie made for a great study buddy at a giant table by the window. Often I study at home, but when I venture outside, you can find me at one of the following:

1. Flightpath is my favorite cafe in Austin. The place has friendly baristas, good tables, lots of outlets, and a wide array of tasty drinks and snacks. This is a place you can camp out for the day (as I did during Fall semester finals). If only it were open past 11 PM.

2. Thunderbird on Koenig has huge, wooden tables that make for great group study (or fulfill the needs of space hogs like myself). Unfortunately, there are no outlets. They have a fuller (and delicious) food menu than does Flightpath. Also open until 11 PM.

3. Epoch is the place to go for all night studying. It’s one of the few 24 hour spots in Austin and thankfully the pizza slices from East Side Pies are available all night long with you.

4. Mozart’s on the lake has stunning views. The drink selection is enormous (too many chai lattes to count) and the place is always crowded. It’s a great place to watch the sun set.

I also would like to give a shout out to Avenue B Grocery, which has been in Austin for over a century. Ross Mason (owner for 25+ years) makes great sandwiches and soups and has a panoply of other goods for sale. Definitely check this place out next time you’re in Hyde Park. If it’s a nice day, sit on the bench swing outside while you eat.

Academics, MPA Council, MPAC, Olivia, Student Life

Change of Plans and What I’ve Learned

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In my opinion, it’s almost never too late to change something and there’s always plenty more to learn. On the change front, two of my forward looking plans have already been scratched. First, I am not going to Buenos Aires this summer. Second, I did not attend a single SXSW event. The beauty of the latter is that the job offer I’ve accepted is in Austin, so I have plenty more chances to check out the hubbub. As for Buenos Aires, I decided to take a more low key approach to this summer by staying put in Austin, taking classes and TA-ing at UT, and hanging out with my cat. Buenos Aires will (likely) still be there to explore later down the road. But never fear, not all is lost with my goals! This Saturday I am scheduled to go on a Tower Tour with MPAC.

As for what I’ve learned? So much. Lately it’s been a struggle to write blog posts given that there is so much going on and it can be a challenge to synthesize. So, I thought I’d present to you two interesting things I learned in class this week:

Judge-Gavel

1. Getting wrapped up in intentional tort civil cases is no cake walk. In these types of cases, not only are punitive damages often tacked on to compensatory damages, but these damages are not absolved in the event of bankruptcy. Further, there are few standards, if any, for punitive damage amounts so they are often up to the complete discretion of the jury. As explained by Dean Bredeson, substituting for Frank Cross’s LEB 380 30 “Business Law” class.

hacker-attack

2. It’s frighteningly easy to hack into home routers that use system default usernames and passwords. Lizard Squad accessed over one thousand routers as an “elaborate commercial” for their new website. On a similar note, the strongest passwords are the longest passwords. Aim for over 8-12 characters and try linking together several common words. Length trumps the use of special characters as far as security and hackability are concerned. As explained by Edward Block, guest lecturer in Patti Brown’s ACC 380K 13 “ITAC” class.

I think these two tidbits well illustrate the diversity of the MPA learning experience. I had no idea I would be exposed to things here that seem on the surface to be so unrelated to accounting. Happily, the adventure continues!

Academics, Alexandria, MPA Council, MPAC, Student Life

MPA Council and the ICAEW: The future of global auditing

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icaewIn late February, Program Director Jim Franklin and Department Chair Lillian Mills were able to have some members of the Institute of Chartered Accountants of England and Whales (ICAEW), one of the leading institutions publishing articles about the profession internationally, to come and speak about the future of global auditing with members of MPA Council.

We were asked the question “What challenges do you think the auditing profession currently faces?” and “If you lived on a small island where all the companies did not have to have their financial statements audited because everyone trusted each other. If you wanted to open the island to foreign-based companies, what protections would you put in place?”

The resulting discussion I felt was fascinating, as it combined the knowledge I’ve developed in both my auditing and complexity theory categories. I feel these two questions are extremely related, and here’s why:

Let’s say we are on the small island described above. There is no need for audited financial statements because there is trust between the companies and shareholders. We face the decision of requiring audited financial statements in the face of foreign companies wanting to sell shares on our island because we do not have the same trust in these companies. Auditors would become in demand because of a lack of trust between company management and investors.

If shareholders feel they have been presented fraudulent financial statements, they will blame the auditors for not catching it. Even though it was the company that committed the fraud, the highly-trained auditors did everything they were supposed to do, a disproportional amount of blame falls upon the auditors.

This blame falls on the auditors because most people don’t fully understand the role of the auditors and the work they do. They just expect them to catch all and any fraud. This is what we discuss in auditing class as the expectations gap. Because people don’t understand the training and qualifications we have, and the limited nature of our job, we can only do so much to prevent fraud. Companies preparing the financial statements are the ones ultimately responsible.

Also, auditors are held accountable for the effectiveness of accounting standards. The problem with this is that the world is coming more and more complex, and companies are quickly adapting their operations in order to survive in the complex world. Frequently, we can’t keep up in developing accounting standards to reflect these new and innovative ways of doing business. Technically, a company’s financial statements could be following GAAP, but the core economics of the transactions are misrepresented.

Because of this expectation gap and lack of trust that is continually strengthened by corporate fraud, a a decent amount of people are mistrusting auditors for “not doing our job.”

The answer seems to be to close the expectations gap and to increase people’s trust in our services. The million dollar question, though, is how in the world can we do that?

Career, Joel, MPA Council, MPAC, Student Life

Why Accountants are Risk-Averse

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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.

Academics, Career, Employment, Joel, MPA Council, MPAC, Recruiting

What is a CFP?

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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.