The Pur$uit of Happine$$: Part 2

Right now I’m in my 4th week of my internship. Things have been a little different from my expectations, but that’s why being able to roll with the punches is a good thing. FAs an intern, auditing has been a lot about reviewing, editing, and generally supporting the full-time staff and firm in ad-hoc tasks. So far, I have assisted in basic accounting for 5 different clients in 4 different industries. Right now, I’m helping HR with some of their recruiting efforts. Both of these experiences are relatively unique for an assurance intern and not what I thought the traditional auditing role would be like, but I really like the people that I’m working with, which makes everything a lot smoother and enjoyable.

As an intern, you may be subject to some pranks that the senior staff will pull on you. I have outlined some of the more common ones, to help you know what to expect:

1)      “Go ask the client where their list of unrecorded liabilities are.”

2)      “I’m going to need you to grab me some tick marks from the supply closet.”

3)      If you’re ever staffed on an engagement where you’re told that you need to find the size (in square feet) of a road or building and your Senior tells you since they don’t have an adequate tape measure available  you have to measure your foot with a ruler and measure the area by walking around, be a little suspicious.


Continue reading with Part 3 of The Pur$uit of Happine$$!

Melissa Takes Boston: Part 1

Hello Everyone!

I am 3 weeks into my auditing internship here at a Ernst & Young in Boston, MA. It has been crazy, a bit overwhelming, and already it feels like I have been working forever. I am learning so much everyday and I want to share what I have learned with those of you who are currently in MPA and thinking of participating in this awesome program.

My first internship lesson actually had nothing to do with accounting at all.

It was my first day at the client and my start time was 8:30 AM. The commute was about an hour, so naturally I left at 6 AM. (This might seem crazy but those of you who know me know that it is actually very predictable.) All was going well and I was on track to be not-so-fashionably early for my first day. All of a sudden, the “low tire pressure” alert began sounding in the car. As I pulled off at the next exit, I heard my tire completely blowout. I frantically called the rental car company, and then the towing company, and then a team member on my client to explain what was going on.

As all of this was happening, there were so many thoughts going through my head. The first, of course, being that I was going to late my first day of work because of a flat tire. That’s almost as cliche as forgetting your homework and saying your dog ate it.

In the end, I was late, but I learned a valuable lesson. As cheesy as it is, I learned that these things happen and no one is going to hold it against you. As adolescents we often resort to one of two reactions when these kinds of things happen. We either blame everyone except ourselves or we completely internalize the situation and worry about what everyone will think of us. As new interns we really hope to impress, not only because we want to secure that 5-star performance review that Jamal alluded to in his last post, but also because we are representing the University of Texas as we intern.

As you begin your internship, nerves and anxiety are okay, but my as my dad always tells me, the difference between excitement and nervousness is confidence.  It’s important to remember that no one is expecting you to be perfect, they only expect you to be the best you can be. Don’t be nervous because McCombs more than prepares us for the actual accounting part of the internship.  If something happens on your first day, just remember that things happen, and don’t sweat the small stuff.

Click here to read Part 2 of Melissa Takes Boston!

Bitcoin for Accountants

Most blogs, including ours, operate on the WordPress content management system, the most popular blogging platform in the world. Last year WordPress began accepting a new, secure digital currency called bitcoins for payments and donations. This new currency combines open source software with cloud computing to dramatically lower the cost and delay of transferring funds.

Bitcoins are bought with dollars, euros, and other conventional currencies on centralized exchanges much like any other liquid asset. The currency is currently in a bull market, with the price of one bitcoin increasing from $5 to almost $18 over the past year.

Once purchased, bitcoins are used to make payments for goods and services using a distributed transaction clearing system (PDF). Instantaneous fund transfers cost less than a penny and are free if rapid execution is not a priority.  The clearing system continuously broadcasts all transactions between anonymous addresses (hashes of public keys) using a “block chain” or public ledger; the equivalent of check clearing between bank accounts. This level of transparency, combined with modern cryptography (SHA-256 & ECDSA), prevents any tampering or double spending.

Over the last couple of months approximately 1,000 merchants started accepting bitcoins thanks to a start-up called Bitpay. This trend has been driven by the low costs and high security of the Bitcoin payment processing system as well as the monetary stability of the underlying bitcoin currency. Perhaps the greatest advantage of Bitcoin over the current payment system is “immediate funds transfer” or IFT. Rather than wait for overnight clearing through ACH, CHIPS, or SWIFT, payments can be deposited or disbursed instantaneously wherever there is an internet connection.

From a financial and tax accounting point of view, bitcoins are the same as any other foreign currency. However, from an auditor’s point of view they do present an unprecedented peculiarity: the entire system relies on cryptographic proof rather than human trust. It is important for auditors to understand how to verify bitcoin transactions and value a company’s inventory of bitcoins.

The public ledger is called the “block chain” because it is a series of “blocks” that contain information about transactions. All of the bitcoin transfers from one address to another that have ever occurred are recorded in the block chain. This is very convenient for auditors since transactions recorded in the company’s internal systems can be instantaneously verified by searching the block chain for the company’s addresses. The block chain can be downloaded at the cut off date from Sourceforge and its integrity can be checked using the open source Bitcoin client. Not only does the block chain make payment verification simple, it also dramatically reduces the risk of defalcation while simplifying internal controls and bank reconciliations.

It is important for accountants and corporate treasurers to be aware that all bitcoin transfers are recorded in a public ledger and that transaction patterns may reveal the identity of an address. An astute competitor or investors could quickly develop a cash-flow statement from such information. For this reason, it is best practice to generate a new address for each transaction.

Bitcoins are stored in a digital wallet after they are received. The wallet can be cloud-based for mobile payments and browser access or stored on a local system to maximize security. Treasurers should be careful to divide funds into several different wallets stored on separate systems. Managers that would normally sign and countersign checks should similarly be entrusted with the passwords to prevent unauthorized payments.

Once the physical system is properly secured, the only potential threat is the password. Management should have a password policy that balances security with the risk of one person being responsible for an unrecoverable password. Internal control designers and auditors should consult with an I.T. specialist to ensure that the wallet is stored and backed up on encrypted drives attached to dedicated systems.

Similarly, audit teams should employ an I.T. specialist to verify the bitcoin balances held in wallets. Verification includes sending a traditional confirmation letter to a 3rd party wallet custodian and obtaining the balance from the block chain. Tools like Block Explorer make independently authenticating the existence of individual bitcoins straightforward and instantaneous. Control of the addresses themselves can be evidenced with walk-throughs as well as bitcoin transfers to and from an address controlled by the auditors.

After the amount of bitcoins at the balance sheet date has been established, the auditors need to verify that this amount is translated into the reporting currency pursuant to ASC 830-20-25. The currency translation from bitcoins to dollars is effectuated through an adjusting entry that contains the gains and losses reflecting changes in the exchange rate between bitcoins and dollars. This translation must also be done for receivables and payables the company expects to settle in bitcoins. The exchange rate used for measurement at the balance sheet date, called the current rate, can be observed on liquid markets like Mt. Gox.

Cash management with bitcoin is now finally entering the Internet Age: payments are processed around the clock, anywhere in the world, and with little to no transaction costs. We can expect that this disruptive innovation will transform the treasury function just as much as social media transformed marketing campaigns. Does your business accept bitcoin payments? How do you think internal controls and audit planning should adapt to this new digital currency?

Run Austin! (2.0)

Last year I wrote a blog post about the best places to run around in Austin on a day to day basis, and mentioned a few of Austin’s most famous races. (Click here if you missed it!) Austin has a strong running community and a ton of marathons and races. With spring on the horizon, I thought it a good time to discuss a few of the best races to run in Austin.

My friends and I at the Color Run last year

Let’s start off with the fun races.  Color Run, coming in May (sign up open January 15th!), is one of the most fun and colorful races in Austin! It has a national tour, so you can run the race in other cities around the country. This is a 5K run, about 3.1 miles long, where volunteers throw dry paint at you at the start and after each 1K you complete. You start wearing all white, and finish a colorful mess. Once you finish you are given a bag of dry paint of your own, and there is a massive dance party by the finish line where everyone dances and throws paint. I did it with a few friends last year, and highly recommend the race to runners and non-runners alike.

Warning: Make sure you shower the paint out of your hair (yes, it will get in your hair) as soon as you get home. I didn’t get all of the paint out immediately, and my hair had pink and green sections for a week following the race because I let the paint sit for a few hours. Unfortunately for me, that week after the race was full of public accounting firm career nights. Nothing like colored hair for networking!

Braving the mud with some fellow MPAs

Another fun, and extremely messy, race for everyone to do is the Muddy Buddy. This race, also part of a national tour, is a partner race where you mountain bike and run. There are obstacles throughout the course, including a large mud pit you crawl through with your partner at the end of the race. I particularly enjoyed the costume contest at the beginning, where the funniest costumes received some recognition and appreciation. There are a lot of races in Austin similar to this one, in particular the Warrior Dash and Mud Run.

The Gorilla Run may be one of the strangest races in Austin. Instead of a race t-shirt, each race participant receives a full gorilla costume to run in. Volunteers run dressed as bananas for the gorilla-clad racers to chase through Austin’s streets.

Austin has a number of zombie runs in the winter, where you attempt to outrun zombies as they chase you throughout an urban course.  I have also noticed many “urban-challenge” races as well. These are similar to the TV show “The Amazing Race” where you complete tasks around the city on foot, or take part in a city-wide scavenger hunt.

Come out the the LiveSTRONG half marathon and find me in my infamous Waldo race costume in the crowd!

Finally, I am going to make one final push for something I think everyone in Austin should take part in, whether it be racing or volunteering. I really think everyone should take part in the LiveSTRONG Marathon and Half Marathon while they are in Austin. It is a very energetic and inspiring race that I feel is unrivaled. Only slightly less than 3 weeks away! And, in case you are feeling particularly generous, I am raising money for the LiveSTRONG Foundation as a member of Team LiveSTRONG again this year, and you can see my personal page here.

The Pur$uit of Happine$$: Part 1

Hi everyone! Long time no read! Right now I’m interning at PricewaterhouseCoopers in their assurance practice in Dallas. I thought now would be a good time to talk a little bit about my experience so far and give some perspective on the ominous MPA internship. I’ll try to make a blog every week, so hopefully some of my many fans might benefit.

Moving to Dallas has been quite the shock for me despite the fact that I have done my fair share of travelling. I’ve been all over the U.S., traveled through the Middle East, and even lived in Bangkok for two years. But moving to Dallas, just a couple of hours from Austin, has been really something. Not only has there been a psychological shift, but in the span of a week: I got into some serious paperwork trouble, I got into a car accident, and I went to the gym everyday (for that last one I’m just bragging). Similar to school, I have always been held liable for my actions. Except now it doesn’t involve just going to office hours or studying harder. Instead I am learning how to deal with people that don’t necessarily want to be dealt with. I’ll tell you, dealing with strangers is a lot more time consuming and difficult than dealing with group members for a class project.

Despite a few hiccups, the overall transition has been a relatively peaceful one. I just started working at the client site, and though it’s not quite as exciting as I had hoped accounting would be, I’m getting to see some real world application (albeit a small amount so far) of transactional policies. Meeting the staff and other interns has been enjoyable and I’m definitely learning a lot about the corporate life and the best ways to present yourself to co-workers and clients.

There are a lot of intangible qualities that I think people don’t really think about when they’re working for the first time. Things come up that can really set you back, but the nice thing about the “real world” is that grades don’t define who you are. Sure there are performance evaluations, but they aren’t quite as looming as seeing a B or C on your UT grade report (I would know). Now if you’ll excuse me, I have to reconcile a bank statement…

Best regards,
Jamal

Continue reading with Part 2 of The Pur$uit of Happine$$!

 

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