Author: Adrienne Gonzalez

Adrienne is a 15-year veteran of the accounting industry, if by "veteran" you mean "vulture prowling the periphery of the profession waiting for something exciting to happen." She has been spewing vitriol on Going Concern since the site was founded in 2009. A former CPA review employee, she has sat through more FAR classes than any CPA exam candidate ever could -- even one who has failed FAR seven times -- and can still recall most of the mnemonics all these years later.

CPA Exam Memory Aids, Do You Need Them?

For some, lease accounting comes easy and you don’t need a catchy tune to help you remember title-transfer, bargain purchase and 75% of its useful life. But for most of us, retaining the information critical to getting through a multiple choice question every minute or minute and a half requires either divine intervention or a really excellent collection of memory aids. Since some of you may be atheists, let’s talk memory aids. Pay attention, especially those of you taking FAR who need help getting through such a huge mess of information.


Post its are your friend! Are you having trouble remembering present value tables or the three necessary components of an audit opinion? Not to worry, just grab a pack (or 20) of sticky notes and start writing down mnemonics or calculations and sticking them everywhere you might see them; your fridge, the bathroom mirror, your car’s rearview mirror (don’t forget to take it down before you drive), your desk, and especially on top of the PlayStation. Swap out your old notes for new ones every couple of days as you add new information and be sure to read them every time you pass the note. If you’re one of those folks who has this stuff down but just needs a little encouragement, you can also use this trick to get a much-needed boost of confidence by writing your name, CPA and slapping them all over the house. Talk about motivation!

You have a few minutes and some scratch paper at the exam, so use it! While the Powers That Be may discourage using the 10 minutes before you actually get into the exam as a brain dump, there is no reason you can’t use 2 or 3 of those minutes to scratch out everything you can on the scratch paper you are given at Prometric. Mnemonics, keywords, formulas, FASBs, whatever, just start writing everything down before you actually launch the exam. You can help yourself out by bringing your review book with you to the test center (but not inside!) and reviewing it one last time in the car before you go in. But be careful, if you use the whole 10 minutes and don’t get through the screens, you’ll blow the whole exam and have to reschedule! 5 minutes tops!

Flashcards are your friend! No, I’m not talking about overpriced CPA review materials that your firm is nice enough to pay for, I am talking about a good old pack of 3x5s that you mark up yourself. I once had a student who claimed his homemade flashcards were what helped him through FAR even though his handwriting was so atrocious that even he couldn’t read it. Just the very act of writing down key topics helped him remember those areas when crunch time came and he was struggling at the exam. Of course this works best if you can actually read your own handwriting but don’t let that keep you from using this important tool to help in your retention of key areas. You can use them to quiz your study buddy or simply make a stack of hard-to-remember topics for your own review. Again, slip these in the car the night before you head to Prometric and flip through quickly before you walk in to take your exam.

Here’s the deal, the CPA exam isn’t meant to be easy and you aren’t supposed to be an expert on dozens if not hundreds of topics. You need to know a little bit about a lot so with the help of some simple tricks to train your brain to work in exam mode, you’ll be breezing through exam parts like no one’s business. Good luck!

Why Your Firm Needs a Social Media Policy

If you work for a larger firm, chances are you’ve already got a social media policy that encompasses everything your firm does not want you to do online. For smaller firms and private practices, a social media policy can be the very last thing management considers implementing, assuming you will use your better judgment when conducting yourself online and don’t need the rules laid out. Oftentimes this mentality comes more from management’s unfamiliarity with social media than anything else. If they don’t use Twitter, how can they tell you how to conduct yourself on it?

But your online social life isn’t the same as a cocktail party at which you are representing your firm. Should you be able to say whatever you want on Twitter after hours? Can you post pictures of yourself getting wasted on Facebook?


The line is cut and dry when you are at a firm event or at a client but are you expected to represent your firm even when tweeting on your own time? If your firm does not have a social media policy, the answer is you have no way to know until it’s too late and you’ve pissed off the boss.

For firms, not having a social media policy can open the company up to all sorts of tricky trouble. Without knowing exactly what is expected of them, employees are forced to use their own judgment when it comes to their online behavior. Most are smart enough not to bash the boss in 140 characters or post embarrassing holiday party photos on Facebook but what’s to stop them from starting a blog that management finds offensive or keep them from tweeting about their work life in general? Absolutely nothing.

With hyper-connected Gen Y more than established in the workplace, a social media policy makes even more sense. Very few us get through a day without a Facebook update or a tweet and for some of us, our online persona can be a point of contention with management. Case in point, yours truly and Jr Deputy Accountant. Working in the industry meant that I had to be careful not to needlessly bash firm failures (like PwC and Satyam), lest I ruffle any feathers that could connect my site to my employer. Sometimes a disclaimer is helpful – something along the lines of “my opinion is my own and independent of any personal or professional affiliations” – but without having clear lines drawn between how you behave at work and how you behave on your own time in front of the entire Internet, it can be difficult to know what’s appropriate and what is not.

Last week we gave you some tips to keep your online life safe in the event that you don’t have a social media policy but that doesn’t mean your boss gets a pass. A social media policy is always a good idea and in this day and age there’s no getting around it, it’s necessary.

Don’t Let 2011 CPA Exam Changes Keep You From Studying This Year

I’ve talked to a lot of panicked CPA exam candidates out there who seem to be bewildered and anxious about CBT-e changes coming up in just a few short months and even though we’ve covered it plenty here on Going Concern, I figured I’d take the time to remind you once again to relax. Please. Seriously. Like now.

A few things to keep in mind and then we’ll get to the good part.


1. Accounting is still accounting and IFRS puts debits on the left too. While international standards are spooking everyone, let’s take a deep breath and remember that accounting is still accounting whether it’s GAAP, government, IFRS or that wonky version of financial accounting that the Fed gets to make up. For the first few testing windows, if not years, it is highly likely that the AICPA will take a conservative approach when it comes to integrating the new standards into the CPA exam. They are not going to scrap years worth of effort put in to the computerized exam just to test international standards that aren’t even used in the U.S. so stop thinking 2011’s exam is THAT much different.

2. Regulation isn’t really changing at all. Does it ever? You’d be surprised how little the exam changes from year to year even as new standards are released and introduced to the bank of questions candidates receive. The fundamentals haven’t changed much over time and probably won’t. In the last three years, I can only remember two very large changes: a massive overhaul of Audit in mid 2007 that changed a lot of terminology but not much else and FAS 141(r) or, as candidates know it, business consolidations last year. Beyond that, the meat and potatoes of the exam have remained pretty constant in the 6 years since the exam went computerized.

3. Simulations will be easier. Believe it or not, the new sims should be way easier than the current ones. Instead of hoping you get a simulation that covers the two or three areas you studied (ahem, procrastinators, I’m talking directly to you), you get 6 or 7 smaller simulation problems that cover a multitude of areas. This makes your crapshoot odds of knowing what you’re doing far better than they are under the current structure.

So, now that we’ve pointed out those few things, I think you should know that there’s no reason to hold off on studying this year if your plan is to start taking exams in the beginning of 2011. GAAP will not change and will still be tested, it is just that new international standards will also be added to the mix.

You can certainly get a jump on studying by going over the current material towards the end of the year and then hit the 2011 stuff once it is available. Otherwise you’ll have to cram up to 150 hours of studying into a couple weeks right after New Year’s when you’re probably in no mood to study anyway. Trust me, a fourth quarter 2010 FAR exam isn’t going to be drastically different from a first quarter 2011 FAR exam except for the obvious international stuff sprinkled throughout. No big deal.

You CAN use 2010 books to START to prepare for the 2011 exam, just be sure to update them with 2011 material once it is available. If you rely solely on 2010 materials you will probably fail but you can definitely use them to get the foundation on topics that are still going to be tested in 2011 and beyond in much the same way they have been since 2004.

Hope some of you can now sleep at night. You’re welcome.

Hey Media, Leave the Accounting To Us Mmmkay?

When Going Concern first launched a year ago, I know we heard more than a few chortles from the audience at the very idea of an accounting news site (or tabloid, depending on who you ask) because, really, how interesting can accounting be? Of course we’ve since learned that cube-dwellers, financial professionals, college kids and accounting enthusiasts are totally into what we do because no one was doing it before and someone had to.

It’s easy to forget that we’re not only utilizing this avenue to rip on obvious boneheads who try to manipulate our precious accounting (we’re talking to you, Patrick Byrne) and make fun of idiot celebrities who don’t pay their taxes but also to bring an accounting awareness to the world at large. It’s not all number-crunching and despite the stereotypes that we ourselves perpetuate, we’re also providing a service by making the obscure world of accounting digestible to non-accountants.

Which is pretty much the entire reason why other media outlets need to back off and leave the really super complicated reporting to us if they’re going to get into things they don’t understand.

Case in point, American Apparel.


The headline was really that American Apparel has been taking the active accounting defense stance lately, getting fired by Deloitte (hint if you’re not into the accounting: that doesn’t happen very often. The other way, perhaps, but the auditors very rarely get spooked and bail like that), rapidly bleeding precious capital and sort of “forgetting” to file important check-ins with the SEC. Oops. That’s where the doubt arises in “going concern doubt”.

In fairness to some media outlets, not everyone bumbled the headline. But for these two, we need to define the term “going concern.” This might be too hipster ironic, even for me.

Thanks, InvestorWords, I’m too lazy to type out this definition myself:

The idea that a company will continue to operate indefinitely, and will not go out of business and liquidate its assets. For this to happen, the company must be able to generate and/or raise enough resources to stay operational.

And then we can get into American Apparel’s future a ‘going concern’ via Marketplace and American Apparel Warns of ‘Going Concern’ via the Los Angeles Business Journal. Yeah, to clarify: that’s what we want, American Apparel has the doubt part to worry about, which was conveniently linked to directly from AA’s preliminary 10-Q to the SEC. See, it’s laid out there for you, all you have to do is read it.

Anyway, I’m not annoyed when people like Emily Chasan write stories about this stuff because she knows what she’s doing. Caleb gets away with it because he knows what he’s talking about. I stick to what I know – ripping on regulatory agencies and bitching about the general state of the industry – and pull it off. There are a ton more accounting writers I could name (Bill at CPA Success, Rick at CPA Trendlines, Francine at Re: the Auditors, Professor David Albrecht, Jim Peterson at Re:Balance, blah blah blah) but I would end up leaving out quite a few talents and I’d hate to offend anyone. Ha.

My point is that you don’t have to be one of them to get the story right. That’s all I’m saying.

The irony of this is not lost on me. I don’t wear American Apparel dammit but I half dress like this awful stereotypical hipster. Don’t ask me what to wear on CPA exam day, I stick to what I know.

Should CPA Exam Candidates Crack Open College Textbooks?

It’s a valid question and we haven’t answered it yet so let’s give it a shot, shall we? Here’s the specific reader inquiry:

I graduated in 2008 with an accounting degree, but I’ve not really pursued anything in accounting since then. Without talking too much about my personal life, I’ll just say I had better opportunities.

Anyways, I’m considering getting back into public accounting, and I plan on beginning taking the CPA exam in 2011, after busy season. If I order a CPA review course, will that be enough, or should I spend some time reviewing my books/notes from college?


Yeah, we’re with you on the “better opportunities,” be that foaming lattes or harvesting certain medicinal plants (depending on your state, of course), so let’s forget about what you’ve been doing since you graduated and focus on the task at hand: passing the CPA exam.

As we’ve told you plenty of times, it’s always best to knock the exam out as soon as you graduate since you likely still have some sort of study habits left over from college and aren’t yet tied down with family and a career but things don’t always work out that way for whatever reason. That’s fine, my professional experience has actually been that those who take some time off after school do better once they do start to tackle the exam simply because they are older, wiser and usually slightly more dedicated than a 22 year old fresh out of college. No offense to the dedicated 22 year olds out there, of course.

But please, whatever you do, don’t bother with your college textbooks. Chances are your cheap, lazy and overworked accounting professors used the same textbooks year after year while the CPA exam changes twice a year. Sure debits still went on the left even in 1903 but keep in mind the CPA exam isn’t necessarily a test of how good of a CPA you will be but a comprehensive skills test that identifies your shallow knowledge of a broad range of subjects. Think of the exam as a lake 15 miles wide but only an inch deep; some of your college texts may delve into some areas in detail that aren’t really tested on the exam or they could skip entire areas completely, especially since you graduated just as the economic crisis was hitting. Things have changed since then and with international standards hitting in 2011, the chances are even lower that these areas were covered in school.

For you, the best thing to do is find a review course that will help refresh your knowledge based on what you learned in school but also give you a general outline of topics that you may have forgotten or never covered when you were in college. I know it’s called “review” but a good review course can teach you as if you have no prior accounting experience whatsoever… assuming you do remember which side to stick the debits on.

Skip the textbooks and spend your time focusing on a review product that will give you exactly what you need to pass the exam. Good luck!

Five Ways Not to Lose Your Job Playing Around on the Internet

Accountants are more prevalent in the social mediasphere than you might think; they’ve taken over Twitter, blog regularly and can even be found figuring out how to make Foursquare relevant to business. But since tapping the potential of social media for business is relatively new, not all organizations know exactly how to use the tools, nor do the understand the importance of a good social media policy within their organization. So here are some tips for making the most out of social media without losing your job. We’re sorry we have to even share these but we’ve seen some of you guys out there in the social mediasphere and it appears you need a reminder.


Choose Your 140 Characters Carefully – If you’re on Twitter and are complaining about your job, understand that the entire world can see you. Even if your stream is private, the great Google sees everything. A few months back, Twitter’s internal search allowed private tweets to appear in searches. I’m not sure if this little hole has been patched but if it hasn’t, you don’t want to be a victim of your own public stream of consciousness. Don’t say anything online that you wouldn’t say in an e-mail to your boss.

Ask About Your Firm’s Social Media Policy – Though it’s sort of implied in the firm’s overall policy on communications outside of the company, social media is an entirely different avenue and the rules may not be as cut and dry as the GAAP you’re used to. Not all companies will specifically bar you from blogging on your free time and many turn a blind eye to the activity… until you say something they don’t like. Don’t assume that you’re safe if you don’t share your name or location: it’s fairly easy to reveal your identity if you’re sharing details of your life like where you live and what you do. It gets easier if you’re using a blog to rant about work or out obnoxious coworkers. This applies to positive blogs as well; even if you’re doing the industry a service by discussing current events in accounting, some firms would rather you not say anything at all. Be careful with your details and when in doubt, ask about your firm’s social media policy.

Facebook Friends – You’re not friends with him in real life so don’t be friends with your boss on Facebook. Facebook can be a great networking tool if you aren’t sharing photos of your drunken weekend adventures but if you are, better leave your boss or even coworkers off your friends list. Remember also that Facebook privacy settings can be complicated to say the least; even if you have most of your profile set to private, if you haven’t gone in and changed certain settings, mobile uploads and other photo albums can still appear in search results. That means any nosy coworker out to make you look bad could easily stumble upon your page and access things you’ve posted thinking they are invisible to anyone but your friends. I’m all for being cozy with colleagues but be careful when adding people you work with if you, like 99% of us, use your Facebook to rant, brag and occasionally spout off inappropriate things.

Careful when commenting on blogs! – Listen, we love you guys for contributing but sometimes we have to wonder if you’re playing with a full deck. If you’re commenting from and about work, keep the details to a minimum and use the anonymity of the Internet to your advantage! I have Jr Deputy Accountant readers who work for the banks, the Fed or government agencies but that secret stays between them and me – some choose to create a nickname that wouldn’t reveal who they really are and others stick with “anonymous”. However you do it, remember that if your name is George Stein and you work at KPMG, using GSKPMG2010 isn’t fooling anyone. Talking about salaries or griping about the conditions are totally allowed – if not encouraged – but be smart about it and never use your real name unless you work in communications or don’t mind your boss or colleagues seeing your comments. Once again, remember the great Google sees ALL.

Whatever you do, never forget the Internet is forever – You can delete your Myspace account but since the Internet tends to aggregate information, just because you’ve deleted something doesn’t mean it is gone forever. Case in point: when I write a blog post on JDA, it’s picked up and republished by two news aggregators instantly, which means I’m stuck with whatever typo I missed or stupid comment I made, even if I change or delete it on my own site. It is the same with Twitter as many bizarre websites aggregate tweets about a particular subject, some permanently. So you might be able to zap an obvious faux pas the morning after but it could come back to haunt you if it ends up somewhere else.

Tales From the CPA Exam: Is Gum Really Banned at Prometric?

Directly from CPAnet comes word that gum could possibly be banned by Prometric, although it may only apply if the testing staff are having a bad day. I didn’t see gum on the list of prohibited items either and would assume the rules are not there for interpretation by staff based on the mood they are in.

The test facilitator at Prometric today made me take my gum out before the exam. I rebutted with the fact that the AICPA does not prohibit gum in the list of prohbited items in the AICPA Candidate Bulletin: She then explained that people have left their gum in the testing center and it has been a “mess” to clean up. She seemed irritated and ornery, and I didn’t want to raise my blood pressure any higher before going into the test room… so I conceded and spit out my gum.

Now, I tend to consider myself to be a courteous and responsible gumchewer. I dispose of my gum in its original wrapper that always ends up in a trash can. One reason I like chewing gum while taking a test is b/c it allows me to harness any natural stress and focus on the task at hand. I really could’ve used some gum today, but I didn’t let that ruin my test. However, I will never be able to quantify the effect of my lack of gum on my final score tbd. Does anybody know the official gum rule? I think this lady was just having a bad day…

I didn’t attempt to reach Prometric to confirm this candidate’s story, I believe that our little candidate here IS a responsible gumchewer. Since this was posted on August 3 (assuming the night after the exam), the candidate still has until September 3 to request a rescore though it’s been several years since the AICPA has actually granted one (don’t waste the money).

I believe you can also contest the conditions of your testing center within the same 30 day window so if you absolutely must, go that route. Complain that you were subjected to conditions outside of your control that had a detrimental effect on your performance and see how that works out.

Or hope you passed and don’t bring gum next time. Regardless of why you wanted it, you should have been allowed it since it wasn’t on the list. Hopefully this person checks in and lets us know how it turns out.

Regulatory Uncertainty Leaves Small Businesses Reluctant to Hire

I know of only one small business owner who has confidently added staff throughout the recession and that’s only because A) he’s really cocky (in the best way, of course) and B) he absolutely needed to in order to survive. Lucky for him he ended up in a fairly recession-proof business and in fact, the recession has been kind as it has driven all sorts of new business to him as the unemployed and jaded look for new career options. But he’s a fluke success and not all small business owners can say they’ve weathered the last two years as well as he has.

Dallas Fed President Richard Fisher and former St Louis Fed President William Poole both feel the hiring problem is based not on the fact that businesses can’t afford it but because business owners are too unsure of the regulatory environment to confidently add staff. I am going to have to agree with them on this one.


Said Fisher in a recent speech:

For some time now in internal discussions with my colleagues at the Fed, I have ascribed the economy’s slow growth pathology to what I call “random refereeing”—the current predilection of government to rewrite the rules in the middle of the game of recovery. Businesses and consumers are being confronted with so many potential changes in the taxes and regulations that govern their behavior that they are uncertain about how to proceed downfield. Awaiting clearer signals from the referees that are the nation’s fiscal authorities and regulators, they have gone into a defensive crouch.

Case in point, Obamacare’s insidious 1099 requirement that we’ve covered plenty up to this point and will continue to cover so long as it threatens to cripple businesses with unnecessary busywork. The House had a chance to kick the requirement in the balls last with with the Small Business Paperwork Mandate Elimination Act (H.R.5141) but failed to pass it, leaving us right back where we were*.

Business owners – and small business owners in particular as they tend to have less capital and fewer chances to “warehouse” out their employee insurance needs in bulk – are understandably reluctant to plug more money into the economy if they are unsure as to how much it’s going to cost just to hire on new staff. Many businesses could hire at this point but have chosen not to simply because they have no idea what sort of financial impact hiring will have on them in the future once new rules are fully written out and implemented.

Seems a bit counterproductive when we’re trying to claw our way out a recession, doesn’t it?

*Full Disclosure: JDA is long Caterpillar at this point in anticipation of the number of bulldozers that will be required just to keep up with the 1099 goodness. How is this helping the economy heal again?

Is Copy and Paste Cheating on CPA Exam Written Communications?

Today’s reader question comes from a CPA exam candidate who I imagine would prefer to remain totally anonymous so let’s blow right past the pleasantries and get to the question, shall we?

So I just finished my exam yesterday and I am a little concerned about my communications tab. As I still had about 2.5 hours remaining going into my first simulation, I had a lot of time to write my communication. With the amount of time I had, I was able to research my topic extensively.

In my communication, I had used sentences that were straight from the research tab, without referencing it, but a most of my memo was changed and modified into my own words. However, the fact that I used some sentences and phrases word for word concerns me. I can’t actually recall how much I copied, which concerns me even more. Do you know if this is considered cheating? Has anyone copied directly from the research tab and still passed the exam?

Let me tell you, this is a new one even for me so the best way to answer is by defining what the AICPA BoE is looking for in your written communication.

The three components of a successful written communication are organization, development, and expression. This means they are looking for a structured document with clear ideas, supporting information to supplement your statements and use of standard English when conveying your ideas. Now the AICPA BoE spends quite a bit of time and effort developing questions for the CPA exam but that does not mean they are also developing components for you to use in your communication. This means that if you do have lots of time left to work on your written communication, the very last thing you want to do is copy and paste. It was my understanding that the copy-paste function was limited to research problems within simulations only as “transfer to answer” but maybe I’m wrong (stranger things have happened).

That being said, your best hope is that they don’t notice you did that. I don’t think it counts as cheating, exactly, as cheating is defined as having someone pretend to be you to take the exam or somehow smuggling in exam answers as if you’d be able to predict what questions you would get. That last one is probably rare if not impossible as not even the review courses get the EXACT questions that will appear on the exam except for retired questions released each year by the AICPA.

If you took exact phrasing from the authoritative literature, you did not complete the objective of developing nor organizing your statements; you simply took what had already been organized for you and stuck it in there. Suffice to say this is a HUGE NO NO and probably means you will not get points for this area. As I said, maybe they won’t notice and you’ll pass, it’s hard to say.

If you find yourself with lots of time left over for written communication, use it to review your other simulation answers, not to develop the Howl of CPA exam WCs. All you need is a beginning, middle and end. Your answer could be totally wrong but you will still get the points as long as you are clear and concise. You do not get bonus points for flair so don’t bother, you’d be better off going over your simulation to make sure you did everything correctly.

So the short answer is: I don’t think it’s cheating but I don’t think you are going to get the points if they pick up on what you did. Since most WCs are machine graded, the machine may be thrown off by just how perfect your answer is, raising a red flag that gets yours pulled for human review. Again, I could be wrong on this as frankly I’ve never heard of anyone doing this.

Be sure to let us know how it went once you get your score and good luck!

P.S. – don’t do that again. Seriously.

Family Planning and the CPA Exam: Part 2

Last Friday, I tried to talk a soon-to-be-Mom out of trying to squeeze in at least one exam section this year before her baby is born but she refused to listen (I like that) and is asking how to do it “against medical advice” – or my advice, anyway. Since I admire that kind of dedication (even if I don’t necessarily agree with it), let’s see if we can come up with a plan.

Here’s her response to my comments last week:

I really appreciate and understand your response. At this time in my life it makes the most sense to get this done now. I am basically sitting around while my husband spends this year on internship. I am at a point where I will not be working this year and felt I might as well take the CPA now. Once my husband gets a job we will settle down and I will get a job. I heard it is much harder to take the CPA while one is working and that is why I figured it would make sense to do it now. I know there is some risk with trying to pass all 4 parts in an 18 month window, but after reading a lot of your articles and blogs on studying tips I feel I can realistically make this happen. Hopefully that will be the case.

Man, a new baby and Dad is working on an internship? Ouch.

Well let’s start with your plan: a good study plan pencils in at least 3 hours a day, no more than 3 hours at a time, over a consistent period of time. Your study plan will have to include time for rest so be sure to take lots of breaks and don’t try to do marathon study sessions of 5 or 6 hours at a time as you’ll stop retaining information after about 3. Ideally you need to figure out how to get in 150 hours of studying for FAR between now and your due date as you will have forgotten everything by the time the baby is born and you actually get back to being able to form complete sentences once you’re getting more than 3 hours of sleep a night.

Do NOT schedule your exam too close to your due date as I haven’t heard of getting your fees refunded because you ended up having a baby on exam day. If you have any control over this (planned C-section or something along those lines), obviously it will be easier to figure out how to schedule but otherwise just try to sit as many weeks before you’re due as you can. This may mean having to study 7 – 12 hours a day (in 3 hour chunks, of course) leading up to your exam date but if you need more breaks (like an hour of studying at a time), that’s fine too. Find a rhythm that works for you, I can’t tell you what formula is going to be best for your needs. When I was pregnant I found that I tended to stay up late because that’s when my son was most active, which would have been a perfect chance to study had I been so inclined at the time. I commend you for wanting to pass FAR more than I wanted to stuff my face with Flamin’ Hot Cheetos.

Other than the above suggestions, your job now is no different from other CPA exam candidates’: study, practice MCQ, get familiar with simulations and go into the exam with confidence knowing you prepared as best you could.

Just hope your water doesn’t break.

Good luck!

Family Planning and the CPA Exam

For this particular post, as much as I would love to throw my experience with CPA exam candidates and children (sometimes interchangeable, mind you) around, I’m going to do something a little bit different. Would any of you with experience in the following care to weigh in and help?

Here’s the question via a CPA Exam Club member:

I am having a baby in 2 months and wasn’t planning on taking any parts of the exam until 2011, when I will hopefully have more rested nights and energy to study. However, after starting to do research about the CPA exam I discovered all of the changes taking place in 2011 and decided that it seemed prudent to get FAR out of the way in 201and can basically devote all of my time to studying until I have the baby and after I have the baby in order to take the exam in November. I am a pretty disciplined person with good time management. I am pretty quick at getting things done. I also got a 2nd bachelors in accounting and just completed a masters in accounting as well. Do you think I am being unrealistic in my pursuit of passing FAR in 2010?

If you think I can achieve this goal, what do you advise CPA hopefuls to do in order to pass? I am very determined to try and pass on the first try and would do whatever it takes in order to do so.

First of all, I remember what being 7 months pregnant felt like and while I loved being pregnant with my son, at that point the very last thing I would have been able to do would have been to study. So my first piece of advice not just to our little CPA exam candidate friend above but all of you with family plans on the horizon is to WAIT until you have passed the CPA exam to start cranking out the tax deductions. The exam is hard enough on its own, add a career and kids into the mix (especially for Moms) and you have a recipe for disappointment. Or at least a nervous breakdown, which you probably don’t want either.

I often tell candidates to be prepared for any and every possible thing to go wrong and mess up their perfect plans along the way. For parents, it’s almost a guarantee that even our best-laid plans will somehow be ruined, delayed or otherwise compromised.

Discipline is a requirement to get through the exam but even your best intentions can’t fight the inevitable. I could barely function once my son was born (waking up every 2 hours to feed will do that to you), let alone actually do anything productive.

So my advice to you is to wait. Wait until your child is a little older (or at a minimum sleeping through the night) and hopefully you have a supportive partner who will happily babysit while you head off to live CPA review classes. I can’t tell you how many Moms I have seen in live classes, most of whom refuse to take advantage of the convenience of online, on-demand review simply because they are desperate for a break. You know it’s bad when you’d take 8 hours of government and non-profit accounting over being at home with your brood but let’s face it, this Mom thing is the world’s roughest gig.

It sounds to me like you have a plan and that’s awesome but be sure you are being realistic. It’s already almost September, meaning the last window of 2010 is close upon us and if you haven’t already made an appointment at Prometric, you might run yourself into the ground trying to squeeze FAR in (that’s if you can even get in to schedule). And let’s just say you pass (which I’m confident you will once you get off the ground) and then have the baby. What happens when motherhood takes its toll and you aren’t able to resume studying until your child is a year old and your 18 month window is fast approaching?

Enjoy these last two months, take care of yourself and bask in your baby once he or she arrives. The exam will be here waiting patiently in the meantime and by then maybe the AICPA BoE will have ironed out all the IFRS kinks or thrown out new content altogether. Trust me, the changes next year are not that big of a deal and CBT-e will actually be easier than 2010’s exam if I’m guessing correctly (I usually do). You will put in no more effort in 2011 to pass than you would have in 2010 so better to spend the energy when you actually have it instead of running yourself into the ground at a time when you need to be in fighting shape.

Hope that helps!

If you have a CPA exam question for us, get in touch and we’ll do our best to answer.

Somebody Has Been Busy: PCAOB Issues Eight New Audit Standards

Since the PCAOB was only up to Audit Standard 7 last time we checked and seems to take the conservative approach when it comes to issuing new ones, we have to say we were more than shocked to see them almost double their audit standards overnight. Gee, must be serious.


Via the PCAOB:

The Public Company Accounting Oversight Board today adopted a suite of eight auditing standards related to the auditor’s assessment of, and response to, risk in an audit.

The suite of risk assessment standards, Auditing Standards No. 8 through No. 15, sets forth requirements that enhance the effectiveness of the auditor’s assessment of, and response toial misstatement in the financial statements.

The risk assessment standards address audit procedures performed throughout the audit, from the initial planning stages through the evaluation of the audit results.

“These new standards are a significant step in promoting sophisticated risk assessment in audits and minimizing the risk that the auditor will fail to detect material misstatements,” said PCAOB Acting Chairman Daniel L. Goelzer. “Identifying risks, and properly planning and performing the audit to address those risks, is essential to promoting investor confidence in audited financial statements.”

What does this mean for auditors? Let’s check them out.

AS No. 8 – Audit Risk. This standard discusses the auditor’s consideration of audit risk in an audit of financial statements as part of an integrated audit or an audit of financial statements only. It describes the components of audit risk and the auditor’s responsibilities for reducing audit risk to an appropriately low level in order to obtain reasonable assurance that the financial statements are free of material misstatement.

AS No. 9 – Audit Planning. This standard establishes requirements regarding planning an audit, including assessing matters that are important to the audit, and establishing an appropriate audit strategy and audit plan.

AS No. 10 – Supervision of the Audit Engagement. This standard sets forth requirements for supervision of the audit engagement, including, in particular, supervising the work of engagement team members. It applies to the engagement partner and to other engagement team members who assist the engagement partner with supervision.

AS No. 11 – Consideration of Materiality in Planning and Performing an Audit. This standard describes the auditor’s responsibilities for consideration of materiality in planning and performing an audit.

AS No. 12 – Identifying and Assessing Risks of Material Misstatement. This standard establishes requirements regarding the process of identifying and assessing risks of material misstatement of the financial statements. The risk assessment process discussed in the standard includes information-gathering procedures to identify risks and an analysis of the identified risks.

AS No. 13 – The Auditor’s Responses to the Risks of Material Misstatement. This standard establishes requirements for responding to the risks of material misstatement in financial statements through the general conduct of the audit and performing audit procedures regarding significant accounts and disclosures.

AS No. 14 – Evaluating Audit Results. This standard establishes requirements regarding the auditor’s evaluation of audit results and determination of whether the auditor has obtained sufficient appropriate audit evidence. The evaluation process set forth in this standard includes, among other things, evaluation of misstatements identified during the audit; the overall presentation of the financial statements, including disclosures; and the potential for management bias in the financial statements.

AS No. 15 – Audit Evidence. This standard explains what constitutes audit evidence and establishes requirements for designing and performing audit procedures to obtain sufficient appropriate audit evidence to support the opinion expressed in the auditor’s report.

Now don’t get me wrong, I love rules and regs as much as the next girl – if not more – but I am of the thought that users of financial statements would be better served not by more rules and regs but by a more comprehensive auditor training program that starts in college. Am I asking too much?

Did we really need clarity on audit evidence? The PCAOB seems to think so and that’s fine, they are well-intentioned in their motive and you can’t fault them for that.