Going Concern

Maybe You’re Too Busy To Pass the CPA Exam Then

Adrienne Gonzalez
February 8, 2011

Warning: the following is a rant and it’s nearly four years in the making. If you offend easily or think you might recognize yourself in what I’m about to rant on, maybe you should skip this post and come back Friday when I’m back to offering cuddly advice on how to pass the CPA exam. For now, I have a serious bone to pick and can hold my tongue no longer.

As many of you know, I spent my early years on the fringes of the industry in CPA review. I loved my job, mostly because I gobbled up everything I could about the exam and was able to offer that knowledge to others at a critical time in their lives. I loved being able to share in their successes (and failures) and it was a joy to work with some of our students who went out ofize what I’d brought to their experience. We all know it’s hell, and I can’t say my job was any less stressful than the exam experience itself but it was worth it to come to work every day just to hear a heart-felt “thank you” from a candidate who truly appreciated what I’d done to help them get those three all-important letters after their name.

But for every sweet student, I would have to deal with a handful of lazy, unmotivated, over-privileged pricks who expected the exam to pass itself and seemed to blame everyone except themselves when things went wrong. Somehow it was my fault that they spent the last year getting wasted and posting photographic evidence on Facebook, or my fault that they blew off studying to play WoW or [insert lame, overplayed excuse here]. And that’s exactly what they were and will continue to be: excuses. I can tell you that nothing will stand between a CPA exam candidate and their goal of licensure more than excuses. Well, maybe lack of knowledge but that’s a rant for another day.

The worst excuse of all has always been and will always be “I’m too busy.” If you’re too busy to read through the terms and conditions before you shell out a few grand for a review course (or at a minimum, call up with reasonable questions about how things work), you’re probably too busy to take the exam. If you’re too busy to dedicate two hours a day to studying, you’re again likely too busy to take the exam. If you’re too busy to sacrifice 14 hours to exam-taking and 400 hours to studying in 18 months time, you’re definitely too busy to take the exam.

It’s a pathetic excuse when you think about it because who decided to take this thing in the first place? You did and at some point I can only hope it registered in your mind before making said decision that you still have things to do and a limited amount of time to do them. But you chose to do this anyway, right?

My favorite are the parents who also work full-time and complain that they are just too busy. Listen, no one is debating the fact that they have a metric shit ton on their plate but what they seem to forget is that life is all about choices and they chose to start working, get married and have children before passing the exam. So, sorry but it’s not like life is just a random shuffled deck, each candidate getting whichever cards the dealer hands out; we’re all adults here and as such, it’s important that we recognize the impact of the choices we make. The AICPA Board of Examiners didn’t decide to start a family for you, you did.

This exam sucks for everyone and for different reasons. Stop making it suck even for people who aren’t taking it by thinking somehow you are more important than everyone else and therefore entitled to some kind of special treatment because you work 60 hours a week (who chose this line of work again? Please remind me). Somehow hundreds of thousands of equally-busy future CPAs have managed to pass this thing before you and I didn’t hear most of them complaining about how busy they are. Get over yourself or get out of public.

Accounting News Roundup: Groupon CFO Not Interested in Dealing with SOX; The Latest in Tax Denial; Cheap Beer, Redefined | 02.08.11

Caleb Newquist
February 8, 2011

Obama Vows to ‘Knock Down’ Business Barriers [WSJ]
President Barack Obama told business leaders at the U.S. Chamber of Commerce they should stop hoarding cash and start hiring in return for tax breaks and other government support for exports and innovation. Mr. Obama’s speech Monday on the home turf of the nation’s biggest business lobby was part of an effort by the White House to patch up relations with the Chambers after two years of clashes over health care, regulatory policy and tax issues. Mr. Obama offered conciliatory words, but the thrust of his speech was a call to business leaders to use the $2 trillion ince sheets to “get in the game” and start adding jobs in the U.S., despite slow growth in consumer demand.

Groupon CFO Jason Child: ‘I Don’t See Any Limits’ [Daily Finance]
To the business, that is. An IPO, on the other hand, “If we’re a public company, I have to spend time thinking about Sarbanes-Oxley, fair disclosure requirements. I have to think about balancing the need to report sufficient information to investors without giving too much to competitors.”

Michael Moore sues Weinsteins over Fahrenheit 9/11 [Reuters]
Filmmaker Michael Moore has sued Harvey and Bob Weinstein, accusing the brothers of “Hollywood accounting tricks” and “financial deception” that cheated him out of at least $2.7 million in profits from the hit documentary “Fahrenheit 9/11.” In a lawsuit filed Monday in Los Angeles Superior Court, Moore says the Weinsteins and an affiliated entity called the Fellowship Adventure Group agreed to split profits from the film 50-50 but then diverted monies to hide them from Moore.

Unlearning the Income Tax: Another Journey to Frivolity [Taxable Talk]
Russ Fox shares the latest in “taxes are illegal” education, from the Institute of Unlearning: “[I]ts proprietor, one Patrick Mooney, espouses that, ‘[A] private sector worker’s earnings are not legally subject to the federal tax on income. They never have been, and as long as we still have a Constitution, they never will be.’ Mr. Mooney was highly confident in his beliefs, so he filed a 2005 tax return with all zeroes, and claimed a refund of $2,647.48, the amount he had withheld in federal tax during the year.”

Private-Label Beers Take a Shot at Earning Joe Sixpack’s Respect [WSJ]
Your low-price alternative, “Supervalu, the third-largest U.S. grocery chain by revenue, began selling Buck Range Light, a low-priced domestic brew, in December. Drugstore chain Walgreens recently began offering Big Flats 1901 for as little as $2.99 a six pack. The retailers are trying to tempt shoppers with lower-priced alternatives to domestic mass-market brews such as MillerCoors LLC’s Keystone Light. The effort comes amid declining sales volumes for the beer industry, which has been hurt by stubbornly high unemployment.”

Fees will rise as Audit Commission is abolished [Accountancy Age]
David Heald, professor of accountancy at the University of Aberdeen Business School, said that auditors would have to charge local authorities higher fees to pay for insurance, which is currently covered by the commission itself. Speaking at the first hearing of the Commons communities and local government select committee inquiry on the future of council auditing, he said: “One of the reasons I am skeptical of audit fees going down is that private audit firms will have to buy insurance in the market, meaning that some councils will find it very hard to get audited.”

It’s Being Suggested That Higher Taxes on Alcohol Will Reduce Crime

Caleb Newquist
February 8, 2011

It’s ironic that I read this this blog post today (rather than on Friday) since A) approximately a third of the country is in a some stage of a hangover B) I’m listening to “Rehab” by Amy Winehouse as I write this and C) there was a murder at a fraternity in Youngstown, Ohio over the weekend (I realize it’s a stretch to assume that anyone would have been drinking at a frat party) but this is pie-in-the-sky postulating that just begs to be mocked.

Janet Novack’s post at Forbes discusses a recent article written by two professors who are crime fighters in the economic persuasion:

Would raising the tax on beer reduce the number of young folks who get caught up in crime and the high budget and social costs of locking up so many people?

In a provocative article, The Economist’s Guide To Crime Busting, in the new issue of The Wilson Quarterly, Duke University’s Philip J. Cook and the University of Chicago’s Jens Ludwig suggest that it would. (The article is here, but isn’t free.) The profs argue that crime policy (from an economist’s point of view) should focus “both on making criminal opportunities less tempting and the law-abiding life more rewarding” and offer three strategies which they say have been shown to do just that: raising the mandatory age through which kids must attend school; creating business improvement districts with private security guards (a tactic Los Angeles has used with great success); and yes, raising taxes on alcohol.

Our favorite passage being the “making criminal opportunities less tempting and the law-abiding life more rewarding” because this what someone walking into the liquor store is thinking, “Jeepers, the cost of binge drinking on the weekend has gone up significantly and no longer fits my monthly budget. I guess I’ll stay sober and won’t break the law today.”

It continues:

The average state excise tax on beer, they note, is now only about 10 cents per 12 ounce bottle. Raising it to 55 cents they write, would persuade some teenagers “not to pick up that second six-pack on Thursday night” and would produce such extra benefits such as “fewer auto accidents and more money for state treasuries.” Data from Cook’s 2007 book, Paying The Tab, suggests a 55 cent per bottle levy would reduce beer consumption perhaps 10% and crime maybe 6%, they note.

Never mind how the neo-con scamps over at American for Tax Reform would react; this assumes that the demand for alcohol is elastic. You could easily argue that most people with the necessary means will pick their potent potable of choice regardless of price and even if they did decided to tighten the booze budget, they’d just go for a cheaper alternative, they wouldn’t actually buy or drink less.

I’m no economist but this kind of reasoning simply defies logic. People will drink regardless of the cost and they will continue to act like idiots and commit crimes when doing so. If you want to discuss that from a tax/fiscal policy standpoint raising taxes on booze (or taxing other sins) is a good idea then a discussion can be had. But let’s not get all crazy and start claiming that our country will become a bunch of law-abiding teetotalers the second a sixer of suds goes up $6.

Super Bowl Question:Would Higher Beer Tax Reduce Crime? [Forbes]

Career Center

Should an Overachieving Auditor Ruin His Summer By Studying for the Certified Internal Auditor Exam?

Caleb Newquist
February 8, 2011

Welcome to the I’ve-never-been-so-disappointed-with-commercials-in-my-life edition of Accounting Career Emergencies. In today’s edition, a future Big 4 auditor is thisclose to finishing up the CPA and is worried that his summer won’t be sufficiently ruined without an exam to study for. Is hitting the books for a Certified Internal Auditor badge the answer?

Need career advice? Need a myth about your firm debunked? Is your job driving you mad to the point of considering a terrorist act? Email us at advice@goingconcern.com and we’ll keep your face off a most-wanted list.

Back to our glutton for punishment:

Dear Caleb,

I keep going back and forth on whether or not to go for another certification. This month I’m studying for, and taking, the last section of the CPA exam. I’m starting an auditing gig at a Big 4 firm this Fall. With no CPA exam to ruin my life this summer, I’ve considered ruining it by studying for a new exam, specifically the CIA.

I’ll have the required work experience for the certification as of June 2011, so my first set of biz cards would be able to read “Indentured Servant, CIA” right out of the gate, with it being updated to “Indentured Servant, CPA, CIA” in 2012, just in time for the world to end.

The CIA exam is cheaper than the CPA and probably easier at this point. Plus, everyone would think I worked for the CIA. Should I take the exams, or get a life that will be ripped away from me in a few months?

Best,
Indentured Servant

Dear Indentured Servant,

I think a more appropriate pseudonym for you might be “Auditing Overachiever” or “Don’t Know What to Do with Myself” OR “Prefers Books About Auditing as Opposed to Interacting with Humans, Even Those Who Might Want to Have Sex with Me.” NEVERTHELESS, I’m here to help.

Your letter is a little confusing but I’ll try to piece things together. Your job starts in the fall but you’ll have enough work experience (24 months) to obtain a CIA in June so that can only mean that you’ve been an auditor for awhile. It also means this new Big 4 gig is fresh start for you in some way, shape or form since you’ll effectively be a new hire. Making those assumptions, I’m not really sure what the CIA will do for you as a Big 4 auditor. Yes, having a extra credential is nice but it likely won’t mean squat to your co-workers, partners or clients and it won’t make you any extra money. Plus, as far as I can tell, the superficial motivation behind this endeavor – paraphrasing your words – is A) “I want to ruin my summer” B) “it’s cheaper than the CPA” C) “people will think I’m a spy.”

My response to these is A) What’s wrong with you? B) How is spending more money “cheaper”? C) No, they won’t.

See why I’m confused? The underlying motivation – if i can put you on the couch for a sec – is that you’re worried about being bored. Are you completely incapable of enjoying a summer if it doesn’t involve being indoors with your nose in a book? Take a vacation, take a staycation or do nothing but study for an exam that will get you an obscure certification? In my opinion, there’s extremely limited upside to the CIA at this point in your career so do yourself a favor, finish your CPA and give the certifications a rest for awhile. They’ll always be there for when the disappointment of the world NOT ending in 2012 gets you down.

In other words – get a life, dude.

KPMG

KPMG Advisory Doubles Down

Caleb Newquist
February 7, 2011

KPMG’s head of advisory practice in the Americas, Mark Goodburn, recently gave an interview to Consulting Magazine where he predicted that the House of Klynveld would double its advisory revenue by 2015. While this an admirable goal, it certainly causes one to pause and ask the obvious question: “Does this mean we get double the meat?”

But forgetting animal flesh for just a sec, it may cause the more serious-minded of you to ask, “Just how in hell are you going to do that?” Well, MG goes into details about “transformational business,” “the evolving world of risk,” “the myriad of changes in public policy and regulation” and that’s all fine and good but we’re most interested/curious/shaking with anticipation about the acquisitions the firm will make.

Doubling a multi-billion-dollar business in no easy task, for sure, especially when you consider that KPMG advisory will probably have to significantly outpace the market, which most forecasters— including Kennedy Consulting Research & Advisory—expect will experience very modest growth the next several years. Most likely, the firm will have to make a few significant acquisitions along the way.

This probably doesn’t come as a surprise since we’ve seen Deloitte and PwC shopping around to boost their own advisory practices but Goodburn says you won’t see the HofK making a move on every boutique out there:

Goodburn’s quick to point out that any potential acquisitions, would have to meet KPMG’s criteria—the ability to upgrade to a global platform, quality controls that match the firm’s standards and a financially attractive opportunity for clients and employees. “We’re only looking for companies that meet our standards” he says.

Right, then. So for all you consulting boutiques out there sexing yourselves up to get a big pay day, you better be a match or you won’t be getting a blue rose. KPMG is looking for soulmates.

Naturally, all this revenue-doubling and business development talk means headcount will increase. The firm has already put it out there that they plan on hiring people in spades and MG makes no secret about who will be leading the charge:

Goodburn says KPMG has been hiring pretty aggressively since the firm saw its first sustained uptick back in early 2010, but will that be enough to keep pace? “We certainly expect advisory to grow faster than other parts of the KPMG business in the near and possibly longer term,” Goodburn says. “Our brand is very strong right now, clients are demanding our services, our people are outstanding, and our ability to recruit is extremely high.”

So, from the sounds of it, opportunity abounds for KPMG’s advisory business and anyone interested in joining the blue team. Whether this manifests into an extra-beefy future remains to be seen.

Double Time for KPMG [Consulting Magazine]

Can We Get a Show of Hands From People Who Plan to Declare Their Super Bowl Gambling Winnings?

Caleb Newquist
February 7, 2011

You may have heard about or even watched a sporting event known as the Super Bowl that was played last night. This particular mother of all bowls saw the Green Bay Packers defeat the Pittsburgh Steelers 31-25, paying a tidy sum for anyone that picked them last spring. Which brings me to my next point: while the Super Bowl is a grand occasion that involves athletes at the top of their game, expensive ads and shitty, over-hyped halftime shows, it’s also means an epic amount of wagering. Everything from the coin flip to last year’s odds on Reggies Bush’s total yardage versus Kim Kardashian’s measurements are popular ways to earn yourself some free money (or, if you’re on the losing side, a broken tibia).

And believe it or not, most gamblers appear to be a honest lot with over $27 billion declared gambling winnings in 2008 (the most recent data available). However, because avoiding taxes is as American as, well, the Super Bowl you can bet that a lot of the winnings don’t ever see a 1040. The exact amount of unreported winnings is, like that the secret ingredient in that dip you were inhaling last night, a mystery. Kay Bell reports:

As for how many taxpayers didn’t completely ‘fess up on 2008 returns about their gambling income, the IRS won’t even venture a guess. Or as an IRS spokesman once told me, “We can’t tell you what we don’t know.”

But guesstimating that a whole heck of a lot of gambling income never gets taxed is a very safe bet.

But don’t worry if you missed some sweet, tax-free action on last night’s game. March Madness isn’t far off.

By the Numbers: $27.197 billion [DWMT]

Ohio County Auditor Discovers an Ongoing 30-Year Tax Mistake

Adrienne Gonzalez
February 7, 2011

After a massive flood in the Ohio county of Butler March 25, 1913, the Miami County Conservatory was formed to preserve the quality of Great Miami River water. This mission, hammered out in 1914, allowed for a tax against Butler County residents but apparently when this tax was raised in 1976, it didn’t actually go in front of Butler County votes like it was supposed to.

Which means $4 million in taxes has been collected since then ($252,793.74 in 2009) and somehow no one noticed until now.

Via the Oxford Press (OH):

Following an internal review and opinion from the Ohio Department of Tax Equalization, Butler County Auditor Roger Reynolds is removing the tax from the 2010 bill.

“I am proud of my office for this discovery, and for instituting our plan for stronger internal controls on behalf of the citizens of Butler County,” Reynolds said in a press release. “Our role as government leaders must be to protect taxpayers’ money, and to safeguard against waste and error.”

The tax is allowable according to Ohio law. A 1914 statute states taxes for a conservancy district can be collected up to 10 mills, but anything greater must have voter approval.

The funny part is that according to Miami Conservatory District PR, the county is only obligated to pay $207,982 a year to the conservatory. So they really over-collected.

This county auditor is the same who caught another tax boo-boo in early 2010 in which a $1.46 assessment was wrongly collected from every parcel of land in the county for a grand total of $2.3 million.

And you guys wonder why tax protesters do what they do.

Accounting News Roundup: Lil Wayne Settles Up; Maryland Wants Tax Deadbeats’ Driver’s Licenses; India Suggests Big 4 Back Off | 02.07.11

Caleb Newquist
February 7, 2011

AOL to Acquire Huffington Post [WSJ]
AOL Inc. disclosed early Monday morning plans to acquire online news website Huffington Post for $315 million, as part of the Internet company’s attempt to turn its business around with a strategy of becoming a top producer of news, entertainment ntent. Huffington Post, a news and analysis website founded in 2005, reached 25 million unique visitors in December, according to comScore. AOL says that a combination of the two sites will reach a total of 117 million unique U.S. visitors.

Airline Losses May Top $600 Million on U.S. Cancellations [Bloomberg]
Airlines may be headed for more than $600 million in weather-related losses as U.S. winter storms trigger the most flight cancellations since the government began tracking the data in 1987. Almost 20,000 flights were scrubbed last week alone as snow blanketed U.S. airports such as Chicago’s O’Hare, a hub for United Continental Holdings Inc. and American Airlines, according to researchers FlightStats and FlightAware.com. Since Nov. 1, the total is 89,884, the firms’ tallies show.

It’s Snowing. Do We Get the Day Off? [WSJ]
Caruso Caruso, a retail business in Birmingham, Mich., lacks a stormy-weather policy because it always stays open, regardless of how brutal a wrath Mother Nature dishes out, says co-owner Lennon Caruso. The shop’s 15 employees have no excuse for failing to show up for a shift, he explains, because they all live within a reasonable driving distance and roads throughout the area are generally well-plowed after snow piles up. “It’s 2011. You have a car, get to work,” Mr. Caruso says.

Packers backer Lil Wayne free from tax bill [Tax Watchdog]
Best to pay $1.13 million before enjoying that action off GB’s win.

Driving privileges could be denied Marylanders who owe state taxes [DMWT]
The governor would let the state refuse to issue or renew licenses and registrations to those who have unpaid, undisputed tax obligations. By making drivers pay up, the administration estimates it could collect an additional $40 million over the next two years.

Career Tips from Annoying Office Mates [FINS]
Apparently, you can learn something from that person who marks every email as “Urgent!”

ICAI asks Big Four audit firms not to buy out Indian cos [Economic Times]
Amid concerns of alleged ‘surrogate practices’ of ‘Big Four’ accounting firms,regulator ICAI has asked PriceWaterhouseCoopers, KPMG , Ernst & Young and Deloitte to desist from acquiring Indian audit outfits. “Worldwide, there is a talk that there should be decongestion of the accounting profession…So that’s what we have suggested them (Big Four)… instead of acquiring firms please provide work to small and medium practitioners and go in for quality control,” ICAI President Amarjit Chopra said.

New tax tab for Rev. Al [NYP]
The Rev. Al Sharpton, who has vowed to clean up his fiscal house, has a new tax lien to pay. Sharpton owes $359,973 to the IRS for 2009 personal income tax, according to documents on file with the city. Public records show he owes a total of $3.7 million in city, state and federal taxes, including penalties, dating to 2002. But Sharpton’s spokeswoman, Rachel Noerdlinger, said that he had paid back “well over seven figures” as part of agreements with the state and IRS and that the liens remained on the books as “a matter of bureaucracy.”

Did Prosecutors Bungle Their Case Against BDO’s Former CEO?

Caleb Newquist
February 5, 2011

Maybe! Denis Field’s lawyers certainly aren’t amused with the tactics:

Denis Field, ex-CEO of BDO Seidman, the world’s fifth largest accounting firm, claims Manhattan prosecutors intimidated his former firm into curtailing and eventually cutting off payments to his lawyers. In recently filed court papers, he claims that the government deprived him of his constitutional right to counsel and seeks dismissal of the case.

Field alleges that among other tactics, prosecutors threatened to indict the firm if it kept funding his defense. During a hearing on Thursday, U.S. Judge William Pauley III of the Southern District of New York, who is presiding over the case, closely questioned prosecutors about the accusations. A ruling is expected soon.

If this sounds familiar, it should. Back in 2007, the very same prosecutors – Stanley Okula and Shirah Neiman – pulled a similar stunt, “convincing” KPMG not to pay the legal fees for the partners and employees that were facing criminal charges for their roles in the firm’s tax shelter schemes:

That case was thrown out in 2007 after U.S. Judge Lewis Kaplan found that prosecutors had improperly “coerced” KPMG into cutting off the legal fees of 13 former KPMG partners and employees. “KPMG refused to pay because the government held the proverbial gun to its head,” Kaplan wrote.

Two of the prosecutors called out by Judge Kaplan — Stanley Okula and Shirah Neiman — have also been involved in the Field case, a fact that is prominently noted by Field’s lawyers in their motion to dismiss. “The reason for the government’s conduct is obvious — as with KPMG, the prosecutors believed BDO ‘should not pay the fees’ of allegedly culpable individuals,” Field’s lawyers argue. They cited the KPMG case no fewer than 50 times in their brief.

So it appears that Okula and Neiman aren’t much for personal reflection and may have pulled out the proverbial gun again. But they’re making a case for themselves, saying BDO’s motivation for sticking Field with the tab isn’t related to them putting the screws to the firm, “the government argues that BDO stopped paying Field’s legal bills after the firm discovered that Field hid from the board a report, prepared by law firm Skadden, Arps, Slate, Meagher & Flom, warning that certain tax shelters that Field was promoting were questionable.” Hey! – you can even ask BDO’s general counsel, he’ll tell you that the firm’s decision had nothing to do with get the government off their backs. And if you can’t believe a lawyer, who can you believe?

Prosecutors on defensive in BDO Seidman fraud case [Reuters]

News

Report: Bomber of Moscow Airport Was an Accounting Student ‘Pumped Full of Drugs’

Caleb Newquist
February 5, 2011

For the love of everything good and holy, we know some of you are depressed but please don’t resort to this:

Forensic experts have determined the identity of the suicide bomber who killed himself and 36 other people at Domodedovo airport – an accounting student from the North Caucasus republic of Ingushetia, Moscow media reports said Friday. The forensic researchers, going by DNA evidence taken from the scene, identified the bomber as a 20-year-old who apparently was ‘pumped full’ of drugs before he carried out the January 24 attack.

Accounting student was airport suicide bomber, Moscow media say [M&C]

Career Center

Big 4 Aspirant Requests Some Myth Busting

Caleb Newquist
February 5, 2011

Welcome to the first Friday in February edition of Accounting Career Emergencies. In today’s edition a future Big 4 soldier isn’t sure what to make of all the myths and rumors swirling around the quad about said four firms. He’s asked me to debunk.

Are you in desperate need for a ~~regime~~ career change? Have a gassy cube neighbor? Need some tips on how to turn that frown upside down during busy season? Email us at advice@goingconce serve you better than Dr. Phil (or his dopplegänger).

Back to our Big 4 mythbuster:

Hey GC,

I was wondering if there were any truth to the rumors/legends that seem to percolate through campuses about Big 4 accounting. Here’s a short list of stuff that I’ve heard while attending accounting job fairs, business frat/club meetings, and associates from Big 4 and regional firms that come back to campus for recruitment events.

1. During their respective busy seasons, new tax and audit associates at a Big 4 work so many hours that their monthly salaries break out into an hourly rate that is less than minimum wage.

2. It is nigh impossible to study for and pass any portion of the CPA exam while simultaneously working at a Big 4.

3. Internships are virtually the only way for new graduates to break into a Big 4.

4. Becker is better than Kaplan is better than Bisk.

5. Beginning a career at a Big 4 will open more doors down the road than starting at a mid-tier , regional or local firm.

6. At Big 4 firms, advisory associates make more money than audit associates make more money than tax associates.

7. The average Big 4 associate leaves/quits/defects before their 3rd year.

8. Evan after taking raises into account, Big 4 associates that were hired during the brunt of the recession will actually be paid less than new hires this year.

So is there any truth to these rumors? I’m guessing that there’s quite a bit of embellishment that come from associate ‘war stories’ so I’ve tried to take everything with a grain of salt.

Thanks,

Big 4 Mythbuster

Dear Mythbuster,

There’s a lyric in “I Heard it Through the Grapevine,” that goes, “People say believe half of what you see, Son, and none of what you hear,” which we find to be generally a good rule of thumb (with the exception of what you read at this fine publication…most of the time).

ANYWAY, we’ll tackle these one at a time:

1. During their respective busy seasons, new tax and audit associates at a Big 4 work so many hours that their monthly salaries break out into an hourly rate that is less than minimum wage. – Let’s keep this simple: if you calculate an average salary based on this year’s starting salaries and 2,000 chargeable hours, it’s pretty difficult to get down to the federally mandated minimum wage of $7.25. Now, can you work far more than the 2,000 hours? Of course but even if you doubled the hours, you’re still above the minimum wage. MYTH.

2. It is nigh impossible to study for and pass any portion of the CPA exam while simultaneously working at a Big 4. – Is it difficult to balance a work schedule, studying, arranging to sit for a section, having a shred of a personal life, finding time to take out the dog AND still pass a portion? Yes, absolutely. “Nigh impossible”? No. People working at the Big 4 pass portions of the CPA every month. MYTH.

3. Internships are virtually the only way for new graduates to break into a Big 4. – When the Big 4 firms were hiring everyone and their dog back in the mid-Aughts, this would have been a myth. These days, with hiring budgets being a little tighter, the internship route is a must. Most interns end up taking the full-time offers which leaves just a few spots, so that doesn’t make for very good odds for any outsiders. TRUTH.

4. Becker is better than Kaplan is better than Bisk. – God, sorry to say but this is fruitless exercise. I don’t endorse any of the CPA review courses (FULL DISCLOSURE: I used Becker and passed and some companies happen to advertise with us.) out there. The companies will present stats that presents their pass success rate in the best light possible. That said, ranking the review courses in some arbitrary order like you’ve done above is meaningless. If you hear from someone on campus that Becker is the best because that’s what they used (Tim Gearty’s handsome wardrobe notwithstanding) or that Roger is the best because that’s what they used (and not because they have a thing for hipster chicks) that doesn’t mean you will necessarily have the same success. And if someone tells you that they’ve tried more than one review course, you should know that this person probably just sucks at taking tests. MYTH.

5. Beginning a career at a Big 4 will open more doors down the road than starting at a mid-tier, regional or local firm. – As a general rule this is true. Having the exposure to the most complex accounting systems, transactions and business models will allow you to work at these companies if you so choose. Working at Big 4 firm (and in some markets, mid-tier firms) will give you that exposure. Does that mean you’re doing yourself a disservice by accepting a position with a regional or local firm? Of course not. It all depends on what your career goals are. But does a Big 4 firm name on your résumé get more attention than a non-Big 4 firm. Yes. TRUTH.

6. At Big 4 firms, advisory associates make more money than audit associates make more money than tax associates. – In my experience, I’ve found that salaries for tax and audit associates are extremely close with a slight edge to the tax side, so you’ve got those two backwards. But yes, Advisory associates are paid the most. ONE-THIRD TRUTH.

7. The average Big 4 associate leaves/quits/defects before their 3rd year. – Again, the “average” number of years that an associate works at a Big 4 firm is a complete arbitrary statistic. I’m not sure when people started throwing numbers like this but it’s pretty useless information. Typically when people state an average number of years that an associate stays, it’s not backed up with any stats. I’d be surprised if the firms themselves even know what the average shelf-life of an associate is. I may be wrong about this and would love to see some stats if they’re out there but for now we’re going with: MYTH.

8. Evan after taking raises into account, Big 4 associates that were hired during the brunt of the recession will actually be paid less than new hires this year. – Pay freezes and meager increases certainly put a damper on salaries in ’08-’09 but this past year saw the Big 4 return to some reasonable increases across the board as well as bonuses in various forms. Starting salaries for new associates will always keep up with the market (as is popular to say) but with coverage of salaries being more transparent than it used to be, it will be impossible for firms to allow new hires to earn more than their superiors. MYTH.

Whew! There you have it; discuss as needed.

CPA Exam

(UPDATE/CORRECTION) A CPA Exam Study Timeline for Masters Students

Adrienne Gonzalez
February 4, 2011

When this future CPA from South Carolina wrote in asking for our sage advice, he noted that we’d probably answered this exact question before but he thought email might be the best way to get a more specific answer. While we may berate you for not using the fancy search bar in the upper right-hand corner of this website (I’m speaking directly to you, guy who emailed me asking a question I just answered a week ago), that doesn’t mean we don’t want to answer your questions. Really it just means that we’re bitter and the vodka supply is running low at GC HQ. So if you have a CPA exam question, by all means get in touch. If I have written about it already, Caleb’s next trip to Costco for 1.ld fix that right up.

Anyway, enough about our vices, let’s get to the question:

I am currently in the second semester of my masters to fulfill the 150 hour requirement and am starting with my firm in October of this year. My firm also offers to pay for a B—– course for us to help with the studying. What is a simple timetable for when I should start studying, when I should start the tests and such[?] I am looking to earn my companies bonus for completing the exam in a year, but I also know that with school and everything I am most likely behind the 8 ball for that.

First, we have to thank you for bringing the phrase “behind the 8 ball” to our attention. I’ve never used it myself (though I’ve certainly been in that position) and I have to say looking at your situation you’re not exactly there either. By all appearances, you have a good education behind you and a career in front of you. In other economic times that probably wouldn’t be enough but for now, you’re head and shoulders above many of the sad saps who we talk to on a near daily basis that have degrees growing mold and not a single job prospect ahead of them. Be grateful you only have to decide which CPA exam part to take and not which flavor of ramen noodle to spend your rent money on.

My biggest piece of advice to you is to use your review course. My professional experience has been that those who get courses “free” from work almost always blow it off, buy it at the wrong time (hello, don’t sign up in January) or otherwise waste a good opportunity. If you had to shell out $2,000 of your own hard-earned money, you’d be much more likely to get the most out of it, right?

Then there’s your bonus. The fact that you’re acknowledging a bonus of $5,000 if you get this done shows that you might already be using that as a motivator – which is fine! We aren’t suggesting you run out and blow $5,000 on a home entertainment system as if you already have it but you are an accountant and money is your thing so use that to your advantage when you’re feeling unmotivated, lazy or overwhelmed. Which brings us to our next point.

It is now February and you start in October, the problem being you won’t actually be able to sit for the CPA exam until after you meet South Carolina’s 150 requirement. You are exactly the sort of future CPA we think should be allowed to sit for the exam at 120 units but we doubt the South Carolina Board of Accountancy reads Going Concern and even if they do, you might be a partner by the time the rule actually changes. Guess this is where your position behind the 8 ball comes in, eh?

UDPATE: Apply to sit now while you are eligible and try to nail as many exam parts as you can while you have some time. With a Masters program going on, that could be just one (or zero) but hey, at least you’ve got a head start before you are working and will leave less work later.

Talk to your firm and see what sort of support they offer for studying. We’re pretty sure they’ll laugh directly in your face but it’s worth a shot.

Assuming they are like just about every other firm out there, you’re going to want to apply for the exam as soon as you are eligible so you can get the paperwork part out of the way and begin to study shortly thereafter so the information is freshest in your mind. Don’t make the mistake of studying now months in advance (even though this appears to be an optimal time to do it) as you’re just going to have to do it all over again later. You’re going to need to be diligent – if not anal – about a study schedule once you start working, which we recommend you use to your advantage. Get up at 5am to study for two hours before work, that way if you’re exhausted at 4 or 5 or 9 pm when you’re still slaving away for the man, it won’t matter because at least you’re still getting paid to do it. You can study for the entire exam in 400 hours. There are about 730 hours in a month. Got it?

It will be excruciating but it can be done. I’m sure any number of the poor slobs who did exactly that before you will be chiming in in the comments any minute now.

CORRECTION: an earlier version of this article incorrectly stated South Carolina was a 150 state. It’s actually a 120 state. We realize the error of our ways and will repent all weekend on the NASBA website.

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