A behind-the-scenes look at the CPA Exam

Behind the scenesMost CPA Exam candidates can rest assured knowing the time and energy they’ve spent leading up to exam day has prepared them for what to expect. Reviewed content and structure, section by section in the Blueprints? Check. Practiced with the sample tests to learn the exam’s functionality? Check. Confirmed test windows, how scoring works and made that test day appointment? Check. Understood the importance of language in the exam and what goes into the wording of each question? Che...wait. What?

Understanding what goes into the development of exam questions may provide extra insight for test day when you sit for the exam, which surely adds to your confidence. Read on to explore some of the behind-the-scenes considerations from creation to approval, fairness in the wording, as well as knowing with certainty that each multiple-choice question has only one right answer.

Continue reading "A behind-the-scenes look at the CPA Exam " »

Start your audit off right with data analytics

When planning an audit, how do you approach your preliminary analytics? Many auditors perform a variance analysis. They compare current year account balances to the prior year to identify any unexpected fluctuations. While this procedure often yields relevant insights, did you know performing audit data analytics (ADAs) can be even more effective at identifying potential problem areas? ADAs can be quick and painless, and you probably already have the tools on hand to perform them.

Continue reading "Start your audit off right with data analytics" »

The one thing stopping you from making better decisions

Shutterstock_640007017
It’s been several years since your last dodgeball game in the high school gym, but you may remember it like it was yesterday. Nervous energy hangs in the air during those moments when the captains choose their teams. No one wants to be picked last.

Human nature is at play, compelling Captain Kim to choose Mark instead of you. Maybe it’s Mark’s athletic ability, or maybe it’s because he lives on Kim’s street and she is more familiar with him. Kim’s unconscious bias drives her toward one classmate over another. For the person whom Kim picks last, it might sting a little.


Without realizing it, every day in our professional lives, we make choices similar to Kim’s. It’s not always pleasant for everyone involved. All humans have a hardwired need to belong. If we don’t check our unconscious bias and unknowingly show favoritism, we risk alienating our colleagues and staff. That can affect engagement, productivity and team cohesion.


The good news is that you can train yourself to become mindful of your unconscious bias and strengthen your relationships in and out of the office. Try this practice I call the Three Rs.

Continue reading "The one thing stopping you from making better decisions" »

Engagement letter stories — when they hurt and when they worked

Engagement letterAs a risk management professional at CNA, professional liability insurance carrier for nearly 25,000 CPA firms, I am often asked if engagement letters are worth all the effort. The answer, based on my personal and CNA’s claim experience, is a resounding YES!

I’ve experienced firsthand the value these letters bring to the table. When an engagement letter is used, and a claim arises related to that engagement, the losses are typically less severe (meaning less expensive) than if an engagement letter had not been used. But what means more (especially to a CPA) than more money in your pocket? Many professional liability insurance carriers provide premium credits or other benefits for firms that use engagement letters.

If it’s not enough to just trust the numbers, consider the following experiences of CPA firms that have or have not used engagement letters.

One that hurt — no engagement letter meant higher risk

A CPA was engaged to prepare income tax returns for a small business and its owner for many years. The owner regularly spoke with the CPA about his plans to sell the business and ultimately retire. One day, the client did just that and moved away.

Continue reading "Engagement letter stories — when they hurt and when they worked" »

Blockchain was made to solve 1 problem. Here’s what that is.

Blockchain“Blockchain is a solution looking for a problem. Unless you want to buy drugs on the internet,” said the instructor in a technology training I recently attended.

While not the first time I had heard such a comment, it was disturbing that a hundred of my fellow practitioners were being misled. Ignoring or dismissing blockchain does the accounting profession no favors. Instead, let’s consider the problem that the technology solves. This will provide a basis for later understanding possible applications to our work.

 What is the problem blockchain is trying to solve?

Blockchain, or distributed ledger technology, set out to solve how we transfer a digital asset between two peers without an intermediary. While there are many applications of this transfer, let’s look at it in the context of money.

Imagine you are selling a bike online. You don’t actually know the person who is buying your bike, so you have no way of knowing if the buyer actually has the money to pay for it. You have to trust an intermediary like PayPal for this information. PayPal is crucial to the transaction because it verifies what you cannot – whether the buyer has enough money in their bank account to make the purchase.

The asymmetry of trust in this transaction is known as the Byzantine General’s Problem. Imagine we have four generals planning to attack a city. At least three of the generals must attack at the same time to overpower the army holding the city. However, the only way they can communicate with each other is via messenger, and they do not know if one of the generals is a traitor. If a general were traitorous, he could modify the attack message and cause the other generals to fail. The only way to overcome a traitorous general is to provide the history of all messages sent and evidence they have not been altered. If the generals see that one of their peers has sent a message different from the others, they would know the general is traitorous and disregard his message. If more generals are good actors than bad in this attack, the correct message will be obvious.

Continue reading "Blockchain was made to solve 1 problem. Here’s what that is." »

Subscribe

Subscribe in a reader

Enter your Email:
Preview