It’s a Great Time to Be an Accountant

1. It’s a Great Time to Be an Accountant

2. It’s a Great Time to Be an Accountant • Thanks to the Sarbanes–Oxley Act, the demand for accountants has rarely been greater, even in tough economic times.

3. What is a financial statement audit?

4. An audit provides assuranceabout the reliabilityof the financial statements

5. Definition of Auditing • Auditing is the accumulation and evaluation of evidenceabout informationto determine and report on the degree of correspondence between the information and established criteria. Auditing should be done by a competent, independentperson.

6. Why do audits exist?

7. Why do audits exist? • Need to reduce information risk • (Risk that information on which an investment or other decision is based, such as financial statements, is not reliable)

8. Lower Lower • Information Cost of Capital • Risk for Auditee • Key point: Audit benefits the auditee (even if required by lender or other user)

9. Sources of information risk • Remote information • Biasesof provider • Volume of transactions • Complextransactions

10. Relation of Audit, Attestation and Assurance Services ASSURANCE SERVICES NON-ASSURANCE SERVICES ATTESTATION SERVICES Other management Consulting Audits Reviews Certain Management Consulting Accounting and Bookkeeping Internal Control over Financial Reporting Other Attest Services Tax Services Other Assurance Services

11. Audit, Attestation and Assurance • Assurance Service to improve the quality of • information • Attest Report on reliability of an • assertion (Attestation Standards) • Audit Written report on whether F/S • are in accordance with GAAP • (Auditing Standards)

12. Attestation Services • Engagement where CPA issues a report about an assertion • Forecasts • Internal control • Web sites • Historical financial statements

13. Attestation Services Any quantifiable information with established criteria is capable of being attested to. Examples: Emmy Awards, Miss America Pageant, Lottery

14. MC 1-14 (c) • Which of the following services would be considered an attestation engagement? • 1. A consulting engagement to provide • computer procession advice. • 2. An engagement to report on statutory • requirements. • 3. An income tax engagement to prepare • state and federal tax returns • 4. The compilation of financial statements • from a client’s financialrecords.

15. Assurance Services • Services to improve the quality of information • Give an example of an assurance provided by: • Government • An independent party other than a CPA • A CPA

16. Additional Assurance Services • Web site controls • Web site “hits” • Circulation audits • Royalty agreements • Compliance with investment policy • Customer satisfaction surveys

17. Why is there increased demand for other attestation and assurance services?

18. Why are attestation and assurance services expanding? New types of information require assurances about the quality of the information.

19. Auditor Reputation Investors Co. Auditor

20. MC 1-14 (a)Which of the following best explains why independent auditors are asked to express an opinion on financial statements? • 1. It is difficult to prepare financial stmts. • without the expertise of an auditor. • 2. It is management’s responsibility to seek • independent aid in the appraisal of financial • statement information. • 3. The opinion of an independent party is needed because a company may not be objective with respect to its financial statements. • 4. It is a customary courtesy that all stockholders receive an independent report on management’s stewardship of the business.

21. Types of Audits • Financial Statement Audit • Operational audit - concerned with efficiency and effectiveness • Compliance audit - compliance with rules and regulations

22. CPA Background • Becoming a CPA has three requirements • Education • CPA Exam • Work experience • CPA license is granted by individual state • CPA Exam is uniform for all states, but licensure and education requirements vary by state

23. CPA Exam Questions • 150-hour rule – Forty-three states require 150 hours of education to become a CPA • New York rule became effective August 1, 2009 • New York now allows 120 to sit (as does NJ, MA, CT) • 150 hours required for licensure; requirements vary by state

24. Registering for the CPA Exam • New York information is best accessed at www.op.nysed.gov/cpa.htm • Easiest way to access other states is through www.cpa-exam.org • “Getting started” • “Steps to becoming a CPA” • Click jurisdiction link • You will now be at National Association of State Boards of Accountancy (NASBA) site www.nasba.org

25. Application • Three Forms • Application – CPA Examination Services • Registered Program Form (education) – CPA Examination Services • Undergraduate students submit to Deedee Thousand in Suite 215 • Graduate students submit to Rick DiRubbo in Suite 315 • They will arrange transcripts • Licensure (Form 1) – New York State

26. 150 Hour Rule – Other States • Most states require 150 hour requirement to sit for the exam • Having 150 credit hours alone is generally not sufficient • Need to check the education requirements in the state in which you seek licensure • Access through www.cpa-exam.org or www.nasba.org • Key point: Many states require additional accounting as part of the 30 credits

27. CPA Exam Questions • Other issues • Computerized exam • When to sit • Review course • Register early

28. Time Breakdowns by Section for Uniform CPA Examination Examination Length (hours) 14 Auditing & Attestation 4.5 Financial Accounting & Reporting 4 Regulation 3 Business Environ. & Concepts 2.5 CPA Exam Length

29. Computerized CPA Exam • Exams can be taken during any of four exam windows • Open window Closed • Jan/Feb March • April/May June • July/Aug Sept • Oct/Nov Dec • Candidates may sit for each section of the exam individually and in any order • Retain credit for a passed section for 18 months beginning on the date the first section passed is taken • Section pass rate near 45% (approximately 30% for old paper exam)

30. Exam Pass Rates

31. MS Accounting Program • 30 credit hour program - students with an undergraduate accounting CPA degree • Additional credits are required for other students, depending on previous accounting and business coursework • Application available online • http://whitman.syr.edu/apply.asp • Or see Shannon Hiemstra in Room 315 • Qualifying GMAT score is required • Key point: Prepare for GMAT early (seniors who registered received a GMAT voucher this year; expect program to continue)

32. Benefits of the MS • Better long-term career performance • Ability to transfer CPA license • Qualified for promotions and positions • Better performance on CPA exam • Somewhat higher salary • May reduce years of work experience required to receive CPA license

33. Maximizing Public Accounting Partner CFO Controller Accountant Compensation and Rank based on years in public accounting

34. Flexibility/Meeting 150 hours • Start taking graduate classes in senior year if course schedule allows • Spend 1 or 2 semesters in MS program • Complete remaining courses in iMS program • You can design a plan that works for you

35. Careers in Public Accounting • Optimal time to leave (opinion only): • Law school 2 years • MBA 3 - 5 years • Job offer 5 - 8 years • Or never Partners make big $