The accounting industry is one of the most steadfast on the planet. It has often been called the “language of business,” and is the backbone of every economic entity. Thus, as the global economy progresses, so does the need for accountants. The profession measures the results of an organization's economic activities and conveys this information to a variety of users, including investors, creditors, management and regulators. Accounting reports provide information on a company’s financial position, its liquidity, solvency, cash flows and day-to-day operations. This report aims to better understand accounting discourse communities. It discusses the standardization of reporting practices, various standard-setting boards, organizations available to professionals in the community and current issues in the field. Considering first the industry as a whole, the report then discusses tools of the trade, professional accounting communities and current issues in the industry. Finally, it narrows to various discourse communities within Deloitte specifically and the tangible benefits that these communities produce. This information will be invaluable to the brothers of the Beta Alpha Psi Accounting Fraternity as they prepare for graduation and ultimately careers in the accounting industry.
Accountancy as a Profession
Auditors are the “fact-checkers” of accounting information and it is up to them to call out fraudulent bookkeeping activities. The industry values ethical behavior above all else, and one needs not dig deeper than the 2001 Enron and WorldCom scandals for evidence as to why. These companies committed enormous fraud over the course of many years, fudging the books to increase assets, lower expenses and misstate various other accounts in an attempt to cover up mounting debts and overstate future potential. These reporting infractions would have likely amounted to nothing more than a slap on the wrist and a couple lost jobs had the auditors over at Arthur Anderson done their job initially. Unfortunately, those assigned to check Enron’s and WorldCom’s books for errors turned a blind eye to the mess, giving birth to the greatest accounting scandals in modern history. An auditor must pit his or her moral compass against corruption and fraudulent activities even when calling these activities into question may not be in his or her best personal interest.
The Certified Public Accountant
Two thirds of accountants in the industry are employed by businesses, government agencies, and nonprofit organizations. The other third is made up of Certified Public Accountants, or CPA’s. This latter third works for independent agencies such as PwC, KPMG, Ernst & Young, or Deloitte. These companies offer consulting and auditing services to the public, and often take on entire corporations as clients.
Becoming a CPA is a rigorous process. In the state of Wisconsin, sitting for the certification exam requires graduation from an accredited accounting program with 150 credit hours and work experience of no less than 180 hours under a CPA. Additional study may be required in order to remain certified or certify in another state. Additionally, the exam is ever-changing, and evolves almost yearly. For example, it was recently announced that the 2017 exam will include more emphasis on the following topics:
This will result in a test lasting 16 hours – two hours longer than the current 14-hour exam (Surgent, 2015).
The Financial Instruments
Financial reports are the final product of an accountant’s work. These statements abide by the Generally Accepted Accounting Principles (GAAP), which acts as the rule book for accountants and is a common set of principles, standards and procedures which help to standardize both the creation and comprehension of the financial instruments.
The Three Statements
Consolidating every aspect of a business’s dealings into one set of statements, financial reports allow the world to analyze and interpret every aspect of a company’s dealings. These statements include the income statement, the balance sheet, and the statement of cash flows.
The income statement summarizes the totals of revenues and expenses, calculating net gain or loss for a period. The balance sheet shows the current calculated or estimated values of a company’s assets, liabilities, and owners’ equity. This statement does not summarize a period like the income statement but rather provides a snapshot of a company’s current financial position. The statement of cash flows contains all sources and uses of a firm’s cash supply during a period and explains liquidity of a business.
Using values from these statements, a reader can calculate certain financial ratios that help compare and contrast companies. The ability to correctly create and interpret these statements is vital for an accounting professional because succeeding in the industry requires communication through these means. This vocabulary may take years of education and/or training to perfect, as there are many small nuances in financial statement terminology. Failure to comprehend the common acronyms found in these statements can significantly hinder one’s ability to make sense of the financial statements and confidently assess a company’s future potential. These include, but are not limited to:
Professional Discourse Communities within the Accounting Industry
There are many discourse communities that members of the accounting industry belong to, but the most significant one for public accountants is the American Institute of Certified Public Accountants (AICPA), which represents the CPA profession nationally. The organization educates its members in the form of daily columns and newsletters. In addition, it develops and grades the CPA Exam and enforces compliance with the profession’s ethical standards (AICPA, n.d.). The AICPA provides guidance in setting new rules and standards for the industry and serves as the profession’s advocate before legislative bodies, public interest groups and other professional organizations. Thus, it is not only a think tank for public accountants, but also a big player in legislation for the industry.
Current Issues within the Industry
Communication is a vital part of the accounting profession, especially for auditors. Andrew Millet FCA, a director of Middlesex-based accountancy firm Wisteria Ltd, is adamant that if candidates can demonstrate they can offer more than number-crunching, “it’s a big tick in the box. Unless they are an excellent communicator, I’m not interested” (“Skills of the future accountant”, 2016). Communication is a hot topic in the accounting industry, and justifiably so. Recent studies conducted by recruiter Randstad USA found that 48% of businesses say their accountant is their most trusted business adviser (“Skills of the future accountant”, 2016).
As the digital age progresses, businesses turn more and more to email as their main source of communication. Accounting firms are no strangers to this trend. Communication between auditors and their clients increasingly occurs through email for increased efficiency. However, whatever time is saved in gathering information via email comes at the cost of the ability to detect deception that could indicate fraud. Face-to-face interviews provide richer forms of communication and may help in more effective detection of deception and fraud. Therefore, while other industry professionals, such as tax and managerial accountants, are rapidly adopting electronic alternatives to organic conversation, auditors continue to resist the overhaul.
Lack of Millennial Job Satisfaction
According to Deloitte, “One of the biggest issues facing the accounting industry today is the lack of millennial loyalty in the workforce” (@Deloitte, 2016). General dissatisfaction among young professionals with their current organizations is increasing rapidly for a multitude of reasons. These employees perceive a lack of leadership development opportunities and thus see little future at their current place of employment. Surveys conducted by the “Deloitte Global Survey” in 2016 indicate that over 44% of respondents, if given the choice, would leave their current employer within the next two years (Wall Street Journal, 2016). The respondents who show the most loyalty to their employers explain that their organizations actively encourage younger employees to aim for leadership roles and offer support and training to those individuals. Companies that are more likely to overlook millennials when filling or building leadership roles are far less likely to retain these employees in the long run.
This is coupled with an increasing desire in America’s youth to work for a purpose. The survey results also suggest that millennials’ career moves may be driven by their desire to work for businesses that demonstrate a strong sense of purpose, rather than those that narrowly focus on financial results. 40% of respondents who report high job satisfaction and plan to remain with their current employer beyond 2020 say their organization maintains a strong sense of purpose. They want to work for employers that provide goods and services having a positive impact on people’s lives. For companies rooted in the traditional “profit first” ideology, change is required in the coming years to keep up with the times.
“Deloitte” is the brand under which tens of thousands of dedicated professionals in independent firms throughout the world collaborate to provide auditing, consulting, financial advisory, risk management, tax and related services to select clients. In the accounting industry, it is at the forefront not only in market cap but also in employee retention. The issue of loyalty facing the industry today is minimized at Deloitte, where there are countless programs designed to prepare employees of all levels for the next stage of their careers, including the Emerging Leaders Development Program, the Ellen Gabriel Fellows, the IDEA Committee, several female specific leadership programs and the CORE Leadership Program, to name a few (Deloitte, 2016).
A Culture of Communication
Deloitte employs over 220,000 people in over 150 countries. It utilizes many channels of communication in order to keep employees in tune with change and the company’s current goals. Utilizing company-wide memos, social media blasts and other forms of digital communication help to relay the latest news, research and other events both internal and external.
Emphasizing communication as a vital part of its success, Deloitte trains even its top level management in the art. It believes that communication is not just an activity, but a process. The firm spares no time developing and training its employees to communicate effectively, as is evident in the words of one of its top executives. Dr. Ajit Kambil explains that the communication process in the accounting industry involves: defining the audience, the message to be conveyed, how to package the information, selecting appropriate channels and frequency for conveyance, seeking feedback and analyzing it for improvement (Kambil, 2014). It is clear that Deloitte values communication highly and regards it as more than just a means of exchanging information between parties.
The job outlook for accounting majors in the near future is promising. Nonetheless, ignorance of the various discourse communities surrounding the industry would put the brothers of Beta Alpha Psi at a disadvantage as they prepare for success in it. One should be aware of the various professional organizations available, specific industry jargon, present issues facing the community and the traits most coveted by today’s employers. Members who familiarize themselves with this advice will see greater job prospects and opportunities for growth.
...(download the rest of the essay above)