Thursday, 12 September 2013

Helping Students Find Accounting

Accounting isn't a popular subject. Accountants don't have a sexy image.  Yet accountants perform a valuable service for both corporations and individuals.  They help people navigate through mazes of government regulations.  They save people money on taxes.  They help people make rational decisions about their business.  They have a reputation for loyalty and integrity.

So, how do we help the right people find a career in accounting?  My hat's off to the people at Masters in Accounting.  They have resources and interviews to help students figure out if this is the right career for them.  Then they help the students find the right university.

Nice job!

Tuesday, 30 July 2013

We Have Moved

As part of my new web site, the party has moved to a new location:  Energized Accounting

Come and join the party!

Sunday, 7 April 2013

Presenting the Church Budget

It is the moment that many Treasurers dread:  presenting the budget at the church meeting.  Treasurers are often bearers of bad news.  Church donations are down.  Aging church buildings need major repairs.  Staff salaries inevitably go up.  Church reserve funds (if there are any) are declining.  So, what do you do to engage your audience and obtain their support?

Here are 3 tips to help you make your case:
  1. Recognize that you are not alone.  The budget may be your responsibility, but addressing the needs of the church is everyone’s job.  So, add someone to your team or committee who understands selling and who is comfortable talking persuasively to a group of people.
  2. See the budget document in a fundraising light.  People want to give to thriving organizations with vision and drive.  Propping up a declining organization is not inspirational.  The budget document needs to reflect a strategy that leads to sustainability.  If there is no such strategy, then you need to get the full Board involved early in the planning process.
  3. Focus on the church’s mission.  Highlight the good work of the church and make the case that in order to grow, or even continue, attention needs to be paid to the building and the staff.  People will support administrative expenses when they can put them in the context of successful programs and community outreach.

The Treasurer’s position involves a lot of work and responsibility.  Having a team behind you will ease the burden.  

Thursday, 14 February 2013

What are You Worth?

In today's Globe and Mail newspaper, a CEO of a major insurance company (Don Guloien - Manulife) and the Dean of a Business school (Roger Martin - Rotman) unite to challenge an accounting rule.  They say that Mark-To-Market is causing unnecessary volatility in the stock markets.  Normally, I would scoff at the thought that an accounting rule could possibly have that much power, but in this case, I think they have a point.

As a profession, we are choosing asset valuations that are easy to measure over valuations that reflect the underlying economic reality of the asset.  Here's an example.

How much are you worth as an employee?  If I were to value you at your market rate, I would take the salary and benefits of a comparable person in the market place and do a discounted cash flow analysis using a current interest rate and arrive at a valuation.  That is one of the options in mark-to-market valuation.  If the interest rate changed or if there was a sudden shortage/surplus of similar people to you, your valuation would change.  This type of valuation is very sensitive to interest rates, meaning that a small change in interest rates causes a large change in the value.

But does the market value reflect your true economic value to your employer?  I would argue that it doesn't. Your employer is not holding you as an investment to be sold when the market goes up.  Your employer values your work at a higher level than your market value at the time of hire, otherwise why hire you?  At the same time, as long as you and your employer have a lasting relationship, fluctuations in your market value are irrelevant.  So it is with the assets owned by a company  Unless the assets are being held for sale, fluctuations in their market value are irrelevant.  Being conservative, if the market value of an asset falls significantly, accountants will question it, but that's not the same as chasing every fluctuation in value.

Normally, I would expect sophisticated readers of financial statements to understand and interpret changes in market value, but I see so much evidence of purely numeric modelling where financial numbers are just fed into the machine without much analysis.

We need to bring back professional judgement and put more time into understanding a company's situation rather than just making it easier to audit.

Wednesday, 9 January 2013

Numbers are like . . .

Many thanks to Sarah at for this gem:

To me, the number system is like human life.
 First you have the natural numbers, the ones that are whole and positive,
like the numbers of a small child.
 But human consciousness expands, and the child discovers longing. Do you
know the mathematical expression for longing? Negative numbers. The
formalization of the feeling that you're missing something.
 Then the child discovers the in-between space between stones, between
people, between numbers, and that produces fractions.
 But it's like a kind of madness, because it doesn't even stop there. It
never stops. There are numbers that we can't even begin to comprehend.
Mathematics is a vast, open landscape. You head towards the horizon that
is always receding... like Greenland. And that's... that's what I can't
live without.

Miss Smilla's Sense of Snow