I think it’s safe to say that most of us are not naturally good at interviewing. The first few times you conduct an interview may feel awkward, and you never know what to ask. All you want to do is get to the bottom of your list of questions so everyone can go back to their daily routines. Thankfully, our instructor Leita Hart-Fanta has put together a list of skills and competencies every auditor needs in order to conduct interviews and build client relationships.

Eleven competencies for interviewing
1. Analyze background materials
Coming into an interview unprepared can backfire on you. The client does not feel respected if you don’t know their name and the names of the others in the organization to whom you have already spoken. You should also be aware of this person’s job responsibilities and the objectives of their department.  Write everyone’s name down on a pad of paper and take it with you to the interview. Take an organization chart with you. Use whatever you need to jog your memory so that you show respect to the client.

2. Assure preparation of the meeting site
You called the meeting; therefore you are responsible for making sure that the meeting is held in an environment that is conducive to communicating. If the client is distracted or unable to concentrate on your questions because the environment is chaotic, noisy, or uncomfortable, then you – the leader of the meeting – need to do something to remedy the situation.

3. Establish and maintain credibility
Your credibility as an auditor will never come from knowing how the client’s accounts payable process works. You will never know their job as well as they do, nor should you or should they expect you to! Your credibility comes from knowing how an audit works and always having a “plan” – a clear next step, a confidence that lets the client know that you know what you are doing in terms of your job.

You can admit – and I suggest that you admit it frequently – that you don’t know the details about their job. Hesitate to admit that you don’t know what happens next on the audit or why you are asking certain questions. This alternative source of credibility – your knowledge of auditing – is what allows a 23-year-old to audit a 60-year-old finance executive’s job functions.

4. Manage the emotional and physical environment
If the client is upset over something, it won’t do you any good to keep hammering her with questions. As a matter of fact, it can do quite a bit of damage.

5. Demonstrate effective communication and presentation skills
This isn’t anything fancy. You just need to present your best self to the client. That self is clear spoken and energetic. You can go back to your desk later and rest or be bored. But in front of the client, you set the tone for the meeting and manner which it is conducted. It is a good idea to have an agenda and communicate that to the client up front. An agenda also helps you keep the meeting on track.

6. Demonstrate effective questioning skills
Close-ended questions get terse, close-ended responses. Build in open-ended questions that encourage the client to share. You do not have to have a witty follow-up question prepared for every statement the client makes. If you are worried about your next witty follow-up question, you aren’t listening… the focus of our next competency.

7. Demonstrate effective listening skills
If your mouth is moving, you aren’t listening. In most interviews, 90% of the words should be coming out of the client’s mouth.

8. Provide clarification and feedback
The client will be much more comfortable with you if you allow them to participate in the conversation by asking for their feedback and making sure they are clear about your audit objectives. A few well-placed, “What are your questions?” go a long way to build relationships and clear the air of any uncertainty or unpleasantness.

9. Record results in a clear manner
After an interview, get right back to your desk and document what was discussed. Don’t stop for coffee; don’t go to lunch. Sit down and type what you found out. Every minute between the interview and the typing is another chunk of your memory gone! You can edit and tweak it later to fit the format that your supervisor or manager prefers.

10. Resolve all outstanding issues
Sometimes, the client brings up things in an interview that don’t fit neatly into the scope of your audit. Unfortunately, we can’t just let those things simply “hang out” in our interview documentation. We must resolve them formally: report them, discuss them, add them to our audit plan, create a separate project for them, or formally include them in next year’s audit planning.

11. Evaluate interviewer’s performance
To get better at anything, you have to do a little self-examination. After each interview, ask yourself whether you did your best or whether there is anything you would want to change for your next interview. Interviewing is a competency that is learned by correcting mistakes and practicing.

Need to further sharpen your interview skills? Our next blog post will go over how to conduct a successful interview step by step. If you feel like you’ve already got enough interview experience under your belt and want to  learn more about what it takes to be a great Government Auditor, check our Leita Hart-Fanta’s course Essential Skills for the Government Auditor (You can even earn 9 CPE hours).

Hiding and unhiding rows and columns are mundane tasks that many users take for granted. However, sometimes simple tasks can trip up Excel users, like unhiding just one row or column within a hidden set. Other users don’t know simple keystroke commands that can streamline hiding and unhiding columns or rows. In this article, I’ll explore these techniques as well as discuss two powerful alternatives to manually hide and unhide rows and columns. I’ll also discuss how to re-enable an Excel keyboard shortcut that’s disabled in any operating system subsequent to Windows XP.
Continue reading at AccountingWEB.

This article is written by one of our esteemed Instructors, David Ringstrom. David is a CPA and owner of Accounting Advisors, Inc., an Atlanta-based spreadsheet consulting firm that he started in 1991. Throughout his career David has spoken at conferences on Excel, and written dozens of freelance articles about spreadsheets. He presently writes for AccountingWEB.com, and offers Excel training and consulting services nationwide.

Last week we went over the Advantages of Budgeting, yet we did not discuss the number of serious disadvantages. This week’s article gives an overview of the general issues, while the following sections address the particular problems associated with capital budgeting, as well as the use of budgets within a command and control management system.

  • Inaccuracy. A budget is based on a set of assumptions that are generally not too far distant from the operating conditions under which it was formulated. If the business environment changes to any significant degree, then the company’s revenues or cost structure may change so radically that actual results will rapidly depart from the expectations delineated in the budget. This condition is a particular problem when there is a sudden economic downturn, since the budget authorizes a certain level of spending that is no longer supportable under a suddenly reduced revenue level. Unless management acts quickly to override the budget, managers will continue to spend under their original budgetary authorizations, thereby rupturing any possibility of earning a profit. Other conditions that can also cause results to vary suddenly from budgeted expectations include changes in interest rates, currency exchange rates, and commodity prices. 
  • Rigid decision making. The budgeting process only focuses the attention of the management team on strategy during the budget formulation period near the end of the fiscal year. For the rest of the year, there is no procedural commitment to revisit strategy. Thus, if there is a fundamental shift in the market just after a budget has been completed, there is no system in place to formally review the situation and make changes, thereby placing a company at a considerable disadvantage to its more nimble competitors.
  • Time required. It can be very time-consuming to create a budget, especially in a poorly-organized environment where many iterations of the budget may be required. The time involved is lower if there is a well-designed budgeting procedure in place, employees are accustomed to the process, and the company uses budgeting software. The work required can be more extensive if business conditions are constantly changing, which calls for repeated iterations of the budget model.
  • Gaming the system. An experienced manager may attempt to introduce budgetary slack, which involves deliberately reducing revenue estimates and increasing expense estimates, so that he can easily achieve favorable variances against the budget. This can be a serious problem, and requires considerable oversight to spot and eliminate.
  • Blame for outcomes. If a department does not achieve its budgeted results, the department man ager may blame any other departments that provide services to it for not having adequately supported his department.
  • Expense allocations. The budget may prescribe that certain amounts of overhead costs be allocated to various departments, and the managers of those departments may take issue with the allocation methods used. This is a particular problem when departments are not allowed to substitute services provided from within the company for lower-cost services that are available else where.
  • Use it or lose it. If a department is allowed a certain amount of expenditures and it does not appear that the department will spend all of  the funds during the budget period, the department manager may authorize excessive expenditures at the last minute, on the grounds that his budget manager may authorize excessive expenditures at the last minute, on the grounds that his budget tends to make managers believe that they are entitled to a certain amount of funding each year, irrespective of their actual need for the funds.
  • Only considers financial outcomes. The nature of the budget is numeric, so it tends to focus management attention on the quantitative aspects of a business; this usually means an intent focus on improving or maintaining profitability. In reality, customers do not care about the profits of a business – they will only buy from the company as long as they are receiving good service and well-constructed products at a fair price. Unfortunately, it is quite difficult to build these concepts into a budget, since they are qualitative in nature. Thus, the budgeting concept does not necessarily support the needs of customers.

The discussion of budgeting has cast serious doubts on the need for a detailed and rigorously-enforced budgeting system, especially one that integrates the budget model with bonus plans. Nonetheless, the decision to install a budget is up to the reader. In Budgeting: The Comprehensive Guide, Steven Bragg shows how to create a budget, whether there are variations on the traditional budgeting concept that may work better, and how to operate without any budget at all. The discussion also covers capital budgeting, flexible budgeting, zero-base budgeting, and all of the procedures, controls, and reports needed for a functioning budget system.

 

A budget is a document that forecasts the financial results and financial position of a business for one or more future periods. At a minimum, a budget contains an estimated income statement that describes anticipated financial results. A more complex budget also contains an estimated balance sheet, which contains the entity’s anticipated assets, liabilities, and equity positions at various points in time in the future.

A prime use of the budget is to serve as a performance baseline for the measurement of actual results. Budgets may also be linked to bonus plans in order to direct the activities of various company employees. A budget may also be used for both tax planning and treasury planning. Despite these valid uses, there are also a number of problems with budgeting that have given rise to a movement dedicated to the elimination of budgets.

The Advantages of Budgeting
Budgeting has been with us a long time, and is used by nearly every large company. They would not do so if there were not some perceived advantages to budgeting. These advantages include:

  • Planning orientation. The process of creating a budget takes management away from its short-term, day-to-day management of a business and forces it to think longer-term. This is the chief goal of budgeting, even if management does not succeed in meeting its goals as outlined in the budget – at least it is thinking about the company’s competitive and financial position and how to improve it.
  • Model scenarios. If a company is faced with a number of possible paths down which it can travel, you can create a set of budgets, each based on different scenarios, to estimate the financial results of each strategic direction.
  • Profitability review. It is easy to lose sight of where a company is making most of its money, during the scramble of day-to-day management. A properly structured budget points out which aspects of a business generate cash and which ones use it, which forces management to consider whether it should drop some parts of the business or expand in others. However, this advantage only applies to a budget sufficiently detailed to describe profits at the product, product line, or business unit level.
  • Assumptions review. The budgeting process forces management to think about why the company is in business, as well as its key assumptions about its business environment. A periodic re-evaluation of these issues may result in altered assumptions, which may in turn alter the way in which management decides to operate the business.
  • Performance evaluations. Senior management can tie bonuses or other incentives to how employees perform in comparison to the budget. The accounting department then creates budget versus actual reports to give employees feedback regarding how they are progressing toward their goals. This approach is most common with financial goals, though operational goals (such as reducing the scrap rate) can also be added. We will address a countervailing argument in the Command and Control System section later in this chapter.
  • Predict cash flows. Companies that are growing rapidly, have seasonal sales, or which have irregular sales patterns have a difficult time estimating how much cash they are likely to require in the near term, which results in periodic cash-related crises. A budget is useful for predicting cash flows in the short term, but yields increasingly unreliable results further into the future.
  • Cash allocation. There is only a limited amount of cash available to invest in fixed assets and working capital, and the budgeting process forces management to decide which assets are most worth investing in.
  • Cost reduction analysis. A company that has a strong system in place for continual cost reduction can use a budget to designate cost reduction targets that it wishes to pursue.
  • Shareholder communications. Large investors may want a benchmark against which they can measure the company’s progress. Even if a company chooses not to lend much credence to its own budget, it may still be valuable to construct a conservative budget to share with investors. The same argument holds true for lenders, who may want to see a budget versus actual results comparison from time to time.

These advantages may appear to be persuasive ones, and indeed have been sufficient for most companies to implement budgeting processes. However, there are also serious problems with budgets.

This article is an excerpt from Steven Bragg’s Budgeting: The Comprehensive Guide. To learn about budgeting, visit his course or join us for next week’s blog The Disadvantages of Budgeting.

As an accountant would you say that you are analytic, organized, and  precise? How about detailed, factual and accurate? Accountants hold a set of certain characteristics (Whether it be from professional training or personality) that could potentially be carried into a Controller position, but only if they can break out of the “number cruncher” mindset… which is not easy to do.

Corporate Controllers

So what is the Controller position? The Controller is more than just a bean counter or a number cruncher; the controller is the analyzer, interpreter and disseminator of financial information to all interested parties. Functioning mostly in planning, accounting, and reporting, controllers are often the budgeting lead, company historian, and number translator for non-number people… all at the same time. The Controller position is a big role in every company— which means that it is a position that can not be perfectly customized to fit your liking.  There will be occasions when accuracy is sacrificed for timeliness, and “big picture” thinking is considered to be more efficient than detail oriented thinking.

The Controller position is more than just supervising the accounting and financial departments. Controllers must also work with and advise company leaders by providing the financial information needed to develop successful strategies,  meaning that the Controller needs to be able to communicate accounting and finance principals to non-accounting professionals. Being responsible for everyone’s transactions and bills requires the controller to not only be well read in other departments, but also be able to build relationships in order to effectively communicate with them.

Qualifications and Capabilities
Before stepping up to such a large and diverse position, make sure that you have the necessary prerequisites required to become a successful controller.

  • Education: Managerial and financial accounting, regulatory compliance, business analysis tools, communication and leadership, and Federal, state and local taxes.
  • Personal: Dynamic/Likable, Analytic/Problem Solver, Supportive/Positive, Credible/Reliable
  • Credibility: Knowledge, Judgement, Objectivity, Candor and Integrity
  • Technical: Accounting, Analysis Tools, Regulatory Laws, Accounting and Financial Systems

DISC Personality Assessment and Leadership Styles
In order to ensure the well being of the company, it is important that the controller has both the educational background and the ability to mediate conversation between different personalities and backgrounds. Success stories come from those who not only know themselves, but know how to read and react to other people and personalities. This intuitive ability allows them to assess situations and act in a way that is best for the group.

The  DISC tool is based off of four personality traits: Dominance, Influence, Submission, and Compliance. In most cultures, 50% of group personalities fall into the Submission category, while the rest were evenly distributed between the other three quadrants. People with Dominant and Influencing traits tend to be extroverted, assertive, and move towards change, while those with a Compliant and Stable personality tend to be more introverted, passive, and gravitate towards stability. On the other axis of the quadrant lies the task-oriented (Dominant and Compliant) and the people-oriented (Influencer and Stabilizer). So which of these quadrants makes a successful controller? The answer lies in your ability as a leader to exercise each of these four traits in the necessary situation. When the situation calls for you to make a decision or take the lead, will you as the Controller have the discernment to decide which quadrant to act upon? In the meantime, take a look at the DISC quadrant to identify your most prominent trait set and recognize your blind spots.

Think you have what it takes to be a Corporate Controller? If you understand the general character of the position and feel that you may be a good fit, join Miles Hutchinson on February 28 as he talks about the specific functions of a Corporate Controller.

As the Busy Season continually picks up speed, it’s easy to feel overwhelmed by sixty hour work weeks. Besides a bottomless pot of coffee, digital video recording, and superb organizational skills, what else does it take to survive the next few months? Here are some helpful tips on how to prepare for tax season:

1. Know What Tools Are Available to You

Did you know that Google is more than just a search engine? The web service offers a huge suite of online productivity tools that can dramatically improve your workflow, and transform how you communicate and collaborate online with colleagues and clients. It’s also an online marketing channel that can be used to promote your accounting practice and even generate revenue from your website or blog. Most of the tools are free (or nearly free), easy to use, huge time and money savers, and literally right under your fingertips.

2. The Six A’s: Activity, Availability, Attention, Accessibility, Accountability, and Attitude

In this competitive economy, it pays to go the extra mile. Whether you’re a firm administrator, manager, staff or accountant, these proven methods will help to reach your maximum potential and achieve breakthrough results.

  • Activity: 20% of your activities produce 80% of your value, so where do you allocate your time and effort? Being able to prioritize and time manage gives you a sense of direction through the day.
  • Availability: Your ability to master your schedule. You can’t be available to everyone all the time, so you need to protect your time to accomplish your desired activities.
  • Attention: The capacity to focus intently and concentrate on tasks. Tax Season doesn’t leave room for distraction, so filter or tune out environmental distractions unrelated to your current task.
  • Accessibility: The ability to organize the inputs and outputs in your life. This key gives you the systems you need to locate data contained in any medium: paper, email, phone calls, contacts, Internet, etc.
  • Accountability: The extent to which you take personal responsibility for your actions and outcomes. Question processes, strive for continuous improvement, and practice self-discipline
  • Attitude: Your motivation, drive, and proactiveness. There is so much to do, and only 24 hours in a day… but that’s ok! With the right attitude and ambition,you can make those 24 hours count and enjoy the benefits of your hard work.

3. Communicate Efficiently
Today’s firm administrators, staff, and accountants spend so much time attending meetings, but few know how to plan and run them. Most meetings frustrate employees because agendas aren’t distributed, objectives aren’t defined, time runs over, and no decisions are made. Whether you are leading or attending a meeting, it is important to know how to communicate efficiently. Plan your topics ahead of time, stay focused during the meeting, and follow up afterwards.

4. Make the Most of Your Email 

It may not seem like the most obvious way to stay productive, but a lot of time is spent in Outlook. It’s more than just email; it’s a calendar, an organizer, file manager, and much more. Take advantage of what Outlook offers, and make sure that you know all of the tips and tricks to use it as efficiently as possible.

5. Become More Fluent in Excel

During the busy season, every shortcut counts. Take the time to learn keyboard shortcuts and hidden menus in order to blaze through your work, and familiarize yourself with the different functions of Excel.

6. Utilize Excel Charts

Tired of wasting time trying to tweak and automate your charts? Look up workarounds for charting features that became deprecated in Excel 2007, or how to replicate things from Excel 2010 in Excel 2007. It will save you time (And a headache) in the end.

7. Learn Visual Basic for Applications in Excel

Visual Basic for Applications is one of the most powerful features in Excel. Use Excel’s Macro Recorder to automate simple tasks such as cleaning up an accounting report file and formatting a list of phone numbers consistently.

To learn more about the tips and tools to staying productive, check out our Productivity Bundle at CPE Link.

Gift & Estate Tax
The American Taxpayer Relief Act (ATRA) of 2012 prevents steep increases in estate, gift and generation-skipping transfer (GST) taxes that were slated to occur for individuals dying and gifts made after 2012. The Act does this by permanently keeping the exemption level at $5,000,000 as indexed for inflation after 2010 (2013 exemption estimated to $5.25 Million at press time). However, the Act also permanently increases the top estate and gift tax rate from 35% to 40%.

Gift & Estate Exemption Reunification
Prior to the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), the estate and gift taxes were unified, creating a single graduated rate schedule for both. That single lifetime exemption could be used for gifts and/or bequests. The EGTRRA decoupled these systems. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (TRUIRJCA) reunified the estate and gift taxes. The ATRA permanently extends unification and is effective for gifts made after December 31, 2012.

Portability of Unused Estate Tax Exemption Made Permanent

The TRUIRJCA allowed the executor of a deceased spouse’s estate to transfer any unused exemption to the surviving spouse for estates of decedents dying after December 31, 2010 and before January 1, 2013. The ATRA makes permanent this provision and is effective for estates of decedents dying after December 31, 2012.

CAUTION – A Form 706 (Estate Tax Return) must be timely filed to obtain the portability.

The basic exclusion amount is $5.12 million for deaths in 2012 and $5 million (subject to an inflation adjustment) for individuals dying in 2013. (Code Sec. 2010(c)(3))

The “deceased spousal unused exclusion amount” is the lesser of:

(1) the basic exclusion amount, or

(2) the excess of the applicable exclusion amount of the last deceased spouse dying after Dec. 31, 2010, of the surviving spouse, over the amount on which the tentative tax on the estate of the deceased spouse is determined. (Code Sec. 2010(c)(4))

A surviving spouse (for convenience we’ll assume it is the wife in this discussion) may use the deceased spousal unused exclusion amount in addition to her own basic exclusion for taxable transfers made during life or her estate may use it on the estate tax return at her death.

If a surviving spouse is predeceased by more than one spouse, the amount of unused exclusion that is available for use by the surviving spouse is limited to the lesser of the applicable exclusion amount (for example, $5.12 million if the spouse died in 2012) or the unused exclusion of the last deceased spouse. (Code Sec. 2010(c)(4))

For the surviving spouse or her estate to use the deceased spouse’s unused exclusion amount, the predeceased spouse’s estate must make an election – referred to as the portability election – on a timely filed estate tax return (Form 706) that includes a computation of the unused exclusion amount. To make the portability election, Form 706 must be filed even if the value of the gross estate is not enough to otherwise require filing an estate tax return. See temporary regulations § 20.2010-22T for detailed rules and guidance on the portability election.

This excerpt is pulled from the Big Book of Taxes 2012 courtesy of Lee T. Reams, Sr.