I’ve been neglecting my Roger CPA Review materials over the last few weeks, but I’ll be taking AUD in less than 2 weeks, so it’s back to multiple choice questions!

It’s the time in the semester where the first big tests are happening, and the first big cases are due, so there is plenty to distract me. Roger’s review materials come with software that simulates taking the exam though, so I’ll be sitting down with that over the next two weeks to complete my preparations.

In other news, apparently auditors have been noticing an increase in fraud recently. This article from WebCPA has some troubling statistics about the increase in fraud over the last year.

The scary part is when you stop to wonder how much fraud they’re not even finding. For every fraudster that is caught, how many are out there still getting away with it?

A quick update: I got in touch with the website that published the article that I talked about in a previous post. This article talks about the misconceptions that accounting students have about the subject they are studying.

The article is titled “The Seven Deadly Myths of Accounting” and was written by Dr. Pava, who currently teaches at Yeshiva University in New York.

The 7 Myths:

1. “Learning accounting is like learning the rules of a game”
   It certainly seems like it from the way people who memorize every piece can still do well in class! I’ve never been fond of memorization, but I’ve found it’s possible to get by (and easier) if you understand the steps you’re performing. Of course, in the end, you’re still just learning the steps. It wasn’t until my first semester as a masters of accounting student that I had a chance to learn how to use financial statements.
2. “I’m good at math, so I’ll be good at accounting”
   I never suffered from this misconception. I always felt that accounting was a strange middle ground between math and English–my two strongest subjects. My first classes reminded me of solving word problems in Algebra class. But if I were good at math, I would have been an Economics major, so I never really thought that you had to be a math whiz to do accounting–therefore, only being good at math won’t make you a good accountant either!
3. “There is such a thing as the bottom line”
   This myth deals with the idea that net income is the only answer. My favorite line from this part is when Dr. Pava writes about his students reactions when he asks them to discuss the strengths and weaknesses of net income: ” . . . the question makes little sense to them. It is almost as meaningless as asking them to evaluate the benefits and limitations of “subtraction” as a mathematical operation.”

   Again, I didn’t have any idea of what might be good or bad about the bottom line on the income statements we learned to make until I took Financial Statement Analysis last semester. In that class, we looked at financial statements as an investor would, and analyzed which pieces of information that made up net income that we would consider or not consider when evaluating a firm’s financial performance.

   During our class discussion, one of the students argued that we had learned this as undergraduates, because our professors had talked about how managers could manipulate earnings. However, I think that we still didn’t learn how they could manipulate those earnings. And how are we supposed to uncover unethical accounting practices as auditors if the managers are so much more intimately familiar with how to manipulate earnings than we are?

4. “Accounting is a ‘thing apart.’ Understanding other disciplines is a waste of precious time”
   I can attest to this myth being promulgated by my undergraduate education. I like accounting, but I minored in Spanish and often found myself appreciating the break it gave me from memorizing rules (see Myth 1!). It was the only time I got a chance to read literature and poetry and practice analyzing anything in written essay form in the last 2 years of my BBA.

   However, I was told by my accounting advisers that my grades in Spanish classes didn’t really matter, because all anyone would care about in the future were my accounting grades! Not true!

   If there is something you’d like to study in addition to accounting, go for it! It will make you more interesting, it might make you better at writing, it will give you a perspective that is slightly different than your fellow accounting students. I can guarantee that at some point in your life, what you learn in another discipline will be useful to you in your accounting career.

5. “All decisions are based on the cost-benefit criterion. If not, they should be!”
   Now this one, I’m not sure I agree with. Dr. Pava argues that decisions should be thought of in terms of ethical criteria, citing the recent scandals as a result of unethical decision-making.

   There’s nothing wrong with the cost-benefit way of looking at decisions, as long as you make sure to factor ethics into your costs and benefits! Will your product make millions but also make thousands of children sick? The costs outweigh the benefits!
   

6. “God gave GAAP”
   Again, this relates back to Myth 1,  that accounting is simply a set of arbitrary rules that must just be memorized. We are taught these rules with very little discussion of how they are determined, beyond also having to memorize the names of standard-setting bodies! This leads to students have a false sense that the standards are simply there, rather than created, and open to change.

   It wasn’t until my last semester of my BBA that one of my professors addressed the fact that these rules are set by groups of people who have conflicting pressures from investors, business, and government, and who may arrive at compromises that aren’t great accounting!

   The result of this is summed up in a great quotation from the article: Dr. Pava writes, “On those occasions when I can convince students that accounting principles somehow might be improved, students simply cannot fathom why the standards are not altered immediately.”

7. “I’ll learn what I really need to know when I get my first job”‘
   This is a myth I still believed in when I first picked up this article. Of course, we learn the ground rules in accounting class, but there is so much to learn once you get out into the work world, it can feel as though you learned nothing in school! However, if you did not have an accounting degree behind you when starting work as an audit or tax associate, imagine how much more they would have to teach you!

Our assignment was to respond to one of these myths, or come up with additional myths on our own. Does anyone have any myths to add to the list? Disagree or agree with one of the existing seven listed here?

In one of my classes, we are required to bring in articles each class to stimulate class discussion. I brought in one of the front-page articles from CFO.com “Could New Regs Bring More Lawsuits?”

That link is most likely quite temporary folks, as the permalink function gave me an error message when I tried to use it. So click away quickly.

Anyway, after learning last semester in audit class about auditor liability, this article brings up some scary stuff for accountants.

Essentially, the article says that these proposed regulations will make it easier to sue third parties (banks, auditors, accountants, suppliers even) involved in some way with fraudulent companies.

It’s a bit scary to think that, as an auditor, there is no surefire way to stay out of trouble. You can perform your work as diligently and honestly as possible, and yet still be opening yourself up to lawsuits. And unlike doctors, who can purchase insurance to protect themselves when something goes wrong, there is no insurance policy for not figuring out that your client is committing fraud!

Does anyone have a more detailed (yet simplified) explanation of these new regs? (The article doesn’t really explain the regulations, just what the writer considers the potential outcomes.)

Hi guys!

So I’ve been a little quiet, which usually happens when I’m not studying enough for the CPA exam! After hearing that I passed REG, I had a hard time motivating myself to study for AUD, which seems so much easier! But still, I need to keep reviewing, or I might find it much harder than I expected!

Classes started Thursday, so I have to get back to homework and readings. My first assignment of the semester is due tomorrow. We have to read an article titled “The Seven Deadly Myths of Accounting” by Moses L. Pava, and then write a one-page response about a particular one of the myths we agree or disagree with.

I couldn’t find a copy of the article online to link to, so I’ll summarize it briefly. Essentially, the article seems to be written for an audience of accounting professors, regarding the myths that accounting students have.

These myths touch on the idea that many students have that accounting is simply a set of rules, and if one memorizes the rules, one will be a successful accountant. Pava argues that accountants, above all, must be approach accounting like a foriegn language, and must learn to communicate in this “language of business” and that simply memorizing the rules is like trying to learn a foreign language by memorizing long lists of vocabulary words, without learning grammar or practicing speaking or writing.

The myth I chose to respond criticizes the way accounting students accept accounting rules without questioning them. Pava talks about the blank looks he gets from students when asking them to talk about the weaknesses of how we calculate net income. He says:

“It is almost as meaningless as asking them to evaluate the benefits and limitations of “subtraction” as a mathematical operation. Just as students take subtraction for granted, students have inherited a view where net income enjoys a granite-like status. Net income simply is.”

I’m sure that some of you out there held beliefs as students that were ripped to shreds upon entry into the “real world” of accounting or business. Could you share some of those “myths” with us that you think should be on this list?

I finally got the notice of my REG score! I passed! I guess that just goes to show that it’s true what they say about how you can feel like you’ve failed when you did just fine.

On the other hand, the online score checking option definitely didn’t work for me. I don’t know why, or if I should contact anyone, or if it’ll work for the next two sections because I scheduled those with a different NTS. Mysterious.

Anyway, good luck for anyone studying for the CPA exam now, or waiting for your scores! If you put in the study hours, and study the right material (which Roger is great at pulling out for you) you’ll do great!

Also, a photo of my dog in a RogerCPA shirt: (it’s a little small for me, and it’s a good color on her no?)

I always make the mistake of thinking that holidays will be a good time to study! They just feel too darn much like… well, holidays! The time ends up getting spent on other worthwhile things, like spending time with family, sleeping, and reading.

I’ve managed to get at least a little bit of studying done each day since we finished grading though. The easiest thing is to tell myself to do at least 15 minutes – to at least settle down and get the books out. Once there, it’s a bit easier to keep going.

I hope everyone is enjoying themselves! I had a lovely gift waiting for me when I got to my parents’ house – Roger CPA Review t-shirts and flashcards, care of Jr. Deputy Accountant. Thank you Adrienne! My mother says the t-shirts are a “lovely color.” (I agree.)

I (very luckily) have a position as a graduate assistant this semester, which means I get to help one of the accounting professors grade things and whatever else they need done.

So, the last final we have to grade was yesterday morning, and since then we’ve been in final-exam-grading-frenzy mode. I can only help with a limited amount, because grading problems can be pretty subjective sometimes. I have tried to help out as much as possible though, as the other grader has so much work to do!

Grading problems is actually kind of fun though. It can be hard to decipher what students are trying to say sometimes, but that makes life more interesting. And the problems I’m grading relate to some of the stuff on the AUD exam so I even get to review a little, although this test is much more in-depth on some points than the CPA exam is. We should be done sometime tomorrow, if all goes well.

Hope everyone else is doing well, and hopefully you’re all through finals (if you have them) and are looking forward to the holidays!

On Monday, I have my only final exam for the semester – TAX. (My other classes had time-intensive projects which are all done!)

So, I’m working on studying that. It’s hard to sit down and focus on tax. I’d much rather be watching Roger’s CPA Review videos and learning about Audit.

Roger’s blog had a nice little summary of some changes that’ll be coming to the CPA exam over the next few years. It’s interesting to see how they’re changing the simulations. I wonder if it’ll make it easier. I wonder if it’ll make it a better test?

A few years ago, you had to take the CPA exam all at once. From what I’ve heard, you had a two day window and took two parts each day. That wouldn’t work very well for my study style, so it seems easier the way they present it now. But I’m sure there are other students who don’t like to drag out the studying the way I do! So, I wonder if they have shifted the difficulty from endurance to more difficult questions since then?

So, I’m working on my notecards for Chapter 3 of Roger’s CPA Review course. I’m about halfway through the initial review!

Studying slowed down a bit this weekend, as finals are approaching more rapidly than my Audit exam!

Last night I was busily working on a group project on my laptop, when I turned around to see my dog surrounded by bits of paper. My note ! And a little corner of my Roger study book. Luckily, I write in waterproof (and slobber-proof) ink, so the damage was limited.

I’m happy with my progress on Audit studying so far. Audit seems like it’ll be a much easier section of the CPA exam than FAR and REG, because I already understand a lot of the material.

Unfortunately, the question-writers seem to agree that the material is easier to remember, and ask some pretty complicated multiple choice questions. The multiple choice questions for the AUD section that I’ve practiced so far seem to take me much longer to read than the FAR and REG questions, and then even if you are pretty comfortable with the topic, they throw in a lot of tempting distractor answers that all sound right.

I started working on the third chapter of Roger CPA Review’s study materials for AUD, so I’m right on track for getting through my initial review on time!