I’m not unlike the rest of you; I have ideas, aspirations, goals, and dreams. And like most of you, I’ve left most of those things in the back seat in this so called ride through life. My focus shifted to what was readily attainable, what was easy, the path paved in front of me. My dreams became a detour, a pointless venture that just slowed my progress through my “career.” My dreams became a fantasy as I pondered on them here and there throughout my day, an escape from reality into a world of what ifs. Not too different from a fantasy of winning the lottery. Then one day I asked myself, “Why does this have to be a fantasy?” And sadly the answer was because I was scared of what could go wrong.

Risk is the reason why people don’t do certain things. We’ve become so engrained in a certain routine, a certain style of living that we become risk adverse to even the smallest risks. If I asked you to try a different route tomorrow on your way to work, you’d most likely say no. The only risk you mitigate by saying no is the risk of being late, a risk that you run by leaving at the same time every day despite traffic reports. We are animals; we love routines because we think we know the results. We are like mice in a cage pulling levers to obtain food. We become comfortable in a life that brings us nothing new, but the same mediocre results.

I could spend the rest of my life at my current job and progress through the cookie cutter promotions until I reach the top. But what am I really getting out of it? I’ll get more money and that’s about it. When did our idea of success shift from happiness to capital? We can reach that definition of success anytime in our life (well 40s-60s, 70s not so much unless you’re godly healthy). We are in a new era of extended adolescence and self discovery; we shouldn’t be wasting our time on building a career. Rather we should be wasting our time and efforts going after our dreams while we still have the fortitude and energy to get back up when we fail and to keep trying until we find true success.

After receiving my offer letter I thought I was set for life. But throughout my last year in college the same topic was talked about in all of my classes, CPA exam. After spending the last 17 or so years in school you think all the studying and exams would be over. Alas, I picked a career that would almost certainly requires additional continuing education and one of the hardest professional exams administered in the world.  Now that I’ve talked it up and terrified you let’s get to the preparation necessary to pass the damn thing.

Studying

I was (un)lucky enough to have gone to a school that had its own CPA prep course. The course was a 4 hour class, 4 days a week, 10 weeks in the summer. If that doesn’t sound like the most exciting summer vacation ever, I don’t know what is. And spending a good $3,600 on it I say it’s a definite must for any poor college kid trying to become a CPA (/sarcasm). The main reason I took the course was because it gave m a whopping 24 units so that I could go Pathway 2. For those of you who don’t know what Pathway 2 is, here’s the $0.02 tour:

California is one, if not only, state in this great Union that only requires 4 years to complete an accounting degree. In order for other states to really believe that you are qualified to be an accountant they would need to have enough units to represent a 5^th year in college, increasing your unit requirement from 180 to 225. Now those extra units do not need to be in accounting… meaning you can have 45 extra units of dodgeball and it would allow you to practice public accounting in all 50 states. Seems pointless, right? It is, but the rest of the country can’t seem to grasp that and Pathway 2 will be mandatory in 2014, anyone with a license before then (Pathway 1 or 2) will automatically be grandfathered into Pathway 2.

Moving along, after wasting all that money and my last free summer on this course at least I had four heavy Wiley books and a copy of the Wiley questions software. In the end, these materials were what got me a pass on all of my exams the first time through.

Everyone studies differently, things that work for one person may not work for another. But I believe that if you follow my way, passing is a sure thing.* I scheduled one exam at the end of each testing window, four exams, four windows in a year, you do the math Mr. Accountant. I spent 4-6 weeks prior to my exam really studying for the scheduled test. All I did was read each chapter, highlighting the important stuff (I don’t know why, I never went back through the chapters), and did the practice problems, twice if I had enough time (which I rarely did). Then once I finished the entire book I did all of the practice problems on the Wiley software and read the explanation for any of the questions I got wrong. That’s all. There are no tricks, no shortcuts, just brute force your way through that book and you’re set.

Some say I am just smarter than other people, not true. I don’t remember a damn thing I studied. After 17 some years, everyone gets pretty good at taking tests, and you have to approach this test the same way (strike that, approach it as if you were an honors student in college).  You’re spending a boat load of cash on each of these exams and you have to take it seriously. A lot of people will tell you that they studied the perfect amount when they get that 75 pass score. I say that’s stupid, you’re a point away from flushing 200-300 down the toilet. Get an 80, then you can say you studied enough. It takes time and sacrifice. There were more than one occasion when I had to say no to that awesome rager on Friday night just to do some extra studying.

Some basic tips:

• I would suggest taking FAR right away, this is everything you learned in college, it’s the freshest in your mind and it will save you a lot of time studying.
• BEC would be a high priority, it’s getting a huge make over in 2011, you want this out of the way before that happens. Hopefully you can schedule it in the last 2010 window.
• REG and AAA just plain suck, it’s a lot of information that you will basically have to memorize going into the test. There are no real tips other than pneumonic devices and whatnot.
• Simulations are not that hard, and they aren’t worth a ton (but they will make/break you if you’re not doing too hot on the multiple choice). Don’t study them too much, but do at least take a look at the variety of simulation questions that may come up.
• First thing to do in a simulation is the Communication portion. This is worth 5% of the ENTIRE test. Get this done first and do it well. You can even use the research tab to help beef up your memo to ensure you get the full 5%.
• These test are not hard by content, they are difficult due to the quantity of content. At the bare minimum you need to get through the content of each exam. If you’re running out of time on your study a quick way to blast through the content is by doing the practice questions.
• Don’t be too ambitious, two exams in one window is brutal and ensures that you have no down time between exams to relax. Only do this if your first test scores are going to expire soon, last case scenario if you will.

Taking tests

Once you’re done studying, it’s time to sit for your exam. I made it a rule that I would not study the day before the exam. It’s time to kick back and to relax. Get your mind off the test and you will be in a better place mentally to take the exam. Very zen.

The exam itself is pretty straight forward. There are three sections of 30 multiple choice questions each and two sections with a simulation in each. You have to go through the usual identification procedures, don’t let it make you nervous, it’s just routine. You sit and you take the test. Don’t get caught up in any one question. If you’re not sure flag it and circle back to it at the end of the section. Usually by that time you may have seen a similar question you did know that you can apply to those you flagged for review. I usually didn’t take a break between sections but I did once all the multiple choice questions were done. Get out of there, use the restroom, throw some water on your face, and breathe.

Simulations are easier, but they give you a lot more time, take advantage of it. Do the communication first and use the research tab to help with your answer there. Then go through the other tabs. Review what each tab wants you to do before actually answering anything, then do the ones you feel more confident about first. The idea is to get all the easy points first and then spending what time you have left figuring out the hard stuff. And just like the multiple choice questions, doing the easier stuff might actually help you answer the harder ones.  Move to the next section, hit that one out of the park, and you’re done!

Waiting for results

Now comes the hardest part of the whole experience, waiting for your results. I suggest not checking your scores until at least two weeks after the end of the window. That’s the earliest scores get released. Don’t check every hour of every day, you’ll give yourself a heart attack, and definitely don’t check on a Friday. That’s a sure way of ruining your weekend if you should have failed.  If you failed, it’s not the end of the world. At least 50% of test takers will fail, I think last year it was closer to 70%. Just reschedule when you have the money and you have an open window. If you passed, congratulations! Celebrate for a month and then get back to studying for the next test.

Ethics exam

Once you’ve passed all four, you’re done! Not quite. You have to pass an ethics exam, another 50 questions on a book that’s somewhere around 200 pages long. I suggest getting the PDF version of the book, it’ll make it easier for you to search through the book rather than using the index (you got to love technology). Don’t expect to pass the test the first time through, you can only miss three questions and I failed twice. If you fail three times you have request documents again, but if not a lot of time has passed since you ordered the materials then it will be the same stuff, cost you nothing, and you get three more chances. Every time you fail they give you a list of “hints” to help you study. I learned that this list is more than hints. They will have one for each one you got wrong and it will be in the order you got them wrong. The second time you fail it gets real specific on what you missed, so the third time should be almost a sure thing.

Application process

Once you’ve passed that, now you’re done! Not quite. No more exams, just a painful application process, as if it wasn’t painful enough. Tune in next time to hear about my experience with the application process and how it can be a lot less painful for you.

*I make no promises that you will pass by following my study guide.

Going from high school to college was a much easier transition than from college to career. College is just an extended version of high school, albeit a little more challenging. The transition was very exciting and fun because you’re leaving home and becoming independent. What made it a much easier transition was that you knew you could always fall back on your parents if things got difficult.

College to Career

Going from college to work is much more interesting. You have experienced the independent, worry-free life of college and now you’re going out into the big world. For most of us, we are entering the working world without the safety net of our parents and that makes it much more terrifying. Fortunately for me, I didn’t have much time to worry about anything as I had gone through the summer waking up early for classes and getting home late from work and only had a weekend to go from Santa Barbara to San Jose to start my career.

It was definitely stressful, but I didn’t have to go from a relaxing summer break to a 9-5 instantly, and I can’t imagine the difficulty that comes with that. But no matter your circumstances, I can tell you some of the things you will miss and some of the things that you will enjoy once you’ve begun your career.

What you will miss

The very first thing you will notice about your new life is traffic. You all be aware of traffic and have experienced it before, but once you start working it is now part of your everyday life. Though, depending on where you are you will have different experiences with it, but we all come to despise it. It is a huge time drain, time you will learn is very limited when you work eight hours a day.

The next thing you will miss, on your very first day, are naps. Unless you’re one of the few people who didn’t nap during college (who are you?!) then you will notice that without them you are pretty much useless after 2pm. You’re going to have to live without them, and don’t sneak in cat naps as it makes it harder to go without them on those long hour days. Naps are addictive, if you nap in your car one day, the next day you’ll be craving another one.

Remember when you had three hours between classes and took that nap or at least hung out with friends and watched TV? Those days are long gone my friend. You get one hour for lunch, a little more if you push it, and it’s back to the salt mines. An hour is not a long time to get yourself sane again, but it’s doable. Don’t eat at your desk, go out or at least comingle with your colleagues in the kitchen. And don’t talk about work! Nothing irks me more than when coworkers talk about work on break, it’s a break guys, enjoy it while you can.

Same goes with vacations. No more are the days when you get three weeks off in winter and two months off in summer. When you work you just keep working, bet you didn’t know that. And if you want vacation you have to get it approved in advance and you go when convenient to your company. It’s a tough life but you have to make do with what you are given. If not, I suggest moving to France where you get a mandatory month off.

As you may have noticed from all the things you will miss is that they all kind of revolve around time. Work demands a lot of time and that’s the difference between college and work (if you weren’t an honor student that is). One of the other things that time plays a big factor in is errands. You’ll soon learn that everything you need to do during the week is only open during YOUR office hours. You definitely want to try and avoid anything on the weekends as that’s the busiest time and your time is a rare commodity now.

What you will enjoy

Now that I have totally killed your mood and outlook on your life, here are something to brighten your day a bit.

Guess what? Now you’re making a salary! That’s a whole lot of moolah you have never seen in college. You don’t have to worry so much about eating/drinking out, about what you buy at the grocery store, and now you can afford all those awesome things you could never have had in college. Once that money started rolling in I started to plan my purchase of a new car. My ’89 Acura Integra with two broken door handles was just not cutting it anymore.

What also comes with all that money are real vacations now. Sure you don’t have 12 weeks a year off of work, but those two weeks you do take are going to be much more comfortable and amazing. You get to stay in nice hotels, eat good stuff, and many more adventures while on vacation with your new bank roll. Just last weekend I went to Hawaii and saw EVERYTHING and I didn’t have to keep checking my balances to make sure I wasn’t overdrawing.

As you get more accustomed to working life, your weekends really become your vacation time. You have to enjoy every weekend you’re given, even if that just means laying on the couch and catching up on all the TV you missed during the week. I’ve done many trips to Tahoe last season and never missed a day of work. Take advantage of all the time you have because you won’t get many. The weekend may be short, but you can sure do a whole in them.

Another thing that comes with work is all of the new connections you will make working. I have a few good college friends who I still keep in touch with, and it’s hard being separated by distance. You’ll make a lot of friends at work (unless you’re that guy) and they soon become very good friends, I mean you see each other every day. The connections you make at work go a long way in your career but also in your personal life. And let’s be honest, you need someone to rant about work with.

At the end of the day (you’ll start hearing that more often in your career), what keeps you coming back to work are the challenges that it will present you. You’re probably a college graduate and I’m sure you don’t want to push paper all your life. You’re a well educated individual and you probably like facing a challenge once in a while, and I don’t mean doing something faster but perhaps more efficiently. There are endless amount of challenges every day at work, try to seek them out and you’ll not only enjoy your days more, but you’ll also be recognized by your superiors and bring in more dollah dollah bills y’all.

College to career isn’t the easiest transitions, and definitely not the easiest. It takes a while before you’re really accustomed to the 9-5, I still feel that I am not quite there yet. But schedule it right and sacrifice a little here and there you’ll live a much more enjoyable and successful life.

There are three types of controls, in order of their strength: Preventive, Detective, and Corrective. Their names explain exactly what kind of control they are and you can infer from their names why one is stronger than the other. Here’s a simple example to illustrate:

Preventive: Checks require two signatures, this will prevent unauthorized checks to be cashed

Detective: Bank reconciliations are performed, this will detect if there have been unauthorized checks

Corrective: Calling the authority, this is a procedure to help you get your money back

As this example shows, detective and corrective controls are not strong enough to stop a company from losing assets. However, a company who has these controls in place is better off than having none whatsoever.

Preventive controls are the key to safeguarding company assets. The tangible preventive controls revolve around the idea of segregation of duties. The idea is that there should not be one individual responsible for any 2 of 3 areas. Those three areas are Custody (physical custody of records or documents), Processing (processing data, entering into the system), and Authorization (authorization, obviously).

In the example with check disbursements: one person has access to the blank check stock, one person inputs disbursement information into the system, and one person should authorize the checks.

Without separating these responsibilities, you make the process vulnerable to anyone with malicious intent. Say an individual has access to blank checks and data processing. That person is a forged signature away from all the cash in the bank and no one would find out since the accounting software says a big disbursement went out to the payroll provider. By segregating these three duties, you can potentially prevent any unauthorized disbursements such as the one just mentioned.

I say ‘potentially’ because you can see from my example that even if you had well segregated duties, the ‘C’ word can make its security crumble to pieces.  All physical internal controls can be bypassed by collusion. If the person with the key and the person watching the cameras are on the same side, a whole store can be robbed without a fuss. Segregation of duties works on paper but in reality those duties are only held apart by people respecting those boundaries. And like we’ve all heard before, the best defense is a good offense.

The best way to prevent collusion is to prevent it from happening, by a solid pre-emptive strike against it, and this is where the intangible stuff I was talking about earlier comes into play. You strike down collusion and overall mal-intentions by creating an ethically sound environment within the company. The best way to do this is to set a strong ethical tone from management. Essentially, lead by example. If management makes a conscious effort to do what is right, it makes it easier and for employees to stay honest. If management was blowing money excessively on luxury items, the employee starts to feel that the company’s cash reserves are expendable.

Another simple way to improve the ethical environment is to make your policies apparent to all employees. Most companies do have an ethical disclosure and it’s usually in their employee handbooks. When was the last time you read your employee handbook? To tell you the truth, I didn’t even read it when I was hired, but I still signed that letter saying I did. Move your policies out of the handbook and into a separate document. Make it easy to read and short so that you can be certain that it is read. And have all new employees sign it. By explicitly stating that the company is an ethical place you make it harder to be dishonest. Imagine if you were trying to milk the company for all it’s worth and you knew that everyone there signed that same document telling you to be ethical. It just got trickier to steal didn’t it?

And lastly, because this is starting to get excessive, you can simply restructure the existing organization of your employees. You want people to be accountable for their work and you also want two set of eyes on all areas that are susceptible to fraud. If you knew that your work was going to be reviewed by another person, you might try harder to avoid mistakes. It might even make it too difficult to try and pull a fast one on the company. Even if there are only three people in the accounting department there can be proper review of all the work that is being done, especially if you already have a strong ethical environment as established in the previous paragraphs.

In the end, internal controls aren’t as demanding or expensive as people perceive them to be. No matter how much money you spend and how many people and procedures you implement to carry them out, they will always be vulnerable as long as you don’t maintain a strong ethical environment. Oh and keep your employees happy, because even a strong ethical environment won’t hold up if the employees are disgruntled.

I was once a Computer Engineering major. I almost made it one whole quarter majoring in Computer Engineering. Every day after my physics class I thought to myself, is this really what I want to be doing? One day I came to the conclusion that no, I didn’t want to be a computer engineer; I didn’t want to do anything related to computers it turned out. I went to the UCSB website and pulled up a list of majors to try and determine what I wanted to do with my life.

It’s not particularly easy to determine what you want to do for the rest of your life, especially at 17, so I didn’t. I looked at that list and made a quick decision, Business Economics with an Emphasis on Accounting. I didn’t know at that point that I wanted to be an accountant but I did know that that mouthful of a major would look nice on my diploma. What I did know was that I liked math, but not enough to get into variable calculus, and I knew that I definitely didn’t want to be writing papers in all my classes. Accounting was a nice middle ground and it turned out to be a nice fit.

After taking a few economics classes and the intro accounting classes I knew this was something I could do and enjoy it. Economics was fine, it was all really theoretical and I knew that real life was never as simple as these lower level economic classes made it out to be. It did give me the fundamental understanding of the economy which is nice especially when the housing bubble collapsed in 2008 and that was all people talked about for a while. As nerdy as this may sound, I enjoyed accounting much more. I loved the logic and relationships between the balance sheet, income statement, and cash flow.  I loved how if you were right, you knew it because everything would balance just nicely. I also loved how this topic came very quickly and easily to me and made my life in college much more enjoyable.

Though I may have been enjoying college too much as I forgot why I was attending college. I was cruising through college and I still hadn’t determined what I wanted to do with my life after I graduated. It wasn’t until my third year in college that the professors began talking more and more about public accounting. Seeing as I was the kid in the back of the class listening to my mp3 player and doodling, I didn’t get the message until winter quarter. By the time I decided that I wanted to do an internship with a public accounting firm, the deadline had already passed. My chance to get a leg up on campus recruiting the following fall was gone.

Campus Recruiting.

Although the experience from an internship would have been very valuable in campus recruiting, I didn’t think too much about it at the time. I shrugged my shoulder and continued to enjoy my college days.  Some things just don’t work out and you can’t get caught up on them. The next fall the professors were much more adamant about getting us into public accounting and every day we heard that the deadline to get our resumes in was coming. This time I would be on top of things. I got 6 interviews in 5 days, it was an interesting week. Every day I would put on my suit and go to an interview. The questions were typical and repetitive, but my answers would slowly evolve into something comprehensible.

With that in mind, looking back, I should have taken advantage of our career center mock interviews. Instead of developing my answers in real interviews, I should have had the best responses in mind going into those interviews. But in the end, I did well enough to get to second round interviews with a few firms. I have to say, second round is much more comfortable and a lot more fun. You get flown to their office (I strategically selected offices that were far away), get a tour, get a better feel of the people that work there, get a free lunch, and really have a more genuine interview. I felt much more myself on the second interviews than the first which is probably why I got job offers.

Decisions, Decisions.

In the end I had to make a decision on where I would go for my career, and that’s always a good thing. Honestly, I would have been happy with just one. My decision was based on just a few factors. I knew that no matter where I go I would get good experience that would do wonders to my resume.  I looked for a firm with people I would want to hang out with outside of work. I also wanted a broad range of experience with an increasing amount of responsibility. And finally, I wanted a lot of money. Keeping those three things in mind I made my decision and I’ve been a happy Associate for a large regional public accounting firm ever since.

Grand Finale.

With a confirmed job offer starting in September 2008 and having completed all my undergraduate requirements in 2007, winter and spring quarter were the most fun I had my entire college career. Taking classes for only units (not grades) and having no worry about finding a job after college meant for a very festive 6 months until graduation.

Summer was a blast (sarcasm). For 4 hours a day, 4 days a week, for 10 weeks I spent my time in a room filled with fellow accounting major graduates taking a review course for the CPA exam. It was horrible at first, but then my friend broke the system and told me exactly how to study for the daily quizzes and thus ended my struggle. After spending a butt load of cash and time on a course I didn’t take seriously, I got the units I needed to meet the California pathway 1.

The course ended Friday and Monday I made the move up to San Jose. Tuesday I started work. Rough weekend.