Letter of the month: Experience vs 'how much I know'
Perhaps we are all too familiar with the words 'experience'. In a fairly practical profession such as accounting, how much experience someone possesses is virtually what he / she is potentially worth in the job market.
I am no different from many other people, I went through the very difficult stage of securing my first accounting job not long ago. After changing a couple of jobs in the past few years, I discovered, with disbelief, how magical and powerful that little bit of experience is on my resume.
During the process of moving jobs, from suburban firms to CBD firms, from a small sole-trader practice to middle-sized, well-structured firms, I have been fortunate to get to know quite a few very experienced accountants. Quite often I heard an introduction to a client like this: 'I am a qualified accountant with more than 20 years' experience.'
Yet the experiences of working shoulder to shoulder with these accountants has been rather disappointing. Some of them are in the position of mentoring and training me, yet they've not bothered to update their knowledge for more than 10 years. They struggle to keep pace with the fast-changing regulations and rulings. And not surprisingly, they struggle to provide satisfactory answers to clients' questions, let alone to add value to clients' businesses.
I started to ponder the powerful word 'experience' with unease. I wonder what the industry can do to change the preposterous trend, so that when people boast about their long professional experience, they should also ask themselves: 'How much do I know?'
Jessie Brauer ASA
Brisbane
What's to be done about the skills crisis?
As a CPA with over 20 years' experience in public practice I wonder what fellow members views are of the so called 'skills crisis'. I am aware that there is little CPA Australia can do to rectify the problem but, nevertheless, I do think CPA Australia should sponsor some competent research into whether the concerns I am about to raise have any basis in fact. Some pointers for reflection include:
Accountancy as a career is not only becoming less attractive to school leavers, but public practice is increasingly failing to draw its share of the falling numbers.
Generation Y's work ethic is creating a dumbing down of tax knowledge in public practice. By this I mean younger graduates are much more likely to view tax as just a job, not a passion for knowledge or excellence. As a result they read less outside of work and often hold a depth of knowledge well below what was considered not only competent but the 'norm' only 10 or 15 years ago.
The error rate, poor tax planning and omissions occurring in public practice is rapidly rising as firms struggle to find, recruit, train and hold competent staff.
Retiring CPAs are increasingly being forced to sell their practices to accountants with worryingly limited public practice and / or tax experience.
Accountants with good public practice skills and a comprehensive knowledge of tax law often earn a lot more than comparably skilled accountants working for wages in commerce. Younger accountants, however, are often reluctant to wait, learn and train for these higher incomes.
The above are not comfortable issues. But they do deserve some exposure and discussion.
Robert Lopez CPA
Via email
Banks put fear of God into borrowers
Thank you for the illuminating article on the technical perspectives of Islamic banking (Asian edition of INTHEBLACK November 2007). Despite their religious name and the hype, these instruments are not fundamentally new but a mere tweaking of conventional banking. In doing this, banks are no longer clear on their roles. I believe, in most cases, the consumers are worse off.
For example, in a wadiah saving account, the return is not guaranteed; instead a gift is offered. A gift is at the bank's discretion, while interest is legally binding. The bank has taken the benefits of the risk-sharing principle but conveniently left it to competitive market forces (or maybe fear of God) to make sure a gift is offered. Further, with the investment account, the banks share the profit but take none of the losses. I fail to see any risk sharing here.
More dangerously, the tweaking of names and terms causes ambiguity. For example, in a murabaha financing for a home, the bank 'sells' a $300,000 house for $500,000, to be paid over a period of 25 years. If in a few years, the 'borrower' wants to repay the 'loan' in full, the bank can insist that the 'buyer' pay up the full sale price of $500,000.
Luckily for that consumer, the judge decided that the transaction was a 'loan' in spirit rather than a sale and purchase agreement.
Along the way, the concepts of debt and equity are also muddled up. By definition, debt is making money from money. Equity is sharing risks to make money. If making money from money is prohibited in Islam and risk sharing is important, then Islamic banking is an oxymoron. To follow the principles to the 'T', there should only be Islamic investment in halal businesses.
So, the only true blue Islamic product is musharakah financing, where risk and rewards are shared. Unfortunately, most banks are woefully unequipped to deal with these. To be successful, the banks need to be involved in the operations of the invested company and have deep understanding of every industry they are investing in.
Banks should be more genuine in redesigning their Islamic offerings. Quit using names to pull wool over eager consumers' eyes. Many small businesses are crying out for funds they cannot get from conservative banks. Islamic financing could go a lot further in designing risk sharing instruments rather than merely mimicking conventional banking.
Kit Chung CPA
Kuala Lumpur
Inaction not realistic
The change of federal government last year after 11 years of almost complete disregard for global warming, its effects and what can and should be done about it was signalled well ahead of time (as was the last rise in interest rates). But not a word about it or its effects appears in the INTHEBLACK December issue (due to its long lead times).
No printed publication can print as fact what has not happened, but look at pages 78-79 (A glimpse into CPAs' summer reading), there's no indication that CPAs are doing anything to keep up with global warming and its potential (and real) effects on the economy and business.
The new government has ratified the Kyoto Protocol and attended the world Bali climate change conference. What is CPA Australia doing to help members understand the questions top management may shoot at its CPA advisers? Lots of us have to take urgent catch up action. Perhaps the first thing is to gain a basic understanding of the problem and why it is becoming so urgent.
The most concise help available is probably Robert Henson's The rough guide to climate change. In spite of its off-putting title and being published in September 2006, it is probably the best concise way our members can catch up with the subject and get to understand that inaction is not a realistic option.
Nat B. Wheatley
Graceville Qld
Gavan Ord, CPA Australia's business policy adviser replies:
Being involved in shaping the development of government policies that tackle climate change and encourage sustainable business practices is a key focus for CPA Australia.We have made at least a dozen submissions to the government since 2004 on climate change policy and business sustainability, and we expect this contribution to escalate this year.
Assisting members understand how climate change and sustainability impact on their business is also a key focus area. In addition to having a section on cpaaustralia.com.au dedicated to triple bottom line reporting, CPA Australia recently published an issue paper explaining the proposed Australian emissions trading scheme and complementary policies. We plan to release further information papers on other climate change and sustainability over the remainder of 2008.
We have also been assisting members through events and seminars such as the recent Business implications of climate change conference. We will continue to assist members increase their understanding of the business implications of climate change and sustainability through information papers, seminars and conferences.
CPA Australia is finalising the development of a half-day professional learning product titled 'Introduction to sustainability'. This covers, among a range of topics, the nature, scope and implications for accountants arising out of the enactment of the National Greenhouse and Energy Reporting Act, along with a detailed review of the Global reporting initiative, which is now positioned as the leading framework for comprehensive disclosure of the environmental and social performance of business.
Throughout 2008, CPA Australia will release the details of extensive research examining the role and state of preparedness of accountants and accounting information in the development of sustainable business practices and strategic decision making. Complementary to this research will be the development and release of a series of position papers exploring the divide between financial and non-financial information and how each might respectively develop to better capture the full scope of business performance and risk.
Editor responds:
We have run many articles on the environment, CSR and the triple bottom line and their importance to business and the profession. In the last year the topic has been well-represented: 'Welcome to the climate economy' and 'Finance goes green' (September 07), and 'Ensuring creditability' (November 07), to name a few. You will note that this issue carries a feature on how businesses can calculate their carbon footprint, and there are more articles in the pipeline for future issues.
Visit the CPA Australia's president blog to discuss topics with the president and other members.
Care to comment on any business or accounting issue, or want to let us know what you think of INTHEBLACK? Send your feedback to INTHEBLACK.inbasket@itechne.com.
Letters should be kept to fewer than 250 words, and may be edited for length and style.
Reference: March 2008, volume 78:02, p. 10-11
