Category Archives: Accounting & Auditing

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Top 7 Reasons You Should Get into Accounting

 

By Morgan International Staff Writers

Thought accounting was boring? Here are out top seven reasons that’ll prove otherwise.

Getting qualified opens up a world of opportunities

Before J.P. Morgan went on to become one of the most famous figures in the world of finance, he started out as a junior accountant on Wall Street. And he is not alone; dig deeper into the world of accountancy and you’ll find there are many like Morgan who went on to achieve great things. In fact, whether you choose to stay in the accountancy field, set up your own business, or branch out in a completely different direction (like accountancy graduate turned best-selling author John Grisham), the consensus is that accountancy sets you up with skills for life and a vast range of opportunities.

Being a detective

Did you know, for example, that passing the CPA (Certified Public Accountant) exam is one of the areas of expertise considered essential for becoming an FBI agent in America? Thomas J Pickard, who reached the second highest position in the FBI, is a CPA, and used his skills to investigate white-collar crime along the way to reaching his prime position.

Meeting celebrities

Maybe you secretly wish to be a part of the entertainment world or rub shoulders with celebrities: finance and accountancy can still secure those dreams for you. Achieving Certified Management Accountant (CMA) status can be one way to enter a high-level accountancy or finance job in any domain. A CMA, for example, paved the way for Colin Kotchik’s appointment as Senior Finance Manager at Nike, which gave him the opportunity to meet Kobe Bryant (who was even nice enough to sign him a pair of his shoes for him). Monique Keshishian, on the other hand, used her CMA to become a Senior Financial Analyst at Warner Bros. Records, which means alongside putting together financial reports she’s also spent time in the studio with top name artists.

Aiming for the board

Indeed most audit / accountancy-related qualifications set you up for multitude of career avenues. Being a Certified Internal Auditor (CIA) is a profession whose skill sets are highly transferrable to other departments within an organization. That’s because the work of a CIA involves spending time working with people in various departments, getting to understand the risks and opportunities of each, and learning about company operations inside out. This broad knowledge can not only be useful for moving careers, but eventually can propel a CIA towards a board position.

CEO in sight

If taking your accountancy career further into the world of finance is your goal, Chartered Financial Analyst (CFA) is the qualification to look for. It’s widely regarded as the key certification for professionals in investment, especially when it comes to research and portfolio management. It is also your key to unlock careers in insurance companies, pension funds, banks, universities, or even governments (in the areas of public policy and regulation). A good percentage of CFAs also end up as chief executives.

Globally in demand

If you’ve got an eye on the future and your role as an accountant in it, the DipIFR stands out as a qualification that offers global opportunities. The certification is designed to give you the knowledge to apply International Financial Reporting Standards, the set of standards that are currently required or permitted for use by publicly-traded companies in more than 113 countries.

More popular than ever

Today it’s clear that the sky is the limit with accountancy careers, and there’s a wealth of qualifications available to get you started or further your career options. Earlier this year global exam results for ACCA (the Association of Chartered Certified Accountants) showed that a record number of students around the world had successfully completed their final exams. It seems that news is finally out that accountancy is one of the hottest, most versatile fields to be in.

Unsure about the right qualification for you? Contact our team today for a one-on-one career consultation session.

 

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What Every Auditor Needs to Know About Unusual Year-End Transactions

By Aimee Mhaolcraoibhe

Auditors are tasked with judging an entity and its overall environment; in order to do that they must hold an understanding of what relationships exist within the industry and businesses at large. An auditor will pay particular attention to unusual end of year transactions, including:

 

  • Unusual relationships between revenue and income should be noted, such as income or wages that are inconsistent with the yearly trend.

 

  • When looking at bad debt write offs or revenue streams, it pays to consider the industry standard and make note of any transaction that seems to be outside that range.

 

  • Any factors that create a misalignment between the sales volume and the production costs. These factors should be consistently in proportion to each other.

 

  • The responses given by the management of the business is watched closely by an auditor to determine whether any vague or inconsistent messages are being relayed. If a business shows signs of being dishonest or unduly quiet during an audit that can be taken as a red flag and auditors will usually look into those areas with a greater detail to determine why the business does not want to be forthright.

 

  • If there are a significant amount of transactions with any particular party that is outside of normal employees it is normally reviewed in full as it creates an unusual pattern.

 

  • If there are a high number of audit adjusted entries identified it is normally for the auditor to carefully review each related transaction.

 

  • If there are no internal controls or the implemented controls are quite weak an auditor will feel the need to delve further into the business affairs to ensure that it has all been done correctly.

 

  • Disputes over fees that are seen to occur regularly will spark the interest of any auditor.

 

In general, the auditor is highly capable of determining where an unusual transaction has occurred by taking into consideration the above points when they complete any audit.

For those of you who may be interested in an internal audit qualification, we would welcome you to take a look at the CIA course outlines.

References

Puncell L (2008), Audit Procedures, CCH Business and Economics

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Sharpen your skills with a Diploma in IFRS

 

By Morgan International Staff Writers

Perhaps the single most important development in the business world of the past decade – and one that will continue to impact the future – is the introduction and adoption of International Financial Reporting Standards (IFRS). Issued by the International Accounting Standards Board (IASB), these are the standards used by companies to prepare their annual financial statements. What began as a Europe-wide initiative soon spread to become a global phenomenon as the benefits to all of an international standardized financial reporting system became clear. At the same time, the increasingly globalized nature of world markets has added weight to the case for IFRS, with companies that conduct business in foreign markets being able to integrate their financial statements under the IFRS system.

 

To date around 120 nations permit or require IFRS for domestic listed companies, and the Middle East is among the regions where IFRS adoption has made major inroads. The worldwide take-up of IFRS is expected to continue growing, making it imperative for businesses to keep abreast of the latest developments. Crucially, though, this also means that those working in accountancy and finance have to be well versed in IFRS and its updates, too. To date workshops across the region have offered professionals a way to learn more about IFRS, but their short duration and ad hoc nature mean they fall short of providing a solid IFRS grounding that can be leveraged for career growth. This gap, though, is filled by the Diploma in International Financial Reporting (Dip IFR). This qualification can be completed in four to six months and demonstrates a superior insight into and knowledge (theoretical and practical) of IFRS as well as an adherence to high ethical standards.

 

The need for IFRS proficiency is especially relevant to finance and accountancy professionals across the Middle East. Because IFRS has been adopted by so many countries in the region, the ability to prove one’s credentials in this subject are essential to compete in the job market and demonstrate value in the workplace. Even in those countries where IFRS has not yet been adopted, working for a multinational will require all intercompany reporting to be done using IFRS, once again highlighting the importance of being fluent in IFRS regulations and procedures. For more information on Morgan International’s study program for the Dip IFR, click here.

 

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Cost Management Explained in 4 Simple Steps

 

By Aimee Mhaolcraoibhe

Cost Management is concentrated on how businesses use real resources with consideration as to how the resources can be best optimized. In this sense, the area of cost management can easily be referred to as resource provision, and is broken into four categories: planning, estimating, budgeting and controlling.

Planning

Making a complete list of all the money that needs to be set aside to fund the ongoing production or manufacturing and business operations is the first step in cost management, as well as budgeting what resources are available to cover all outgoings.

Estimating

Estimating the cost of future activities is part of cost management. There are different ways in which this can be accomplished and based on the amount of information that is known at the time of the calculation. Accountants will use either analogous estimating which uses the actual cost of past projects that are similar, or a parametric model can be used which would be updated constantly as new, specific costs arise. In time this will realize an accurate costing.

Budgeting

A budget will be a systematic calculation of the ongoing costs per a specific period in time, such as weekly and then monthly to form a budget that can be followed to ensure that there is enough money to cover all outgoings as they are presented.

Control

Ongoing monitoring of costs are constant in order to offer an opportunity to make adjustments where needed. Maintaining tight control over a budget is integral to cost accounting. The culmination of all work in the field will be borne in this aspect of the role.

For those of you who may be interested in a finance or accounting qualification, we would welcome you to take a look at the CMA, FP&A or CPA course outlines.

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Why Organizations Need CMAs

 

By Rebecca Langdon

We all know that the days of organizations surviving based on tactical decision making is over. Strategic decision making must be core within an organization if it is to prosper in today’s tumultuous and rapidly changing environment. The days of keeping some functions in the rhetorical basement are over. Teams such as marketing, accounting, HR, and operations, are now seen as having essential seats at the table when an organisation is strategizing. I believe that management accountants, particularly CMAs, are being seen increasingly as a key contributor to strategic decisions.

Why?

  1. The numbers don’t lie

I say this with some jest, as of course there are instances where numbers can be misleading. However the feasibility of all strategies is dependent on the cost model, i.e. what is it going to cost to implement, and what will the return be in the short, medium, and long term. A management accountant has the requisite skills to profile the costs associated with a strategy.

  1. Performance management

A key part of the CMA syllabus is performance management. This covers performance evaluation, variance analysis, and use of key performance indicators and balanced scorecards. CMA’s are trained to produce budgets and then measure deviations from those budgets. To ensure monetary control of strategies, budgeting and forecasting is of fundamental importance.

  1. Decision making

Another element of the CMA syllabus is decision analysis. This teaches the budding accountants to use financial data to perform analysis for the decision making process. This includes a number of tools and techniques which all contribute to strategic decisions, such as cost volume profit analysis, marginal analysis, make vs buy decisions, and pricing methodologies.

  1. Financing decisions

Many new strategies will require financing. This may be from internal funds, or perhaps a new funding round, or maybe a bank loan. There will be a piece of analysis that needs to be undertaken to ascertain which type of finance best suits the particular strategy. CMAs are trained to undertake this analysis, underpinned by the key concept of risk and return. They also have an operational understanding of short and long term financial management, in addition of the pros and cons of major financial instruments.

Summary

Above are just 4 of the reasons why qualified Management Accountants are so fundamental to the strategic decision making process within an organisation. There are of course many more. It is positive to see that there has been a seismic shift in the last decade in terms of how accountants are viewed and if you are interested in undertaking the CMA qualification, have a read through our website.

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Internal Audit: More Important Than Ever

 

By Morgan International Staff Writers

Now is a great time to be an internal auditor, and predictions are that the importance to business of this role is set to increase: salaries are on the rise, and internal auditors with certain specializations are increasingly sought after.

So what’s making this role so in demand? Internal audit has always been a vital function to business, helping to add value through its systematic approach to improving the areas of risk management, control and governance. But in recent years certain global events have given internal audit even greater importance. First there was the financial crisis, which sent shockwaves across the world and saw many businesses with long-established, solid reputations collapse overnight. Later, economies become mired in recession, a period that also saw a number of high profile fraud cases come to light: awareness of fraud risk to businesses became heightened and internal audit was under pressure to minimize this risk through strict controls. Throughout this volatile economic period, tighter regulatory frameworks were brought in with a view to setting businesses on a path with greater oversight and control – once again internal audit was in the hot seat to ensure businesses complied with new rules.

In short, the role of an internal auditor is evolving. And this need to manage risk better is making internal auditors (IAs) more strategic. Twenty-eight percent of executives in a Forbes Insights/EY study from earlier this year said that IAs currently play a strategic role, but more than half said that within the next two years they expect the role of “strategic advisor” to become the IAs’ primary mandate. Experts also predict that by the end of this decade the profession will have evolved further toward an increasing focus on risk management, governance, and technology issues. In the same Forbes Insights/Ey study, three of the top five emerging risks cited by executives related to IT. All this seems to fit with the results of a 2012 survey conducted by the Institute of Internal Auditors, that declared internal auditors specializing in information technology, fraud, and forensics to be particularly in demand.

With so much pressure to perform, businesses naturally look to internal auditors with the Certified Internal Auditor (CIA) designation as a reflection of competence in the principles and practices of internal auditing. Sponsored by the Institute of Internal Auditors (IIA), the CIA serves as the only internationally accepted designation for internal auditors worldwide. According to the IIA, the CIA is enduring because it requires candidates to master the ability to identify risks, examine alternative remedies, and prescribe the best initiatives to control these risks. In the words of John J. Fernandes, CIA, Executive Vice President and Chief Operating Officer of The Institute of Internal Auditors: “CIAs master auditing standards and practices as well as management principles and controls, information technology, and emerging strategies to improve business and government.”

Do you want to get certified? Find out about Morgan's CIA Exam Preparation here.

 

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Gain and Maintain the CPA Credential

 

By Rebecca Langdon

There is global demand for candidates with the CPA qualification, and perhaps you are reading this because you have decided you want to become a qualified Accountant. The eligibility requirements to undertake the CPA exams differ between US states and territories; therefore the best thing to do is take our quick and easy eligibility questionnaire.

Once you are ready to start studying for your exam, you can contact Morgan who will be pleased to use their extensive experience to increase your chances of passing first time.

Once you have passed the exam you will want to earn your CPA accreditation, and to do that there are specific work experience requirements that also vary by state. For more information, click here. Once you have successfully achieved your accreditation there will be state specific requirements to maintain the accreditation. Again you should research the exact requirement, but it will involve gaining a certain number of CPE credits.

The good news is that whilst some of the eligibility and maintenance requirements may seem a little confusing at first, Morgan is on hand to help you every step of the way. We also offer Morgan alumni who have passed their exams the opportunity to access Morgan Connect free of charge. Morgan Connect is a cutting edge online platform which provides a way for globally reputed employers to find qualified employees (such as yourself). For more information, please don’t hesitate to get in contact with us.

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10 Things an Auditor Will Need for an Initial Audit

 

By Aimee Mhaolcraoibhe

If your business is going into an audit it is important to have as much information to hand as possible. Of the necessities any auditor will expect to review during the course of the audit are:

  1. General ledger.
  2. This may seem obvious but it is exactly where the auditor starts to determine what all they will need to review.
  3. Trial Balance.
  4. The trial balance can be presented in Excel or represented through the accounting program, such as QuickBooks.
  5. Hard copies of all loans, contracts or leases that show company debt and outgoings.
  6. If there are any loans outstanding, full copies of the statements of each loan will be required.
  7. A schedule of depreciation for all assets.
  8. A copy of every employment contract, merger agreements and articles of incorporation.
  9. A copy of all bank statements with a list of all bank accounts and signatories.
  10. The name of the business solicitor and their contact details.
  11. If there has been any stock issued by the company a register of all the stock trades and ownership of current stock will also be required.

Basically speaking, if you are hit with an audit you must be prepared to show written proof of all incoming and outgoing for the business on an up to date term as well as physical proof to back up the ledger that you have provided which was created between your bookkeeper and your accountant.

Having contact details on hand for any person that may be necessary in the audit including the accountant, bookkeeper, owner and manager would be a good way to ensure that the auditor is able to intake all that they need to in one meeting. The last thing you want is a repeated visit!

This article has only given the high level details of each of item, and for more information you might consider undertaking a professional qualification such as the CIA program.

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Why organizations need CMAs

 

By Rebecca Langdon

We all know that the days of organizations surviving based on tactical decision-making is over. Strategic decision making must be core within an organization if it is to prosper in today’s tumultuous and rapidly changing environment. The days of keeping some functions in the rhetorical basement are over. Teams such as marketing, accounting, HR, and operations, are now seen as having essential seats at the table when an organisation is strategizing. I believe that management accountants, particularly CMAs, are being seen increasingly as a key contributor to strategic decisions.

Why?

  1. The numbers don’t lie

I say this with some jest, as of course there are instances where numbers can be misleading. However the feasibility of all strategies is dependent on the cost model, i.e. what is it going to cost to implement, and what will the return be in the short, medium, and long term. A management accountant has the requisite skills to profile the costs associated with a strategy.

  1. Performance management

A key part of the CMA syllabus is performance management. This covers performance evaluation, variance analysis, and use of key performance indicators and balanced scorecards. CMA’s are trained to produce budgets and then measure deviations from those budgets. To ensure monetary control of strategies, budgeting and forecasting is of fundamental importance.

  1. Decision making

Another element of the CMA syllabus is decision analysis. This teaches the budding accountants to use financial data to perform analysis for the decision making process. This includes a number of tools and techniques which all contribute to strategic decisions, such as cost volume profit analysis, marginal analysis, make vs buy decisions, and pricing methodologies.

  1. Financing decisions

Many new strategies will require financing. This may be from internal funds, or perhaps a new funding round, or maybe a bank loan. There will be a piece of analysis that needs to be undertaken to ascertain which type of finance best suits the particular strategy. CMAs are trained to undertake this analysis, underpinned by the key concept of risk and return. They also have an operational understanding of short and long term financial management, in addition of the pros and cons of major financial instruments.

Summary

Above are just 4 of the reasons why CMA qualified professionals are so fundamental to the strategic decision making process within an organisation. There are of course many more. It is positive to see that there has been a seismic shift in the last decade in terms of how accountants are viewed and if you are interested in undertaking the CMA qualification, have a read through the content here.

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CPA vs. CMA: Which One’s For You?

The two professional designations CPA (Certified Professional Accountant) and CMA (Certified Management Accountant) both offer a route to higher earnings and a career path with great prospects, so knowing which one to pursue can feel confusing. While they share some things in common, they are also quite different – read on to find out what sets them apart and which one could be right for you.

Who’s who

CPA is a globally recognized certification to practice public accounting and auditing but is licensed by US state boards of accountancy. Students from abroad generally choose which US state they want to apply through, and each state has its own requirements to meet. The CPA is an in-demand certification in the accountancy field.

CMA is a global credential, which indicates that its holder is versed in areas such as financial planning and analysis, cost accounting, budgeting and forecasting, and financial reporting. Generally it distinguishes professionals with a finance and accounting background as suitable for positions such as financial, business or systems analyst.

Similar, but…

What the two designations have in common is both involve passing a series of exams, as well as requiring the completion of educational and professional experience.

The CPA consists of an exam in four parts - Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG) - all of which must be passed for success. In total they represent 14 hours of testing and must all be taken within an 18-month timeframe after taking and passing the first part.

The CMA is a two-part exam spread over eight hours and all parts must be taken within three years of joining the CMA Program. Although at least two years of professional experience in management accounting or financial management are required, you can sit the exam prior to satisfying these requirements. Proof of work experience must be provided before CMA certification is granted, though.

What’s your background?

To qualify for the CMA a bachelor’s degree is required. This makes it somewhat of an easier option to those who have a background in finance, marketing or economics but who don’t meet the CPA requirement of a substantial number of accounting hours/courses needed to sit the exam. Most US states require a total of 120 credits hours to be able to sit for the exam, or 150 hours of coursework to obtain the license (in addition to a bachelor's degree).

How easy is it to pass?

In the Middle East the CPA has an approximate pass rate of 40% depending on the section taken (the FAR and REG sections have a pass rate slightly above that). Globally the 2014 pass rates for CPA ranged from 46.35% for AUD up to 55.46% for BEC.

CPA pass rates may sound disheartening but they’re actually much higher than those for CMA. According to the Institute of Certified Management Accountants, pass rates for the CMA in the Middle East and Africa were 21% for Part 1 and 37% for Part 2 in 2014. That compares with a respective pass rate of 35% and 49% globally over the same period.

How will certification boost your earnings?

If you are wondering whether the investment of pursuing CPA accreditation is worth it, one answer lies in the salary expectations. Research shows that professionally certified accountants can expect to earn anything from 5% to 15% more than uncertified accountants. A newly qualified finance accountant in the UAE can expect a basic salary of around US$5,000 per month, according to Morgan McKinley.

Following two comprehensive surveys in 2010 and 2012 of current and prospective CMAs in the Middle East, the IMA revealed some interesting figures. Firstly, it noted that annual basic salaries for CMAs had risen by 77% since 2010. The median annual basic salary came in at US$21,250 in 2012, but with a wide disparity when looked at on a country by country basis. In the UAE, for example, this salary had an average of US$57,500, while in Egypt the average salary was US$6,610. Putting geography aside, perhaps the most eye-catching piece of information is that CMAs earn 50% more in salary than non-CMAs. According to the report, “the benefits of CMA certification can be very substantial” and “the difference in pay between CMAs and non-CMAs is even more striking when work experience is considered”.

Which is more popular?

Just a look at the numbers will indicate that CMAs are much rarer than CPAs: there are 50,000 CMAs worldwide, a small drop in the ocean compared to the more than 300,000 CPAs in the United States alone. But the accreditation should not be looked at in terms of popularity, as either of the two signifies that its title holder is distinguished in his or her field. Whichever you choose, you can be sure you are pursuing a certification that opens up growing opportunities in professional fields that are increasingly in demand.

Still not sure which one's for you? Schedule your free one-on-one consultation session to find out!