Sally's Blog

Eight jokes about accountants

Earlier this year, I asked my Twitter followers to share their best jokes about accountants. So here goes…

1. What’s the definition of an actuary? A person who found accountancy too exciting! @DerekBoughton 

My verdict: Well worn, but still prompts a giggle when you haven’t heard it for a while.

2. Accountants don’t die – they just lose their balance. @jwgn

My verdict: This one is dry and I rather like it.

3. How many accountants does it take to change a light bulb? Well, the management accountant is needed to work out the cost/profit ratio. The financial accountant needs to agree the purchase order. The procurement accountant surveys the market for the cheapest offer. The treasury accountant takes money off deposit to procure the bulb. The bought ledger accountant remits payment to the supplier. And the internal auditor checks that there has been no fraud or bribery. But none of the above changes the light bulb because they have not been trained to. The chief operating officer does it instead. ‏‪@VatDaddy

My verdict: It’s a long joke but it’s definitely worth it when you get to the end.

4. How do you spot an extrovert accountant? She’s staring at your shoes, not hers. @jwgn

My verdict: Yes, it’s a cliché but is there some truth in it somewhere?

5. “It was like riding a tiger, not knowing how to get off without being eaten.” Quote from Ramalinga Raju, former chairman of Indian IT company Satyam, where an accounting scandal erupted in 2009. @MichaelJRWhite

My verdict: OK, so it’s not a joke exactly but it’s amusing nevertheless.

6. Why did the auditor cross the road? Because he did it last year. @WayneT_Derby

My verdict: Simple, but effective.

7. The Eiffel Tower is the Empire State Building after taxes. @jwgn

 My verdict: That’s one way of putting it.

8. I say, I say, I say: what’s a Big Four partner’s favourite wine?

In a whiny voice: “We don’t all get average profit per partner, you know.” @TruenFairview 

My verdict: Oh, don’t we know it!

What do you need to know about Twitter?

This morning I attended a briefing by Bruce Daisley, UK managing director of Twitter (a privilege of belonging to the British Society of Magazine Editors – hurrah!)

He made quite a few interesting points, a lot of which were targeted at his audience of – you’ve guessed it, magazine editors – but many of which equally relate to how businesses and accountancy firms use Twitter.

Twitter is generally seen to have three purposes – to facilitate human interaction, to enable self-expression and to support content discovery. It’s this latter purpose that is most important.

Daisley described Twitter as a “bridge to other media”. So don’t use Twitter to tell people what you had for breakfast; use it to point them in the direction of interesting material that you have found elsewhere on the web. And make sure your voice is authentic. The people who are most successful on Twitter understand how to be three-dimensional ie they convey their professional expertise while being true to their own personality.

The kinds of themes that go down well on Twitter include sport (hmm, possibly a bit tricky for accountancy firms to cover off), music and basically anything that sparks a passion in people. So not tax returns, then? Er…… probably not. Although your followers would probably have plenty to say about tax rises / cuts should we get one. But if you can somehow combine tax and accounting with sport or music, well…

Humour apparently performs well on Twitter, too. So it’s time to churn out those accountant jokes … Anyone know any? Please tweet me if you do and I’ll get a list going and publish it on my blog.

Daisley also revealed that ‘moments’ are one of the biggest drivers of Twitter. It’s all about being in the here and now because the ‘moment’ quickly passes.

Ever wondered about whether it’s best to ‘own’ your own Twitter conversation with the use of hashtag or whether it’s preferable to jump into other people’s conversations? Well, Daisley said that if you’re a celebrity or you have a unique story to tell, you can get away with owning your own conversation. The rest of us are probably best off trying to jump on the bandwagon of existing hashtags as much as we can.

Then there’s the issue of trolls. Should you ever be bothered by them, what should you do? Daisley’s advice is to ignore them. You can also make use of Twitter’s reporting system in the event you are showered with foul remarks. “Retweeting abuse,” said Daisley, “is just about the worst thing you can do.”

Finally, Daisley emphasised the importance of picking one social medium and using it really effectively. He pointed out that it’s hard to be effective across lots of different platforms at once.

Isn’t auditor rotation a matter of common sense?

Having never been an auditor, I must confess upfront that I don’t have the slightest idea of the ins and outs of conducting an audit. I can imagine, however, that it does involve significant cost and effort on the part of the both the auditor and the company when an audit changes hands.

From the auditor’s point of view, there is an awful lot to get your head around. From the company’s point of view, it’s a bit like a new joiner coming into your department – except there are loads of them all at once – eager, bright people buzzing around the office, poking into your affairs – and, scarily, they wield a certain power over you because you don’t always know what they will uncover and they are the ones who are responsible for assuring the outside world that your finances are just as you say they are. On that basis, you can’t blame most parties for being rather happy with the status quo at present.

Recently I researched an article on mandatory auditor rotation and a theme that frequently came up was ‘there’s no proof of quality’. Well, of course there’s no proof of quality. Few countries have followed auditor rotation policies for any length of time with the exception of Italy so the amount of research done on the topic is limited. But we are all familiar with the adage ‘familiarity breeds contempt’. Many of us will also know the management concept that what you do in the first 90 days in a new job is vital since it gives you the opportunity to make important changes. I certainly know from my own experience that when I’ve started a new job or joined a committee, the benefits that I brought when I came in with a fresh pair of eyes were considerable. As time goes on, it is easier for us to become complacent – in fact, I would say that it is almost inevitable that we will become complacent to some extent.

That’s why I believe that despite the cost and hassle involved, there must be sound benefits to mandatory auditor rotation. It seems common sense to me that changing auditors regularly should keep companies on their toes. I would be very interested to hear from experienced auditors about what they tend to discover when they take on new audits – typically, is everything as it should be or do some nasty surprises crop up? I’m not saying that auditors don’t do a good job now; I’m just saying that mandatory auditor rotation might enable them to do an even better job in future.

 

Where do we go from here?

This week I had the good fortune to attend an Association of Corporate Treasurers dinner that was addressed by the Archbishop of Canterbury. As you may already know, the Most Reverend Justin Welby was a corporate treasurer before he gave up the world of bankers and bonds to train for the Anglican priesthood in 1987. He remains a member of the ACT, however, and acts as its ethical adviser.

Prior to the dinner, I was chatting to a banker from a well-known bank about the Archbishop and explaining that he would be speaking at the event. “Is he the one who doesn’t like bankers?” asked the banker somewhat suspiciously (and somewhat surprisingly considering the number of people in the world who purport to dislike bankers at present exceeds one by some margin).

“I don’t think it’s the case that he doesn’t like them,” I responded cautiously. “I think he just thinks they should have a…”

“Moral conscience,” the treasurer standing next to me interjected helpfully.

“Yes, that’s right!” I agreed brightly. But when I looked at the banker, I saw that his eyes had glazed over at the words “moral conscience”. Either he was sick of banker bashing (who could blame him, I suppose?) or he had no idea what a “moral conscience” meant. The Archbishop’s words, I feared, were going to fall on deaf ears.

With life returning to the City at last, I can’t help wondering where we will go from here. Have we really learned anything from the banking crisis or will the unpleasant blip that has been the past five years soon become a distant memory – rather like a fleeting infidelity in a fifty-year marriage? Once the bonuses start rolling again, will morals even matter or will it all boil down to money – just as it did before?

During his speech, the Archbishop praised the City for working to recover its reputation under some “inspired leadership” but he also called on the financial professionals present to use their talents to make a difference in the world. The financial sector is filled with outstanding people so I hope that at least some of the 1,000 odd individuals in the room heeded his message. Even if you earn a six-figure salary – as Welby himself did back in the eighties – you can still have a moral conscience. But you do need to do something to prove it.

The tragedy of Tenon

Over the years I have written a number of articles about Tenon  (later re-branded to RSM Tenon following its ill-fated merger with RSM Bentley Jennison). It has always attracted considerable interest from both within the profession and outside due to its bold acquisition strategy and listed, corporate structure, which differentiated it from most other accountancy firms.

My first encounter with Tenon was shortly after I joined Accountancy magazine in 2006. At that time, its chief executive Andy Raynor had helped to set the firm on a steady path after its rocky first few years in existence. Between then and its £76m merger with Bentley Jennison at the start of 2010, it seemed to go from strength to strength. The firm made profits, undertook some sensible (small) acquisitions and had a generally positive aura about it that was encapsulated in its advertising slogan: “Tenon is flying high”. It based its strong brand identity on meeting the needs of its entrepreneurial client base and its confidence and boldness made a refreshing change in a profession that tends to be cautious and conservative. It impressed me, and I think, many others.

But, as we all know, the Bentley Jennison merger changed everything. Financially, it stretched Tenon to the limit and costs were not stripped out of the enlarged business fast enough. The cultures of the two firms were different, people were not absorbed in the way they should have been and Tenon started to lose its entrepreneurial identity. The firm plunged to a full-year loss of £88.7m for the year ending 30 June 2012, up from a marginal profit the previous year. Raynor resigned in January 2012 after the extent of Tenon’s financial problems became public and was later replaced by Chris Merry, who has never seemed anything other than caretaker chief executive.

From the moment Raynor left, the writing has been on the wall for the beleaguered firm. The question has not been so much IF the firm would be sold but WHEN it would be sold (provided that someone was minded to buy it, a consideration that could by no means be taken for granted.) The firm has haemorrhaged people (which is a disaster in professional services) and, with them, clients. For a while now, its banker Lloyds has essentially been calling the shots.

The tragedy for me is that the demise of Tenon means that the profession has lost a firm that dared to do things differently and challenge the status quo. It was a listed company when other firms are partnerships. It undertook an ambitious merger virtually at the height of the financial crisis. It had quirky and innovative branding. It saw itself as a business rather than a professional services firm. It had vision and ambition. And in Raynor, it had a chief executive with a great passion for what he did.

But the problem was that the vision got lost in the ambition and the execution. Ultimately, the firm relied too much on buying other practices and too little on organic growth. And Bentley Jennison was just one big step too far. It doesn’t hurt to remember that there is lot to be said for organic growth in business, no matter how unsexy it seems. It is usually a sign that you are doing the basics well.

I hope that other firms can take something positive from Tenon despite the fact the firm has been pushed into administration and Baker Tilly is snapping up its trading businesses in a pre-packaged deal. Not everything about Tenon was flawed – far from it, in fact – and it is my belief that its spirit will live on in some of the smaller and more innovative accountancy firms that are active in the market place today.

Tenon may soon be gone, but it will not be forgotten.

Don’t blame the companies

The global financial crisis and the five years that have followed it have prompted much soul searching about the true purpose of companies. This is a result of the economic suffering that has been inflicted on the world by a number of reckless banks along with the extreme tax planning practices of some well-known multinationals.

Taxpayer bailouts of financial institutions have served to emphasise the close relationship that exists between business and society. And while most businesses do not have the luxury of being able to count on the state as a safety net if they fail to manage themselves properly, they still rely on taxpayer-funded governments to maintain the peace, prosperity and infrastructure of the countries in which they are based. They are also taxpayers themselves in most cases.

Hence the idea that a business can just go about its business, minding its own business, as it were, has become rather out-dated. As has the notion that companies only exist to make profits from selling goods and services. Nowadays, companies are expected to contribute to the communities in which they belong – not only financially through paying rates and taxes, but environmentally and socially as well. And this isn’t just the contention of left-wing pressure groups and green campaigners; a paper published by the ICAEW in April boldly argued that: “generating profits and shareholder value is not in itself a sufficient business purpose for a company”.

This, of course, begs the question as to what exactly would be considered “a sufficient business purpose” and it’s not one that the ICAEW paper really answers. The reality is that virtually all businesses have started with someone somewhere either having a very good idea and deciding to pursue it or – less romantically, but probably more common – being left with no choice but to start up their own enterprise or see their house repossessed. Most companies begin life with a simple objective: to be a source of income for their proprietors. That is their raison d’être. Of course, that doesn’t mean to say that as they grow and as their base of shareholders expands, they don’t acquire other responsibilities. But their basic purpose remains the same: to make money.

So how far can we impose what are essentially moral obligations on a legal structure that exists to make financial returns? I would hazard that for most organisations, the lofty principles espoused in their annual reports are patchily applied in practice – particularly if they come in to conflict with profit making. The swathes of redundancies that have taken place over the past few years are an example of this. Surely the greatest social act that a company can perform is to employ people? And while some companies have had to drastically reduce their cost bases to survive, others have used the recession as a convenient excuse to get their employees to do more with less, thus increasing their profitability at the expense of society. Do their shareholders complain about this? Not if they’re getting generous dividends.

When a company has a hoard of hungry shareholders to satisfy (us, in other words), it is extremely difficult for it to be anything other than the consummate selfish beast. So although it may flounce around in corporate social responsibility clothing from time to time, it is difficult to see whether the economic downturn can really have the effect of permanently changing that company’s culture. Perhaps it is not the true purpose of companies that we should be questioning in any case, but the real objectives of shareholders. Do we think that companies exist to generate profits and shareholder value or do they have a wider role to play as the bedrock of our economy and society? Ultimately, if boards believe that financial returns are all that matter to us, then we will get the companies – and the world – that we deserve.

Contact

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