"Deferred Compensation Structure"
The big four accounting firms operate under a deferred compensation structure where the large chunk of your compensation is not paid in cash as a year end bonus, but rather the compensation comes in the form of a balloon raise upon making partner, and an outstanding pension program.
Once you make partner, you can expect more than a 100% raise. Typical partners in my office, and practice, start at a salary of $350, which is a 133% raise from a typical senior manager's salary of $150. Further, the partnership provides all partners a defined benefit pension plan, where the benefits paid are a certain percentage of your three highest year's salary. For example, I have heard of retired partners earning 40% of the average of their three highest year's compensation, which was $2,000. They get to take home $800 a year for the rest of their lives. What is the value of a guaranteed $800/yr annuity beginning at age 55? What kind of banker or trader get's that kind of deal?
The true compensation and profits in accounting accrue to the partners of the firms over time. If you are not planning on staying at the firm for the long run, all of the earnings you are working for are accruing to the firm, and you wont realize any of them. Decide sooner rather than later if you want to stick it out; otherwise you are being squeezed for your profits in the partner's pyramid business model.
Friday, June 7, 2013
Day in the Life of a Big 4 Auditor
So I've decided to document a 'day in the life' of a senior associate in at a Big 4 firm during a typical day in busy season. Days are typically filled with a ridiculous amount of noise from conference calls on speaker phone, speed walking through the office to collect documents and speak with client executives, and, very often, trips back and forth from the client to the firm's headquarters to speak with partners and senior managers. The audit room is often as hectic as a trading floor, except its full of accountants.
7:30am Wake up
8:30am Leave For Work
8:50am Arrive at the client's conference room
8:50-9am Get Set Up
-Boot up computer, get a cup of coffee from the kitchen. Maybe eat the bagel you picked up on your way to work.
9-12pm Audit
-Open up email and check for the status update from the India staff who have been working on your work-papers all night, per your instructions last night.
-Get on call with India and briefly walk through the work performed before it gets too late in Mumbai and they go home.
-Check in with the staff on the team and ensure they are actually doing the work you need them to do, assess staff's mental stability
-Coordinate the conference call with the audit manager, the firm's valuation team and the client's Middle Office VP to discuss a valuation difference on the one of the sample swaption positions.
-Write a memo explaining, in 'auditing speak', the resolution to the swaption valuation difference for the audit files.
-Answer the staff's questions on how to prepare the work you assigned him, explain high level concepts and how the client's business works so the ridiculous detail excel file he is staring at all day makes sense and is in perspective.
-Respond to the manager's constant questions and 'review comments'. This is probably the most frustrating part of the job. You honestly can't get any work real work done as long as the manager or senior manager is in the conference room. Your job is to be their bitch, and answer all of their questions. You'll have all night to finish the actual work..
12-12:30pm Lunch
-Run out of the building and grab a sandwich or a salad
-Eat at the conference table as a team, pretend to work, read the news, desperately search job boards, send out job applications.
-Review financial statements, provide comments, discuss issues with managers. Copy,paste and consolidate the Partner's, Managers' and your own comments on the financials onto a single copy.
-Review the staff's work papers
12:30-6pm Audit More!
-The afternoon is where things get most intense. This is when most client meetings are scheduled, when managers typically have to leave for other meetings and are trying to squeeze in all the work they didn't finish earlier.
-Often lunch is delayed to the later afternoon, and dinner delayed to 7 or 8pm due to meetings scheduled in the early afternoon.
6-6:30pm Dinner
-Instant message your staff back with your dinner selection, and anxoiusly await the delivery man
- Grab your dinner from the bag the Staff just retrieved from the front desk at the building
-Eat at the conference table, read more news, facebook, gmail
6:30-11pm Audit Even More!
- After dinner is when the real work gets done.
-'Tick and Tie' audit work-papers to third party supporting statements. This process involves matching numbers between a 'external document', such as a bank statement, to the clients accounting records, such as a bank reconciliation. It is tedious, mind-numbing, soul-crushing, and 99% of what auditing is.
-Luckily, the big firms have teams of people in India who can perform this work for us, while we sleep. Our only responsibility is to write detailed instructions via email, and review the finished product.
-Write detailed instructions to our Indian team members on how to perform the tie-outs we need performed for the next morning.
11-11:15pm Cab ride home
11:15pm-12am Get ready for bed, some TV or reading, maybe chat with the roommate
12-7:30am Sleep
7:30am Wake up
8:30am Leave For Work
8:50am Arrive at the client's conference room
8:50-9am Get Set Up
-Boot up computer, get a cup of coffee from the kitchen. Maybe eat the bagel you picked up on your way to work.
9-12pm Audit
-Open up email and check for the status update from the India staff who have been working on your work-papers all night, per your instructions last night.
-Get on call with India and briefly walk through the work performed before it gets too late in Mumbai and they go home.
-Check in with the staff on the team and ensure they are actually doing the work you need them to do, assess staff's mental stability
-Coordinate the conference call with the audit manager, the firm's valuation team and the client's Middle Office VP to discuss a valuation difference on the one of the sample swaption positions.
-Write a memo explaining, in 'auditing speak', the resolution to the swaption valuation difference for the audit files.
-Answer the staff's questions on how to prepare the work you assigned him, explain high level concepts and how the client's business works so the ridiculous detail excel file he is staring at all day makes sense and is in perspective.
-Respond to the manager's constant questions and 'review comments'. This is probably the most frustrating part of the job. You honestly can't get any work real work done as long as the manager or senior manager is in the conference room. Your job is to be their bitch, and answer all of their questions. You'll have all night to finish the actual work..
12-12:30pm Lunch
-Run out of the building and grab a sandwich or a salad
-Eat at the conference table as a team, pretend to work, read the news, desperately search job boards, send out job applications.
-Review financial statements, provide comments, discuss issues with managers. Copy,paste and consolidate the Partner's, Managers' and your own comments on the financials onto a single copy.
-Review the staff's work papers
12:30-6pm Audit More!
-The afternoon is where things get most intense. This is when most client meetings are scheduled, when managers typically have to leave for other meetings and are trying to squeeze in all the work they didn't finish earlier.
-Often lunch is delayed to the later afternoon, and dinner delayed to 7 or 8pm due to meetings scheduled in the early afternoon.
6-6:30pm Dinner
-Instant message your staff back with your dinner selection, and anxoiusly await the delivery man
- Grab your dinner from the bag the Staff just retrieved from the front desk at the building
-Eat at the conference table, read more news, facebook, gmail
6:30-11pm Audit Even More!
- After dinner is when the real work gets done.
-'Tick and Tie' audit work-papers to third party supporting statements. This process involves matching numbers between a 'external document', such as a bank statement, to the clients accounting records, such as a bank reconciliation. It is tedious, mind-numbing, soul-crushing, and 99% of what auditing is.
-Luckily, the big firms have teams of people in India who can perform this work for us, while we sleep. Our only responsibility is to write detailed instructions via email, and review the finished product.
-Write detailed instructions to our Indian team members on how to perform the tie-outs we need performed for the next morning.
11-11:15pm Cab ride home
11:15pm-12am Get ready for bed, some TV or reading, maybe chat with the roommate
12-7:30am Sleep
Self Improvement
Self improvement is a illogical process. It implies that you are not good enough, it implies that you are trying to change the way you are perceived in order to gain acceptance from others.
“No amount of self-improvement can make up for any lack of self-acceptance.”- Robert Holden
"If you are not happy with yourself, even the loftiest achievements won't bring you much satisfaction."- Ben Bernanke
“No amount of self-improvement can make up for any lack of self-acceptance.”- Robert Holden
"If you are not happy with yourself, even the loftiest achievements won't bring you much satisfaction."- Ben Bernanke
Big Ben's Commencement Speech
Ben Bernanke is a very smart, and more importantly, a very wise man. His commencement speech at Princeton this year is probably the first time Ben opened up and spoke honestly, as his current occupation doesn't allow him to make many unrehearsed public statements. He speaks about life, expectations and aspirations of the current college graduates, and addresses life's biggest questions and graciously offers his answers. I urge you to take 10 minutes to read what he had to say. Some of my favorite quotes:
"A career decision based only on money and not on love of the work or a desire to make a difference is a recipe for unhappiness." - Ben Bernanke
"If you are not happy with yourself, even the loftiest achievements won't bring you much satisfaction." - Ben Bernanke
http://www.federalreserve.gov/newsevents/speech/bernanke20130602a.htm#fn1
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