What Losers Work For Big 4???

Every time when I was completing the independence checklist on my audit of non-public clients in the small firm I worked, or every time after I was forced to take the boring ethics CPE that nags me year after year about "Auditor's Independence", I couldn't help but wonder,  with such a wide net to restrict auditors and our family and possibly relatives from having "financial or other relationships" with the audited clients, how do the Big 4 manage to keep experienced  and top talents within the firms???  For my small firm and me, the independence compliance was extremely easy to follow.  But for people who work in the Big 4, the "Independence" compliance can be a huge pain in the bottom.

Most of the banks, mutual funds, publicly traded companies are all audited by one of the 4, and they are financially related to most of the Americans who ever held a job and had a 401K, or savings, or loans or credit cards of some sort.... I mean no wonder the Big 4 only seem to be interested in hiring 20 something year old children, who are fresh out of college, because they are broke and they have "zero" savings and no investment. They may still have a student loan they wasted on majoring in accounting though.  But that was easier for the firm to manage, compared to an experienced and talented CPA who had amassed a nice portfolio of stocks, credit cards, home loans, and other partnership interests everywhere.

One has to be really  a broke loser to work for the Big 4, or has to be really stupid about investing and money to have not much investments with the Big 4 clients in order to work for the Big 4. Neither of these is a desirable attribute for a competent accountant.  Either that, or they are so young and so fresh out of college that they have yet to establish any financial relationship with any entities.  Now this kind of projects the caliber of the people who are working in the Big 4 firms... Do you still think they are smarter than the rest of us like the firms claim they are???

If you are an experienced professional and you are looking for jobs with the big 4, be prepared to sell your investments and other financial interests in order to maintain your firm's independence and your independence  as an auditor or advisory professional, unless you are totally broke and you have nothing.

Audit Failures and Pacific Hospital's Healthcare Fraud

As the executive Michael Drobot at Pacific Hospital of Long Beach pleaded guilty on paying tens of millions of dollars in kickbacks to doctors so they would steer business to his hospital, I can't help but wonder if Pacific Hospital ever had an external auditor?  Many hospitals this size hire external auditing firms to conduct annual financial statements audits for state reporting compliance, licensing  compliance or financing compliance, and I would assume it would be very unlikely that Pacific Hospital never engaged any external auditor for financial statements audits.

According to Wall Street Journal, Michael Drobot who built Pacific Hospital had engaged in massive health-care fraud which is also called the largest insurance-fraud case in history.  Again what have been Pacific Hospital's auditors doing all these years to allow illegal kickbacks to doctors to accumulate to tens of millions of dollars, and also the excessive insurance billing fraud scheme to be carried on for so many years?

It's been over 10 years since Sarbanes Oxley overhauled the auditing standards to require auditors to perform risk assessments by considering how any illegal acts or frauds may exist that may cause material misstatements on the financial statements.  Any illegal activity like massive kickbacks and bribery, engaged by the client and the client's management poses tremendous risks that the financial statements may not be reasonably presented. If you are a CPA and you are practicing auditing and you are asking me why, then I think you should stop practicing from now on.

The unrecorded contingent financial liabilities  that may be caused by any legal implications of illegal acts committed in the case of Pacific Hospital would be too material a misstatement on the financial statements.  The illegally earned revenue as a result of excessive fraudulent billing to insurance companies would be too much an overstatement on the company's revenue.  This is why upon seeing substantial referral checks paid to doctors and upon understanding how the hospital's executive also owns a spinal-implant distributorship that distributes overly priced implants to doctors and surgeons who received referral fees to steer surgeries to the hospital; auditors would have to stop doing further work and refer such understanding of related parties and knowledge of referral charges for further investigation.  It's usually during the further investigation that bribery and illegal kickbacks are found to potentially exist, along with excessive insurance billing.  This will prompt the auditor to report the issue to those in charge of the hospital's governance so they can report it  to the external parties specified by law or regulation. Or, if they don't, the auditor will have to report the issue directly to the external parties specified by law or regulation.

In the case of the Pacific Hospital of Long Beach, there seems to have been a chain of missing steps and reporting in the process of auditing throughout the years, if only there was ever a competent audit conducted by an external auditor.

My Job as an Auditor is Literally Making Me Sick!!!!!

Before I majored in Accounting years ago, I had no clue about the downside of public accounting, and the stress level I would experience.  When I studied for the CPA exam, I was told time after time again I would make good money when I became a CPA.  Those were all lies. Driven by a false sense of hope and optimism, I studied very hard and became a CPA.

Looking back, I wish I had spent my time doing something else, like getting a job as an office manager in a Doctor's office or even an office manager in my CPA firm.  May be I should have gotten a job in the kitchen or dining room at a restaurant.  I would be making a salary not too different from what I am making now, but I would have more time with my family, to pursue my hobbies, and to sleep more, etc, etc.

I had recently found out that the office manager of my firm is paid $77K a year.  She is not a CPA, she only has an associate degree.  She is therefore incapable of providing any support at all, and if the professional staff aren't watchful, she will mess up their health insurance,  401K contributions,  paid vacation and sick days and underpay them, not intentionally but because of errors.  The worst part is she has such strong conviction of being correct that she doesn't address the mistake immediately, because she believes the professional staff are wrong!  We are all CPAs and she is an uneducated community college grad with no special skills. She can't even write an email that is more than 2 sentences long.  Yet, when there is a dispute in any calculation of benefits, she is so confident that she knows the math better than the CPAs. Unbelievable.

I am very resentful, because as an audit manager, I don't make any much more than her.  Because of her incompetence, I have to spend extra time fixing complaints from my audit staff about their time, their pay, their software problems and other administrative support issue.   Yet she gets to go home sharply at 5:30pm everyday.  When she goes home, she literally goes home.  When I go home at 7pm or 8pm, I literally am bringing work home to continue to work till midnight.  I have to do that because I have so many different engagements on hand and I am short of audit staff and also administrative support.  Many people said working in a small firm is less stressful than working in Big 4.  I had never worked in a Big 4, I foolishly turned down a senior associate position 3 years ago from one of them because they offered me a salary that was way less than what the office manager is making in my firm.  But I believe if I were a senior associate in a Big 4, I would not have to waste time dealing with administrative issues or correcting paid time off for the 1st year associates and I don't have to do anything about the quality control and ARs for the firm like I am doing now.

I can handle huge volume of audit and accounting work fine, but I can't handle  administrative work, billing, the firm's AR, computer support and also audit, all at the same time.  So before you join a small firm, think twice!!!

Meanwhile, I have been feeling shortness of breath, exhaustion, mood swings with my family, headaches etc... due to the fact that I have a lot of imminent deadlines I have to meet for my clients, and I also have no administrative support. Sometimes I woke up and I literally suffered panic attacks right before I left home for work. Like this memorial day long weekend, my firm's office manager gets to take a trip to San Diego, and I will be working at home because I have a deadline on Tuesday!! I rather take the job of an office manger in my firm because all she does is well, I really don't know what she is doing.  But the partners seem to like her.  As professional CPAs come and go, she has become the employee with the longest tenure in the firm.  No, she is not related to any of the partners. As to why she gets such a well paid position and is able to get away with her little contribution to the firm, I have been too busy to try to figure out.

Yes, I know what you are saying now, why don't I quit?  I have been so busy I have no time to even sleep, forget about finding another job.  I did manage to send several resumes out for corporate accounting positions, but have not heard anything back.  I am very eager to leave my firm and leave public accounting for good.   Until then, I can only wish myself to get well soon, physically and mentally:

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Tired of Working With Incompetent CPAs

I'm the only person in my firm who is working today even though it's Sunday.  It's not because I am the only one who doesn't go to Sunday Service at Church. It's because I have to review the audit workpapers of my fellow CPA co-workers.

I'm really pissed off because if these people are the slightest bit of being competent, I won't be sitting here today and correcting their sloppy and unacceptable audit documentation.

How can CPAs who have been licensed for five and more years be giving me this kind of sloppy audit workpapers.  It is as if they don't give a damn.  All the test procedures are without explanation, without definition of test objective, test procedures.  All of the documentations are so sloppy that the only documentation that shows their audit work is a tick mark right next to each line item on the reports provided by the clients, and the one line at the bottom that says  "Vouched without exception".  Excuse me, what does this really mean???  It's shocking.   Their audit programs are even more shocking, they just filled out the cookie-cutter programs from PPC and just put their initials on each procedure and wrote "Done" on the column where specific audit workpaper of the work done is supposed to be referenced. "Done" where? "Done" how?

So after spending an entire Sunday reviewing and putting comments and questions on their sloppy workpapers, I will have to spend probably the next few days to go over with them exactly what they did.  I was told by the Partner that the clients weren't going to paid for that.  Too bad. If only the Partner hired more competent CPAs, he wouldn't have to worry about all these wasted hours that clients won't pay for.  I am the one who is the real victim here because here I am stuck in this office alone on a Sunday writing all these comments and review issues. Both the labor law and the firm policy don't entitle positions like mine for overtime pay.

I'm so sick and tired of working with these people that I am so going to look for better pastures.  These CPAs are hopeless and they shouldn't be doing auditing.  It's too scary that they are.  I bet this kind of aggravation doesn't happen in the Big 4 firms because I guess they probably have more competent accountants there.

Useless Workpapers

Auditing for small CPA firms can sometimes be so frustrating. The kind of clients small firms usually have are  privately held companies.  It's unlikely for private companies to have an internal audit department and the kind of internal controls that are often found in publicly traded companies.  It's either because they are too small, or they have grown to too big that its huge business volume has outgrown its existing internal controls.

Although I have  been doing audits for years, I am still frustrated when taking on a new client because the accounting staff always gave me worthless reports and useless information  that I couldn't audit on. It's either because the predecessor auditor always asked for the same worthless reports and never cared if they were useful or not, or the new client's accounting staff think auditing is really a joke and just give me whatever papers that are convenient for them to get.

After spending time testing and finding too many exceptions, I often realize that I am testing on the wrong report that is totally irrelevant or report that doesn't include all the activities because it was printed a couple hours too early.  It's a huge waste of my time when the clients' accounting staff give me incomplete reports or pieces of information here and there that don't tie to the whole picture.

I bet this is never the problem with the big 4 firms, since they have more knowledgeable clients and they have much better documentation of prior year's workpapers?

The challenge for auditing for small CPA firms is to get the clients' staff to provide useful and relevant information to be audited upon..

I'm really frustrated because I had just wasted an entire day of work to find out that I was working on bad reports....  So, tomorrow I have to request the client's accounting staff to give me the right reports and to show them why the ones they gave me are no good and are useless.  Then I will have to start the testing all over again.