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    New Study Validates Old Accountant Joke

    By | August 11, 2015

    This morning I linked to a story about a study that ties the willingness to manage earnings to successful careers in corporate accounting departments. This is not a remarkable study because of its findings insomuch as it is a remarkable study because of its timing. I just figured the equation CREATIVE ACCOUNTING = SUCCESSFUL ACCOUNTING CAREER had been proven decades ago.

    Think about it. One version of an old joke goes like this:

    Have you heard the one about the company that needed to hire a chief corporate accountant? In the last interview session each finalist was given financial information and asked, “What are the net earnings?” All applicants but one dutifully computed the net earnings but none of them got the job. The candidate who landed the position answered the question by replying, “What do you want your net earnings to be?”

    What's hilarious is this new study validates that old joke:

    In a study that suggests fighting corporate number-fudging is not just a matter of tweaking a few rules, accounting experts at the University of South Carolina said they surveyed 41 executive recruiters and 57 finance and accounting executives.

    The participants were asked to choose between two candidates for an accounting job opening with similar backgrounds, but sharply contrasting values.

    Nearly 88 percent of those surveyed chose candidates viewed as more congenial to bending the rules to achieve corporate goals, such as smoother earnings, according to the study.

    That's the joke! Nine out of 10 times, companies are going with the guy or gal who answers, "What do you want the number to be?"

    And it makes perfect sense. Do corporate managers want accountants who compile bulletproof numbers into pristine financial statements that no one dare question? Of course not! They want to push the earnings envelope to satisfy investors, analysts, naysayers, haters, former CFOs who know a thing or two about fudging numbers, in-laws and anyone else who has the audacity to scoff at the financial achievements of their company. Sure, an auditor might come around and start asking questions, but seriously, when has that ever stopped anyone?

    So get out there, creative accountants! Success awaits you!

    Corporate earnings management linked to accountant hiring: study [Reuters]

    • liEYr

      I think you’re just a wee bit over the line. I typically asked my clients if they thought they looked good in an orange jump suit. I didn’t really need an answer. The look in their eyes told me everything I needed to know.

    • Another exKPMGer

      The problem lies in the capital markets that will add or subtract $100 million of market cap based on a change in EPS of 2 cents. I don’t care what company says they don’t, if it looks like they’re going to miss earnings by a penny, they’ll find an entry to record to get there. Auditors don’t seem to focus on this much because it’s just EPS, but it’s a major deal from the company’s perspective, hence it SHOULD be a major deal to the auditors. They just haven’t figured that out yet.