Pervasive Qualities chuckle at Consulting Firms
This is what I think of when you say consulting.
The link pops up straight to a chart outlining a ten point scale showing how close someone is to quitting. Despite what you're about to read below, this is one scenario where you can actually replace many of the
instances of the word "consultant" with "auditor" in the above linked
will argue it's a matter of semantics between to distinguish between
"advisory" and "consulting" work, as the Big 4 - aside from Deloitte -
have largely shed their consulting practices.
Yes, "just legalistic semantics."
Until you identify the mindset present somewhat satirically presented by Getting Drunk in First Class.
Above: And they also often stay in posh downtown hotels.
Aside from being a way of doing business where you're actually setting up and running things versus just testing and suggesting, consulting has also acquired a kind of a bad rep from what I've seen. Just pick any Dogbert strip where he's consulting, really. The extreme satirical view is that someone shows up, points out what you already know - by asking the questions "what's going on" of your staff - then runs off while pocketing a big fee.
Are auditors special? Well, in the sense that they are supposed to actually dig a little deeper and often point out things you don't already know, yes. And in many other professional senses.
Not the least of which is that auditors are supposed to show impartiality and independence when checking out how a company is operating. CAs likewise have to be a breed apart, considering ethics in all decisions they make.
If you're found guilty of doing something unethical, you'll be brought up to the local CA tribunal, tried, and if convicted, will face penalties and possible expulsion from the profession. Ontario CAs can read about it quarterly in their institute's newsmagazine. It makes for some interesting reading sometimes.
Consultants don't really have this kind of oversight. And hence the reputation.
How does this all vaguely tie back Pervasive Qualities and to my study plans for the UFE?
The CICA positively loves to test you on your ability to identify ethical quagmires. Although the marking scheme is if anything, full of endless twists and complications, it's absolutely true that the difference between a pass and a fail can be as simple as managing to identify the Pervasive Qualities questions on the exam.
"PQ" is a generic term that can be described as "stuff you won't learn in most accounting textbooks". It's the ability to say, "hey, the professors are using their textbook expense account to buy furniture and clothing from the university bookstore, that's against policy and Wrong". Or to say, "tricking people into buying franchises which you now are doomed to failure so you can buy them back from them at a steep discount" is not only mean, but potentially criminal and reputation-harming. Or trying to pass of non-organic products as organic is Not a Good Business Strategy and yet another Very Bad Idea again for both moral and legal reasons.
As tempting as it is to say, "there's no way to prepare for PQ questions", that's a bit dispiriting, not to mention misleading. Reading the above paragraph is a strong step in the right direction, as is reading other past exams.
PQ questions are generally sprinkled throughout a few of the 7 cases you write during the 3 days of the UFE. They're truly easy marks if you can 1. notice them and 2. have a healthy conscience. Hopefully you succeed in the latter category.
The former is a little trickier, though. The good news is that you won't get something absoultely insane. The CICA won't force you to settle once and for all the debate on stem cells or the proper withdrawal strategy for Iraq - although if something along those lines appeared one day on the exam you should be ready to give it a go regardless, no matter how absurd the idea sounds, I mean my exam had a Bird Flu question on it!
They won't give you a brain-dead connect-the-dots picture. Your clue will often come in the form of an 'accidental' find, like a note or e-mail you stumble across with revealing facts, or some off-the-cuff remarks from an interview which seem have nothing to do with your primary accounting topic - but which do in fact offer you a rich window into someone's morally bankrupt universe.
The 2008 UFE will probably have an issue on it which was big in 2007 or maybe even 2006 - questions are written about a year in advance, often based on what was big in the news at the time. They can sometimes be updated a little to deal with current events, but I wouldn't expect a drastic last-minute change.
This leads to a fun little parlour game - well, fun if you're sick enough to keep talking about this exam a year and a half after having finished with it (my excuse is I'm helping this year's writers, so there) - I wonder what kind of general topics might appear this year?
This game is best played by people not studying for the exam, ironically. They need to focus on their question writing skills and firming up any weak areas in their technical knowledge of accounting and audit rules.
Having said that, the fruits of this kind of thinking could prove useful to them.
So what would I expect to see on this year's UFE?
Debt Covenants, and potential breaches. And similar topics.
They're easy exam fodder and having to calculate the relevant debt:equity ratios is an easy way to panic the ill-prepared.
Credit crunch stuff is huge and they've been talking about it since last summer, and even earlier, really. We had it on our papers even before this stuff was huge. I wouldn't be surprised to see it on an exam.
And of course, why would they just make it a boring, "audit a company with credit trouble" question? They could, but they know that's the "expected scenario". Be equally prepared for the scenario where you're a CA working as a controller or internal auditor and you're reporting not in an audit statement, but to the company's CFO or perhaps its audit committee and they want to know if they can build another factory or if the extra debt they need to take on will sink them.
I think I'll finish my idle speculation now, lest I coincidentally write up a scenario which ends up landing me in the same kind of trouble that occurred fictionally at St. Cedd's in Cambridge.