I’ve been thinking a lot about routines this week. Various experts recommend setting new routines as you move from commuting to the office to working from home. My thought is that it’s not only about setting up new routines; it’s about continuing, even if modified, previous routines that were enjoyable. A few examples:

I’m an early riser and my wife is not. On weekends, I leave the room, close the door and do not disturb her as I go about doing various things. On weekdays, our routine was that I would kiss her goodbye as I left the house to commute to work. At first, I was treating work from home like the weekends, but that left a hole for both of us. After a week or two, I went back to kissing my wife goodbye as I “commuted” to the study. It’s just a small routine, but it brought back to us an important sense of normalcy to our lives.

Another routine I had was listening to a local radio station on the way in each morning. After a few weeks, I realized I missed that connection to start the day, so I set up a new routine, listen to the radio for 20 minutes each morning after breakfast as I start my day. This brought another layer of normalcy back to life and I got a little local perspective to begin each day.

A third routine for me was stopping by the local RaceTrac to get a drink on my commute in every morning. (I already achieved status to get one free drink a week and was working towards the status level for a free drink a day for a year.) Now, getting in the car to drive to RaceTrac doesn’t make a lot of sense, but the idea of taking time to get a drink for my morning in the (home) office made sense to me. So, after breakfast is finished and I’m ready to start my 40-foot commute to the office, I stop during my commute and make myself a drink to take into the office. It was just one more step (pardon the pun) in setting up my new routine for getting myself mentally ready to attack each workday.

An evening routine I developed before COVID-19 was getting home and changing out of my work clothes to something more comfortable and setting out my clothes for the next day (insert favorite geek comment here). The changing clothes part seemed less relevant given my usual attire for working from home (jeans and a decent shirt) and I was already wearing sneakers, so there wasn’t even a need to change shoes. But setting out clothes for the next day was something I could do, so I made that into my new routine. When I shut down my computer and called it a day for working, I would take that 40-foot commute to my room and get out my clothes for the next day. I found that this one activity mentally reinforced I was done working for the day and now it was time to focus on my home and family.

What routines did you give up several weeks ago that are worth restarting? What routines can you modify to give yourself that mental reset that “now it’s time to start work for the day?” What routines do you have for mentally breaking from work and transitioning to being present at home?


Say What You Mean and Mean What You Say

One of the biggest misnomers about accountants is that our work is all about numbers. While it is true that we work with numbers, the reality is that much of our work is about reading and writing. We read service agreements to determine if there is an implied lease as part of the arrangement that needs to be accounted for separately. We read stock compensation arrangements to determine key data points like grant date, the share price, and when the shares vest to determine how much and when compensation should be recognized. And we write reports trying to communicate what the numbers really mean in carefully chosen words.

Because we deal with words so often, accountants can get cranky when they see words used carelessly like the press (and in some cases, government officials) has been doing lately. I hear phrases like shelter in place, stay at home and quarantine used almost interchangeably, but that is dangerous in today’s environment. Here are the actual definitions of these phrases.

Shelter in Place – Stay wherever you are at the moment the order is in effect. This means if you are at a drug store, you stay inside the drug store. If you are at your office, you stay in the office. If you are home, you stay in your house.

Quarantine – Isolate yourself from everyone else. This means you can’t leave the quarantine zone, whether that is a room, a house or a city.

Stay at Home – This one is simpler, yet more complex. Basically, the idea is to get home and stay there. The order may allow you to leave at certain times or for certain activities (essential work, getting food, etc.), but the idea is to stay at home and don’t leave unless absolutely necessary.

If you don’t think the right words matter, think about someone interpreting shelter in place as stay at home when a tornado is hitting the ground. That kind of misinterpretation could kill someone, which is why it is important to use the right words every time. If you use the wrong words, especially use them incorrectly over and over, people may lose sight of the actual definition of the phrase when it’s a matter of life and death.

We can’t control other people using the wrong words, but at least we can set the right example. Use the right words and for now, stay at home even if that’s not what the press is saying.

Keeping it Normal

Life will be anything but normal for several weeks, but that doesn’t mean we can’t have a little fun and remind people there are some good aspects about working from home. To add a little fun, and say hi to my team, I sent “traffic reports” on my “commute” to the office every morning on our instant messenger service (group broadcast function). Here are the messages from last week:

Traffic was light, but I did have to change lanes several times to avoid the cat toys the cats left in my way in an attempt to trip me up. I hope your week is off to a good start.

I had to pull over at the stairway to avoid getting caught up in a high-speed chase, but it was over quickly enough and didn’t hold me up long. I later heard on the police blotter that while Velcro was sure he was younger and faster, Violet decided to prove she was older and had more insurance. I hope your day is off to an exciting start.

Traffic was reduced to one lane today as the fort constructed for the purr-babies partially collapsed like the leaning tower of Dallas and most of the lanes were closed for safety. However, traffic was light and I was able to make it through in almost the same time as normal. I hope all your paths are clear today.

Traffic was light and the temptation to speed was almost overwhelming, but I caught sight of the Fuzz in her favorite hideaway ready to swat me with a ticket, so I kept my speed right at the limit and made it to work without a hitch. I hope you find a smooth pace in your work today.

Animal control made an early morning sweep (i.e., my daughter relocated the cat carrier to the garage) and all suspects went into hiding so my commute was clear sailing all the way in. Hope you have clear sailing all day today.

What are you doing to keep the team engaged and having a little fun?

Forced Change

While much work must be done at a certain place (construction, brick and mortar retail, barber service), Covid-19 is forcing many organizations to face the reality of letting employees work from home if the work can be performed away from the office. In our profession, the fact is that almost everything can be done without going into the office. So, across the country, organizations are implementing, sometimes under duress, telecommuting for their employees on a full-time basis. Organizations that already embraced telecommuting, even on a part-time basis, are making the transition with relative ease.

Those organizations already had the basic infrastructure set up; VPNs and security tokens were in place. Employees already practiced connecting in from home and were used to forwarding calls or using a cell phone as their primary number. If organizations are new to telecommuting, they need to think through how remote access will work. How will data be secured? Does the computer in the office need to be turned on to access it remotely or does everyone have access? Do people know how to get into servers, systems and data? Do clients know how to contact you if you’re not in the office?

Numerous articles are being published that cover all sorts of aspects about remote/from home working. I won’t try to cover all those issues here, but I want to mention one thing not to forget. Even after you work through all the technical issues, you still have at the core people in your organization you’re responsible for leading and interacting with. Out of sight, out of mind will not work in this environment. At first, you might need to be deliberate about your interactions. Set up time to talk to each other. Those hallway conversations aren’t taking place and people will be starved for information. Make sure you’re asking how they’re doing, what problems they’re facing and how do they suggest resolving them. (Yes, make them take ownership of the resolution.)

If done right, this forced experiment may result in a realization that telecommuting, even if only on a part-time basis, works and that employees are happy you’re willing to work with them and help them adapt during this tumultuous time. If not handled well, your employees may come out the other end looking for opportunities at organizations their friends tell them handled the situation with flying colors.

Not the Time to Panic

After one of the worst weeks ever on the stock market, here are the top seven things you should be doing with your retirement savings:

7) If you need to feel better, look at your return over the last 10 years, not the last 10 days.
6) Keep contributing – you’re buying stocks on sale.
5) Don’t rebalance unless it is time you do that according to your preset plan.
4) Keep following your preset plan; trust your judgments when you weren’t filled with fear.
3) Don’t look at your balances every day; keep on the same review schedule you already set.
2) Remember, you will suffer more “big losses” over your lifetime; this is just part of the normal investment cycle. Over time, your gains will overcome your losses.
1) Whatever you do, don’t panic.

For some of you, this will be the first big downturn you’ve suffered in your working lifetime. These things happen. I’ve seen several major downturns/bear markets in my lifetime and the key is to keep your plan in mind. A good plan takes into account that the market will periodically suffer major downturns that last more than a few days. A good plan is like Linus’ blanket. With it, you can handle anything. Without it, you will turn green and get sick at the slightest event.

Take Your Own Advice

Many larger companies and firms implement an annual salary treatment process, so all salaries are adjusted at the same time every year no matter when you were hired. In some companies, this occurs in the fall and others in the spring. My employer adjusts salaries every spring, March to be exact. As I eagerly anticipate seeing what change is in store for me, I started thinking of advice we often give others when asked about financial matters.

  1. Getting a raise is the perfect time to increase your contributions to a 401(k) or other retirement savings. Taking a portion of the raise means you’ll never miss the increased contribution because you were never getting the extra money in the first place.
  2. If you’re already maxing out the tax advantaged contribution to a 401(k), consider switching a higher portion of your contribution to a Roth 401(k) if that’s available from your employer. The increase in salary can be used to offset the higher taxes you pay now but will give you the ability to earn a tax-free return on those contributions forever.
  3. If you’re maxing out your Roth contributions or you do not have that option, consider increasing your contributions to a Health Savings Account (HSA), if you’re eligible. You can contribute to an HSA if you participate in a high deductible medical insurance plan. The magic of an HSA is that contributions are made tax free, earnings are tax free and withdrawals for medical expenses are also tax free. There is no better way to save.
  4. If you’re already maxing out your HSA, consider putting a portion of your salary increase away for current medical expenses and don’t touch your HSA for those costs. Instead, save your HSA for retirement. As long as you use the withdrawals for medical expenses, it’s a better tax deal than a Roth or regular 401(k), and according to every prediction I see, we’ll all need plenty of money to cover medical expenses in our retirement.

Finally, if you’re doing all of the above, then consider taking a well-deserved vacation with your extra income, because you’re already well on your way to a secure future.

Thoughts on Kobe Bryant

The sad news that Kobe Bryant recently passed away along with his daughter in a helicopter crash reminded me of a blog I wrote a few years ago when Kobe set the NBA record for missed field goal attempts. As noted in the blog below entitled Failure is an Option, Kobe’s greatness was not only the number of points he scored or the longevity of his career, but his willingness to risk failure time and time again in an effort to succeed.

The blog was written when Kobe was still playing. His final career stats included making 11,719 field goals and missing 14,481 out of 26,200 attempts for a 44.7% lifetime field goal percentage.

Failure is an Option (A Tribute to Kobe Bryant)

It was a big deal last week when Kobe Bryant became the all-time leader in missed field goal attempts in the NBA. As of this writing, he had missed 13,421 field goal attempts and counting. But there is a big problem with focusing on that “negative” supremacy. The real point (pun intended) is that it takes failing that many times to also make 11,121 field goals and be considered one of the best to ever play the game. A .453 lifetime field goal percentage for a guard is phenomenal. You have to fail 13,421 times to succeed 11,121 times.

If we don’t risk failure, we will never achieve success. Kobe Bryant has risked failure 24,542 times. That is 32 times for every hour he plays. How many times have you risked failure in the past 40-hour week you worked – was it 1,280 times like Kobe? We like to tell our kids that sports teach a lot of life lessons. Maybe the most important lesson is that you have to take risks in order to succeed.

Why You Should Care About This IFRS Proposal

Unless you work for a subsidiary of a foreign company reporting under International Financial Reporting Standards (IFRS), most U.S. based CPAs generally feel there is little reason to pay attention to IFRS activities. Therefore, many of you probably missed the release of a proposed change to the standard on general presentation and disclosures in a financial report in the middle of December. However, this standard is one you might want to pay attention to, because it may push the Financial Accounting Standards Board (FASB) to tackle some similar issues in the U.S. Some key highlights from the standard include:

  • Required subtotals in the Income Statement, including Operating Profit which, unless the entity is a bank or similar financial services company, will generally exclude interest expense and interest income. Even interest income on customer receivables will be excluded unless you conclude a principle function of your business is to provide customer financing.
  • The disclosure of unusual items in the footnotes to the financial statements. Unusual is defined as unusual in occurrence or unusual in amount. And the proposed disclosures allow companies to show the impact of these items on the Income Statement, so you essentially get to include the “normalization” for such items in the audited financial statements.
  • The disclosure of “management performance measures” in footnotes defined as amounts:
    • Used in public communications outside financial statements,
    • Complementing totals or subtotals specified by IFRS standards, and
    • Communicating management’s view of an aspect of an entity’s financial performance to users of financial statements.

The disclosure will include information on how the management performance measure is calculated, how it reconciles back to the most similar IFRS total or subtotal, and how management believes it (better) portrays a financial aspect of the business.

  • The movement of all interest expense into the financing section of the cash flow statement, and interest and dividends received into the investing section. This means such amounts will no longer be included in the operating section of cash flows for most (non-financial services) companies.

The standard provides a lot of opportunity for companies to better tell their stories in the financial statements, but with that comes a price. The disclosures become part of the financial statements subject to auditing procedures if an audit is obtained on the financial statements. Whether or not you want to send comments on the IFRS is your choice, but this proposed standard may be one worth taking a look at to see potential changes that FASB might consider in the future.

New Year’s Resolutions

After last year’s soapbox, I thought it would be good to get back to a simple top 10 list à la David Letterman (showing my age to those younger readers). So, without further fanfare, here is my list of resolutions all CPAs make and then quickly break each new year.

After last year’s soapbox, I thought it would be good to get back to a simple top 10 list à la David Letterman (showing my age to those younger readers). So, without further fanfare, here is my list of resolutions all CPAs make and then quickly break each new year.

10. I will take some CPE every month so that by the time my birthday or the end of the year rolls    around, I will already comply with my state’s CPE requirements.

9. I will reread my emails before I send them out to make sure they are free from silly mistakes and typos.

8. I will give timely feedback to my staff when they do something well or need to improve.

7. I will incorporate exercise into my schedule, even if it is just a 20-minute walk at lunch, each day no matter how busy I am.

6. I will say no to a new project, client or request for my time at least once a month.

5. I will not look at email at least one whole day while I am on vacation.

4. I will spend 15 minutes at the end of each day clearing my desk and planning so I can start the next day productively.

3. I will eat lunch with someone else at least twice each week. Maybe I can also hit Resolution #7 by walking to lunch with the person!

2. I will not multitask during conference calls so I know what is said and don’t have to ask people to repeat the question.

1. I will not wish ill will on the members of FASB despite having to deal with the new CECL standard!

What other resolutions do CPAs need to make and which ones do you think we will be able to keep this year?

Why Ethics CPE is Required

I recently sat through my required four hours of ethics continuing education to meet the biennial requirement for licensure in Texas. While every state requires some amount of continuing education to maintain a CPA license, some states go further and specifically require a certain portion of the continuing education hours cover ethical issues. As the instructor covered actual dilemmas faced by CPAs and actual frauds committed by CPAs and non-CPAs alike, my mind wandered a bit into why I was required to take this course in the first place. My thought was, I have high integrity; I would never do what these criminals did, and I know where and how to look for fraud. I am an internal auditor after all!

Then the stories turned to average people who started down a path that seemed appropriate. They were trying to help the company and protect people’s jobs. These people didn’t realize they were in over their head until the riptide of circumstances had pulled them so far out to sea, they could never get back to shore on their own. That is when I realized we take ethics regularly for two reasons.

First, most of us are fortunate enough to rarely be faced with true ethical dilemmas. While ethics is like riding a bike, you never completely forget, taking on those dilemmas is not for the novice and the training keeps our senses sharp for the potential situations when they arise. Second, we are there for our fellow CPAs. The requirement to think about ethics means thinking about our duty to the public and our fellow professionals. We are trusted because the whole profession is trusted. We nearly lost that trust a couple of decades ago with the Enron and WorldCom disasters. It took us years to get that trust back.

We are, once again, one of the most trusted professions in the world. If sitting through a few hours of ethics every two years means just one CPA stands up early enough to prevent a company from going off the rails and costing investors billions of dollars, then those hours of my time are well worth it.