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Join host Adam Larson as he sits down with distinguished guest Norman Strauss in the latest episode of the Count Me In. Listen as they share engaging stories and insights from Strauss's 60-year career in accounting. From the challenges of embracing technological changes to his pivotal role in standard-setting committees, Strauss reveals the highs and lows of a lifelong journey in the accounting profession. It's a candid and valuable conversation that you won't want to miss!
Full Episode Transcript:
< Intro >
Full Episode Transcript:
< Intro >
Adam: Today we have a special episode of Count Me In called IMA Life. We're going to start talking to different management accountants, from IMA, and hear their journey. Today we sat down with Norman Strauss, a veteran in the accounting profession, with over 60 years of experience. We chat about Norm's beginnings. Sharing stories from his early days in accounting. Navigating the challenges posed by technological advancements, and the significant role mentors have played in his career.
Norm provides insights in his involvement with various committees, and sheds light on the complex process of setting accounting standards. With a dash of humor and a plethora of wisdom, Norm shares valuable insights in his impressive journey. So tune in, for an episode brimming with decades of experience and invaluable insights.
< Music >
Adam: Well, Norm, I'm really excited to have you on the podcast, on our new IMA Life series, and you've had quite the career. And could you start, maybe, by sharing a memorable story of your early days, in your career. Maybe some challenges that you had, as you just got started in accounting?
Norman: Well, thanks for having me, and it has been a long career. I was 36 years with the Financial Reporting Committee, of the IMA, and I also was in public accounting for many years. And if you add it all up, it's about 60 years' worth of doing things in the accounting profession, which I've always felt is a tremendous profession. And I think there's lots and lots of opportunities for people that are getting into accounting.
You start at a beginning position. You work your way up, if you keep working hard, you get challenges throughout your whole career and tremendous opportunities to continue with dancing. So I'm very pleased that I went into accounting, even though it's a long time ago. And I've finally gotten to the end of my career with the Financial Reporting Committee, after those 36 years. So it is nice to keep going, and it's a pleasure to be here today with you.
Adam: Well, I can imagine just the things you've seen in a 60-year career. That's some people's lifetimes and more than their lifetimes. And just thinking about everything you've seen, how do you think accountants are handling the changes? Because in the last ten years alone, the amount of technology changes that have happened across the world, the industries, has just been remarkable. And I'm sure the first part of your career, the technology was changing but not as rapidly as it's happening today.
Norman: It is a real challenge for people in the field, now. In my day, we didn't have computers; and it was nice, and slow, and worksheets, and you did everything in pencil. And now with all the technology, it's a terrific opportunity to get involved with all of these different things. So depending upon where you're working, hopefully, as you're moving along in your career path, the company that you're in will give you a lot of background, but a lot of training, and a lot of people that you'll be able to learn these things from. And that's one good thing about the profession, it's not stagnant. You have these changes. So there's always something new, and always something that's interesting that's happening
Now, I go all the way back in the beginning, and one thing I always felt that helped my career was luck. It was always nice when good things happened to you. So I started at Baruch College and I was going for my master's degree, and I took a course on contemporary accounting topics, with a professor by the name of Abraham Briloff, and I'd never heard of him before. But as it turns out, I found out that he's one of the most famous professors, at the time, and he was a tremendous critic of the accounting profession.
So I went into the first day of class and he said, who am I? And I said, "I'm Norman Strauss."
And he said, "You go sit in the front row," rather, and that's where he pointed. But I didn't want to sit in the front row. So when he wasn't looking, I went all the way to the back of the classroom. And then he started talking, and I'd never heard a professor like this before. I mean he was using big words, complicated accounting theories that he's imposing on everybody. He was even so interesting that he was making quotes to accounting in the Bible, which was not easy to do.
So I was amazed, and he was really critical of the accounting profession. And, all of a sudden, the student who was sitting where I was supposed to sit, up front said, "Professor Briloff, I have to object to your criticism of the accounting profession." And then this young fella articulately explained why the accounting profession is really good, and basically disagreed with the discussion that he was giving us.
So Professor Briloff said, "That was a wonderful explanation, Strauss." So he thought that I was still upfront, that he had my name mixed up. And the next week I got there very early and I sat in that seat, and it worked out very nicely. The rest of the semester he kept smiling at me, so that's kind of luck.
But then getting into public accounting, when you start at the very beginning, in the old days, you had the interesting title of a junior accountant. And that, of course, was not particularly complementary.
But after a while, if you worked hard, you became what was then called a semi senior accountant, which was even worse, and eventually you made senior accountant. And I remember in those days, when I started as a junior accountant, you really had to worry that you'd get fired after the busy season. I know cycles come and go. Now, we read a lot about firms letting go off people, but that's the nature of the profession. Everybody needs accountants in business, and therefore the opportunities are unlimited.
So, anyway, I was worrying about getting let go right after the tax season. And I confided with a semi senior, who I was reporting to, and, to me, he was so smart, he knew everything. And I told him, "I'm really worried that I think I'm going to be let go."
And he said, "Norm, don't worry, you're really doing fine."
And then the next day, I went to work and I found out that he got fired. So that was an interesting challenge. But if you keep doing your thing, learning from the people that you work with, you could keep advancing up the ladder.
Adam: I think that's some great advice. As I've read about your story and chatted with you, mentors have held an important part of your career. Maybe you can talk a little bit about the different mentors you've had and how they've helped you move along, as you've moved forward in your career.
Norman: Well, after being in auditing for quite a number of years, I became involved in what I would call accounting theory. There's lots of rules that affect financial reporting, and people make those rules, they're not scientific, necessarily, people decide, and there's a lot of judgment, it's subjective, and to keep on top of those rules is no easy thing. But I kept doing more and more of that while I was an auditor, but also people started to recognize that I seemed to be pretty good at these technical matters.
In fact, another, you might call it luck, I'm not sure, turning point for me was when I was a young auditor, we used to do what we called analytical review. We probably still call it the same thing, but now it's all on the computers. In those days we had a 14-column worksheet, and what we did was we analyzed changes in the financial results, that the company had gone through for the year. And where there were significant differences, you had to investigate those because those were the red flags.
So I prepared this 14-column worksheet. One column said "This Year's Expense" and the second column said "Last Year's Expense", and the third column said, "Difference". And when the difference was big, you had to find out why. So I had looked at the payroll and it went way down, and I went into the controller and I said, "Why did payroll go down, this year?" And he gave me a very articulate answer, and I was very proud of myself how well I had written the explanation on my 14-column worksheet.
And right before I was going to give it to my supervisor to review, I looked, and payroll did not go down that year, it really went up. And I'd put the numbers in the wrong column, last year's on this year. So, in fact, I then looked, and I had to quickly erase the numbers that I had put on my worksheet and then go back to the controller and ask him why the payroll went up. And he gave me another brilliant explanation, which I put on my worksheet.
And it was just around that time that someone said, "Maybe we ought to take Norman off the auditing staff, and put him into the technical accounting theory end of things." So maybe it was luck that I made that mistake, but I ended up going into a technical group.
Where we were involved in reviewing financial statements that my accounting firm had audited. And that led me to be able to go up, in the end, where I was, eventually, the guru of the firm, and following all of the technical material that kept coming from the group that says Accounting Standards in the United States, which is the FASB, the Financial Accounting Standards Board. And also following a lot of the SEC requirements, of which public companies have many things that they have to comply with.
Now, one thing in moving up the ladder that's also lucky, if you have a good mentor that can help you in learning a lot and moving up in the organization. I was fortunate in my years at Ernst & Young, which is one of the major accounting firms, my boss was Denny Beresford. He was a long-time member of the Financial Reporting Committee, of the Institute of Management Accountants. And he was the person that I reported to, as we worked through all of the different accounting requirements that were being established by the standard setters.
Now, another lucky thing for me was that he became chairman of the FASB. He was an Ernst & Young national director of accounting partner, and a tremendous accomplishment to be selected in this very important position, in the accounting world. And once he went there, I was with him, as an aside, at the time that he was named to be the chairman of the FASB, and I thought at first he was going to faint. He was so excited about the opportunity.
And once he became chairman, he, of course, had to leave his partner position at Ernst & Young, and he also resigned from the financial reporting committee of the Institute of Management Accountants, since you can't do all of those things.
So once he went to the FASB, I was fortunate in being named his successor to be a member of the Financial Reporting Committee, well, that was in 1989 or something, and I've been there ever since, up until just about a month ago. So he went on and did a great job at the FASB, as chairman, for ten years. And I worked many years with the financial reporting committee.
Adam: Mh-hmm. Well, maybe we could talk a little bit about being a part of the Financial Reporting Committee. Because not everybody knows the ins and outs of being a part of such a committee, on the board for an organization like IMA. Maybe you could talk a little bit about your experience, being a part of the FRC, and then also maybe some challenges that you faced as you navigated those waters for many years.
Norman: The Financial Reporting Committee plays an essential role in the standard setting process. Backing up the Financial Accounting Standards Board establishes the accounting standards, in the United States. A very complex process that takes something from the beginning of a project, until all the corporations, in the United States, have to follow the new rules.
The FASB wants input from lots of outside organizations, which help them evaluate whether the standards are operational, practical, and the best possible answer for the particular problem that's being addressed.
Well, many people respond to the FASB, and one significant committee that does that is the FRC. The FRC is the separate committee of the Institute of Management Accountants, whose main objective is to be responsive to standard setters, particularly the FASB, but also the SEC as well. And this committee has members that are experts in accounting reporting matters. And what the committee did, which I was participating for many years, is to get involved with a particular proposal.
The FASB, when they're trying to see what people think, first, issues a proposal, and people can comment on it. And the important role that the FRC plays is to give a response to the FASB, which they think is going to be helpful for them. And the FASB is very appreciative of the role that the FRC plays, in this process. And my role was to work with the members of the committee who, as I say, are very smart accounting experts. We also have people that were involved with the user view.
They use the financial statements and want to know what the best answer is. Not from the accountant's point of view, but the people who actually use the product, the financial statements, and academics were on the committee.
So we'd all, in an interesting process of reading the proposal, we were to make the choice of method A or method B. To be having a dialogue about which the committee thinks is the best, and to work that through until you have a thoughtful response that will go to the standard setters. And, then, hopefully, we'd always feel that they would first appreciate that we did it. And, on occasion, they even agreed with us and changed their proposal to meet the suggestions that we had made.
Adam: That's great, to be able to have that connection to such an organization that sets the standards, and to be able to have that input, that's really important. And you've held a number of roles in different committees, whether FRC or AICPA, or even the IASB, advisory council. Maybe you can talk a little bit about what that means as a leader, and a thought leader, in the industry. To be able to be a part of those committees and share your insights that you've learned over the years.
Norman: Well, I was fortunate in working on the technical matters in Ernst & Young, and also getting all the background from participating with the Financial Reporting Committee to move up the ranks, so to speak, in the accounting standards process. In addition to the FASB, as examples of the other committees that are involved in these different things. There are international accounting standards as well as United States standards.
There's an organization called the International Accounting Standards Board, and they have an advisory council, and the FASB has an advisory council. So that they have lots of experts to provide them with advice. So I was on both; I was on the FASB's advisory council and the international one.
The international one was fun, going around to different countries to meet with accountants from all over the world. In fact, as an aside, years ago, there was a thought that the way we were doing this really didn't make the most sense. Why have an International Accounting Standards Board and a Financial Accounting Standards Board in the United States? Why not just have one and have one set of standards, that the whole world would have to follow when they issue financial statements?
Well, everybody thought we would have to, perhaps, throw away all our United States accounting books, and adopt the international standards. But what really happened, in the end, was the two organizations couldn't really agree on what the right answer is for these judgmental accounting issues. And therefore they decided to have each go their own way and try to have standards that are compatible as much as possible. So if you have an international company, they have to potentially be following international standards as well as U.S. standards.
But in addition to the process of having the standards setters, themselves, there used to be several other committees that I was fortunate to participate on. One was called the Accounting Standards Executive Committee, or the AcSEC, as it was referred to as. And that was a committee that dealt with projects that the FASB itself, the senior standards setter, did not really have the energy, or time, or resources to work on, but felt that the AcSEC committee could handle it, and that was nice.
When I was on the committee, I chaired it, and we worked on several pronouncements that actually are still part of the accounting literate today, even though it was many years ago. And, so, we were a standard setter.
One example, we issued an accounting rule on risks and uncertainties, that corporations still are following today, and it was very controversial. So we issued proposals also and got many comment letters, as an aside, on that particular one that we issued for comments. We got 200 comment letters, 199 of them opposed what we wanted to do. The only one who supported it, I think, at the time, was my mother.
But we did end up finalizing it and it's in the literature, today. Another committee that I served on, for about 10 years, was called, and still exists, only it's not quite as active, as in my day, is the Emerging Issues Task Force. And that's a task force of the FASB, referred to as the EITF, and they too would work on things that are similar to what the name implies, emerging issues.
The FASB issues proposals, they work on it, sometimes, for many years, and finally they finalize it. If you have an emerging issue, corporations couldn't wait until the EITF actually finalized it, and we used to work on those things.
One quick example, in 1999, you may remember, everyone was worried that the computers wouldn't work on December 31st because of the change. That they really weren't set to handle the new numbers of digits, to go into the pronouncements. And everybody was afraid the computers would stop, planes would stop flying, and it would be a disaster.
Well, the accounting end of this thing, obviously, less important than the planes flying, was that what should companies do with all the costs that they had to incur, to make the change from the old computer system to the new computer system, to be able to go into the year 2000? And the EITF came out with the answer. And, therefore, the thousands of accountants, all over the country, that were worried about when you incur the expenditures. Should you treat that as an asset or should you treat it as an expense?
So instead of everybody trying to individually figure it out, the EITF said expense it. Everybody had to expense it, and we solved a big emerging problem. It was controversial, many of us felt it should be shown as an asset. Well, there was a lot of money, all those costs. And, in fact, I think I was at first leaning towards it being an asset, and I thought you should put it on the balance sheet, and then amortize it over the next thousand years.
But no one thought that was a particular good idea, so that's how the EITF works. So between the different organizations that are involved in standard setting, new standards continue to keep coming out. And some of the standards that come out are similar to ones that we worked on 10 or 15 years ago, they're still working on it.
For example, revenue recognition, how companies record revenue, was a complex project that the FASB spent years working on. And the IMA, FRC committee provided lots of input to help the FASB make it the best accounting [Indistinct 00:19:45] that they could.
We had other things. We had segment reporting, which they're dealing with now, but we dealt with that about 20 years ago or 30 years ago. I remember one big issue then was when you report your separate segments of a business, they had a concept that you should take to determine the segments. What is reported to the company's chief operating decision maker and people—Who is that? Is it the CEO? Is it someone else?
In my own household, it's my wife who's the chief operating decision maker. But they're still working on the same issues. They're working on over the years, trying to deal with what should be done with goodwill, and every few years they revisit the project. So the standard-setting process goes on and on.
Accountants for corporations, and obviously auditors, as well, have to follow this process, understand it well. See that companies are complying with these requirements in their financial reporting, and that process is a continuum. If you're in accounting, there's lots of stuff that you have to stay on top of.
New pronouncements are coming out all the time, and it's not easy to stay up with all this information. Another common problem that has been going on, over the years, is what basically do you do with the overload of information? With all these pronouncements; they often say what do you have to put in your financial report to disclose a lot of information about it. And the financial statements get more and more complex to read, getting longer and longer. So those are the ongoing process that accountants are continuously involved in.
Adam: I think that's an amazing experience, that you've been able to be a part of, those standard settings and those standards that thousands of companies need to follow. And I can imagine the weight that that held, which is why it takes so long to set standards. But it also can be frustrating because as new things are emerging, which is why you said there's that emerging issues committee, that can help make decisions faster.
But it can be hard, waiting for decisions from committees and from standards boards because things are constantly changing. Especially, now it feels like things are moving faster and faster. How do the standards board committees take that in, as change is happening quicker and quicker?
Norman: Well, they have a whole infrastructure. The Financial Accounting Standards Board has the people who are on the board, but they also have an excellent staff that follow all the problems. People in industry and people in public accounting often write to the FASB and say, "Here's a new problem that we have to address."
The digital age has brought in a lot of accounting problems. When we had a big influx of more and more companies using derivatives, how should they be accounted for? And the way it works is public accounting is each of the firms have their Norm Strauss-type person that's trying to follow all these accounting rules, and make some sense at it, and then providing information to help the staff follow all these rules.
So we, at the Financial Reporting Committee, have a good relationship with the Financial Accounting Standards Board. We meet with them periodically, have direct input on some of the projects of the day. And, again, always with the goal of improving financial reporting whenever we can provide that type of input for doing that.
Adam: That's great. I mean, it's great that they have such a structure because I can imagine how overwhelming it can be. So you need that structure in place to make sure everything's done efficiently, I'm sure.
Norman: One thing that the involvement with the financial reporting committee helped me with is after I retired from Ernst & Young, I went right back to work, and I went to Baruch College to teach. I was giving back to the school because that's what gave me the tools. That's one good thing, as an aside, about accounting. When I said it was a good field to be involved in, what you learn in school is actually what you do on the job. So when you learn accounting, it's not esoteric, and then you don't see any relationship.
So learning the accounting rules gives you the foundation and the tools to be able to have a good career. So when I retired, I wanted to continue to be professionally involved. And I went back to Baruch, and they hired me to teach a graduate course on contemporary accounting topics, which is, coincidentally, is the same name of the course that I had Professor Briloff with, many years before that. And, again, I was on the IMA committee discussing the issues, and in my contemporary accounting topics course, we did the same thing.
We talked about, in my class, the issues of the day. So it was always a direct benefit for me, personally, to have all that involvement, over the years, with the committee. But teaching students about accounting and telling them why I thought it was a good field was very rewarding.
The other people teaching, they all had PhDs, and this and that, but I had the actual experience of doing what they were going over in the classroom. And I think the students got a lot out of that thing. I was teaching over many years, and at the beginning of every semester, I told the class that I'm giving back, and I'm Baruch alumni. And I told them that I went to Baruch College so long ago, that they only had debits at that time.
So my problem was the students looked at me like it must have been true. But, anyway, I would always try to add a little humor to the discussion, in fact, as an example, to try to keep them laughing. Otherwise, accounting can sometimes make your eyes a little heavy, if you don't add a little bit of humor to it.
So I told them that one of my problems, as a teacher, is that I'm not very good anymore of remembering names, as you get older, it gets harder and harder. And I told them, this story is in the context of some accountant subject I was talking about. I told them about the two couples kind of my age who were in the car together, the two men in the front and the two ladies in the back. And the fellow in the front said to the other guy, he said, "What a great restaurant we went to last night."
And the other fellow said, "Oh, what was the name of it?"
And like many of us older accountants tend to say, "The name of the restaurant was um..." And, so, he said, finally, help me out, "What's the name of a flower with thorns on the side, and the top of the flower is red?"
And the other guy says, "A rose?"
He says, thank you, and then turns back to the back seat and says, "Rose, what was the name of the restaurant we went to last night." The students laughed, and then we went back to whatever topic I was discussing at the time. But the students at the college recognize, because Baruch college is, kind of not where if your parents had a lot of money, that would be your first choice. You'd go to a much bigger type of school, but you won't get a better accounting education. And, therefore, the students were very attuned to really trying to learn this stuff.
Because this gave them a shot that they had, maybe, they'd be the first generation accounting students, first generation college graduates, and they'd be able to get into the accounting profession and have a chance of making it. And that's the thing, again, for people in accounting, you can make it on your own. You don't have to know anybody. You just have to work hard, learn the stuff, be willing to put in the necessary hours.
And another thing that helps is staying power, to be able to stay in there for a lot of years and work yourself up. People that do that, the rewards are great.
Adam: Well, Norm, thank you so much for the wonderful insights. It was great to hear your story and just a little bit about the things you've done. And I'm sure that we could talk for hours, just telling about your story. But I really appreciate the insight you've shared, and just thank you so much for all that you've given to IMA, as an organization, and to all the other organizations you've connected with. And it's great knowing you, and it's great hearing more about your story and sharing with our audience today.
Norman: And being with the IMA was a great opportunity for me.
< Outro >
Announcer: This has been Count Me In, IMA's podcast, providing you with the latest perspectives of thought leaders, from the accounting and finance profession. If you like what you heard and you'd like to be counted in for more relevant accounting in finance education, visit IMA's website at www.imainet.org.
Creators & Guests
Guest
Norman N. Strauss, CPA
Strauss retired as a partner at Ernst & Young in 2001 and is currently serving as EY’s executive professor in residence at Baruch College, where he teaches contemporary accounting in the graduate school. Strauss was EY’s national director of accounting standards as well as EY’s representative on the FASB’s Emerging Issues Task Force and the Financial Accounting Standards Advisory Council.
What is Count Me In®?
IMA® (Institute of Management Accountants) brings you the latest perspectives and learnings on all things affecting the accounting and finance world, as told by the experts working in the field and the thought leaders shaping the profession. Listen in to gain valuable insight and be included in the future of accounting and finance!
< Intro >
– Today we have a special episode
of Count Me In called IMA Life.
We're going to start talking
to different management accountants,
from IMA, and hear their journey.
Today we sat down with Norman Strauss,
a veteran in the accounting profession,
with over 60 years of experience.
We chat about Norm's beginnings.
Sharing stories from his
early days in accounting.
Navigating the challenges posed
by technological advancements,
and the significant role
mentors have played in his career.
Norm provides insights in his
involvement with various committees,
and sheds light on the complex process
of setting accounting standards.
With a dash of humor
and a plethora of wisdom,
Norm shares valuable insights
in his impressive journey.
So tune in, for an episode
brimming with decades of
experience and invaluable insights.
< Music >
– Well, Norm, I'm really excited
to have you on the podcast,
on our new IMA Life series,
and you've had quite the career.
And could you start, maybe, by sharing
a memorable story of your early days,
in your career.
Maybe some challenges that you had,
as you just got started in accounting?
– Well, thanks for having me,
and it has been a long career.
I was 36 years with the Financial
Reporting Committee, of the IMA,
and I also was in public
accounting for many years.
And if you add it all up,
it's about 60 years' worth of doing
things in the accounting profession,
which I've always felt is
a tremendous profession.
And I think there's lots and lots
of opportunities for people
that are getting into accounting.
You start at a beginning position.
You work your way up,
if you keep working hard,
you get challenges
throughout your whole career
and tremendous opportunities
to continue with dancing.
So I'm very pleased that
I went into accounting,
even though it's a long time ago.
And I've finally gotten
to the end of my career
with the Financial Teporting
Committee, after those 36 years.
So it is nice to keep going, and it's a
pleasure to be here today with you.
– Well, I can imagine just the things
you've seen in a 60-year career.
That's some people's lifetimes
and more than their lifetimes.
And just thinking about
everything you've seen
how do you think accountants
are handling the changes?
Because in the last ten years alone,
the amount of technology changes
that have happened across the world,
the industries, has just been remarkable.
And I'm sure the first part of your career,
the technology was changing but
not as rapidly as it's happening today.
– It is a real challenge
for people in the field, now.
In my day, we didn't have computers; and
it was nice, and slow, and worksheets,
and you did everything in pencil.
And now with all the technology, it's
a terrific opportunity to get involved
with all of these different things.
So depending upon where you're working,
hopefully, as you're moving
along in your career path,
the company that you're in will
give you a lot of background,
but a lot of training,
and a lot of people that you'll be
ble to learn these things from.
And that's one good thing about
the profession, it's not stagnant.
You have these changes.
So there's always something new,
and always something that's
interesting that's happening
Now, I go all the way
back in the beginning,
and one thing I always felt
that helped my career was luck.
It was always nice when
good things happened to you.
So I started at Baruch College and
I was going for my master's degree,
and I took a course on
contemporary accounting topics,
with a professor by the
name of Abraham Briloff,
and I'd never heard of him before.
But as it turns out, I found out that he's
one of the most famous professors,
at the time, and he was a tremendous
critic of the accounting profession.
So I went into the first day of
class and he said, who am I?
And I said, "I'm Norman Strauss."
And he said, "You go sit in the front row,"
rather, and that's where he pointed.
But I didn't want to sit in the front row.
So when he wasn't looking, I went all
the way to the back of the classroom.
And then he started talking, and I'd
never heard a professor like this before.
I mean, he was using big words,
complicated accounting theories
that he's imposing on everybody.
He was even so interesting that he
was making quotes to accounting,
in the Bible, which was not easy to do.
So I was amazed, and he was really
critical of the accounting profession.
And, all of a sudden, the student
who was sitting where I was supposed
to sit, up front said, "Professor Briloff,
I have to object to your criticism
of the accounting profession."
And then this young fella,
articulately, explained
why the accounting
profession is really good,
and basically disagreed with the
discussion that he was giving us.
So Professor Briloff said, "That was
a wonderful explanation, Strauss."
So he thought that I was still upfront,
that he had my name mixed up.
And the next week I got there
very early and I sat in that seat,
and it worked out very nicely.
The rest of the semester he kept
smiling at me, so that's kind of luck.
But then getting into public accounting,
when you start at the very
beginning, in the old days,
you had the interesting
title of a junior accountant.
And that, of course, was
not particularly complementary.
But after a while, if you worked hard,
you became what was then
called a semi senior accountant,
which was even worse,
and eventually you
made senior accountant.
And I remember in those days, when
I started as a junior accountant,
you really had to worry that you'd
get fired after the busy season.
I know cycles come and go.
Now, we read a lot about
firms letting go off people,
but that's the nature of the profession.
Everybody needs accountants
in business, and therefore
the opportunities are unlimited.
So, anyway, I was worrying about
getting let go right after the tax season.
And I confided with a semi senior,
who I was reporting to, and, to me,
he was so smart, he knew everything.
And I told him, "I'm really worried
that I think I'm going to be let go."
And he said, "Norm, don't
worry, you're really doing fine."
And then the next day, I went to work
and I found out that he got fired.
So that was an interesting challenge.
But if you keep doing your thing, learning
from the people that you work with,
you could keep advancing up the ladder.
– I think that's some great advice.
As I've read about your story
and chatted with you, mentors have
held an important part of your career.
Maybe you can talk a little bit about
the different mentors you've had
and how they've helped you move along,
as you've moved forward in your career.
– Well, after being in auditing
for quite a number of years,
I became involved in what I
would call accounting theory.
There's lots of rules that
affect financial reporting,
and people make those rules,
they're not scientific, necessarily,
people decide, and there's a
lot of judgment, it's subjective,
and to keep on top of
those rules is no easy thing.
But I kept doing more and more
of that while I was an auditor,
but also people started to recognize
that I seemed to be pretty
good at these technical matters.
In fact, another, you might call it luck,
I'm not sure, turning point for me
was when I was a young auditor,
we used to do what we
called analytical review.
We probably still call it the same thing,
but now it's all on the computers.
In those days we had
a 14-column worksheet,
and what we did was we analyzed
changes in the financial results,
that the company had
gone through for the year.
And where there were significant
differences, you had to investigate those
because those were the red flags.
So I prepared this 14-column worksheet.
One column said "This Year's Expense"
and the second column
said "Last Year's Expense",
and the third column said, "Difference".
And when the difference was big,
you had to find out why.
So I had looked at the payroll
and it went way down, and
I went into the controller,
and I said, "Why did
payroll go down, this year?"
And he gave me a very articulate answer,
and I was very proud of myself how
well I had written the explanation
on my 14-column worksheet.
And right before I was going to
give it to my supervisor to review,
I looked, and payroll did not go
down that year, it really went up.
And I'd put the numbers in the wrong
column, last year's on this year.
So, in fact, I then looked,
and I had to quickly erase the numbers
that I had put on my worksheet
and then go back to the controller
and ask him why the payroll went up.
And he gave me another brilliant
explanation, which I put on my worksheet.
And it was just around that
time that someone said,
"Maybe we ought to take
Norman off the auditing staff,
and put him into the technical
accounting theory end of things."
So maybe it was luck
that I made that mistake.
But I ended up going
into a technical group,
where we were involved in
reviewing financial statements
that my accounting firm had audited.
And that led me to be able to go up,
in the end, where I was, eventually,
the guru of the firm, and following all
of the technical material that kept coming
from the group that says Accounting
Standards in the United States,
which is the FASB, the Financial
Accounting Standards Board.
And also following a lot of the SEC
requirements, of which public companies
have many things that
they have to comply with.
Now, one thing in moving up
the ladder that's also lucky,
if you have a good mentor that
can help you in learning a lot
and moving up in the organization.
I was fortunate, in my
years at Ernst & Young,
which is one of the major accounting
firms, my boss was Denny Beresford.
he was a long-time member of
the Financial Reporting Committee,
of the Institute of
Management Accountants.
And he was the person that I reported to,
as we worked through all of the
different accounting requirements
that were being established
by the standard setters.
Now, another lucky thing for me was
that he became chairman of the FASB.
He was an Ernst & Young national
director of accounting partner,
and a tremendous accomplishment
to be selected in this very important
position, in the accounting world.
And once he went there,
I was with him, as an aside,
at the time that he was named
to be the chairman of the FASB, and I
thought at first he was going to faint.
He was so excited about the opportunity.
And once he became chairman,
he, of course, had to leave his
partner position at Ernst & Young,
and he also resigned from the
Financial Reporting Committee
of the Institute of
Management Accountants,
since you can't do all of those things.
So once he went to the FASB, I was
fortunate in being named his successor
to be a member of the
Financial Reporting Committee,
well, that was in 1989 or something,
and I've been there ever since,
up until just about a month ago.
So he went on and did a great job at
the FASB, as chairman, for ten years.
And I worked many years with
the Financial Reporting Committee.
– Mh-hmm, well, maybe we
could talk a little bit about
being a part of the Financial
Reporting Committee.
Because not everybody knows the ins and
outs of being a part of such a committee,
on the board for an organization like IMA.
Maybe you could talk a little bit about
your experience, being a part of the FRC,
and then also maybe some challenges
that you faced as you navigated
those waters for many years.
– The Financial Reporting
Committee plays an essential role
in the standard setting process.
Backing up the Financial
Accounting Standards Board
establishes the accounting
standards, in the United States.
A very complex process
that takes something
from the beginning of a project,
until all the corporations, in the United
States, have to follow the new rules.
The FASB wants input from
lots of outside organizations,
which help them evaluate whether the
standards are operational, practical,
and the best possible answer for the
particular problem that's being addressed.
Well, many people respond to the FASB,
and one significant committee
that does that is the FRC.
The FRC is the separate committee of
the Institute of Management Accountants,
whose main objective is to be
responsive to standard setters,
particularly the FASB,
but also the SEC as well.
And this committee has members that are
experts in accounting reporting matters.
And what the committee did, which
I was participating for many years,
is to get involved with
a particular proposal.
The FASB, when they're trying to see
what people think, first, issues a proposal,
and people can comment on it.
And the important role that the FRC
plays is to give a response to the FASB,
which they think is going
to be helpful for them.
And the FASB is very appreciative of the
role that the FRC plays, in this process.
And my role was to work with
the members of the committee
who, as I say, are very
smart accounting experts.
We also have people that were
involved with the user view.
They use the financial statements and
want to know what the best answer is.
Not from the accountant's point of view,
but the people who actually use
the product, the financial statements,
and academics were on the committee.
So we'd all, in an interesting
process of reading the proposal,
we were to make the choice
of method A or method B.
To be having a dialogue about which
the committee thinks is the best,
and to work that through until
you have a thoughtful response
that will go to the standard setters.
And, then, hopefully, we'd always feel that
they would first appreciate that we did it.
And, on occasion, they even agreed with
us and changed their proposal to meet
the suggestions that we had made.
– That's great, to be able
to have that connection
to such an organization
that sets the standards,
and to be able to have that
input, that's really important.
And you've held a number of
roles in different committees,
whether FRC or AICPA, or even
the IASB, advisory council.
Maybe you can talk a little bit
about what that means as a leader,
and a thought leader, in the industry.
To be able to be a part of those
committees and share your insights
that you've learned over the years.
– Well, I was fortunate in working on
the technical matters in Ernst & Young,
and also getting all the background
from participating with the
Financial Reporting Committee
to move up the ranks, so to speak,
in the accounting standards process.
In addition to the FASB, as
examples of the other committees
that are involved in these different things.
There are international
accounting standards
as well as United States standards.
There's an organization called the
International Accounting Standards Board,
and they have an advisory council,
and the FASB has an advisory council.
So that they have lots of experts
to provide them with advice.
So I was on both; I was on the FASB's
advisory council and the international one.
The international one was fun,
going around to different countries
to meet with accountants
from all over the world.
In fact, as an aside, years ago,
there was a thought that
the way we were doing this really
didn't make the most sense.
Why have an International
Accounting Standards Board
and a Financial Accounting
Standards Board in the United States?
Why not just have one and
have one set of standards,
that the whole world would have to follow
when they issue financial statements?
Well, everybody thought we would have to,
perhaps, throw away all our
United States accounting books,
and adopt the international standards.
But what really happened, in the end,
was the two organizations couldn't
really agree on what the right answer is
for these judgmental accounting issues.
And therefore they decided
to have each go their own way
and try to have standards that are
compatible as much as possible.
So if you have an international company,
they have to potentially be
following international standards
as well as U.S. standards.
But in addition to the process of having
the standards setters, themselves,
there used to be several
other committees
that I was fortunate to participate on.
One was called the Accounting Standards
Executive Committee, or the
AcSEC, as it was referred to as.
And that was a committee
that dealt with projects
that the FASB itself, the senior standards
setter, did not really have the energy,
or time, or resources to work on,
but felt that the AcSEC committee
could handle it, and that was nice.
When I was on the committee,
I chaired it, and we worked
on several pronouncements
that actually are still part of
the accounting literate today,
even though it was many years ago.
And, so, we were a standard setter.
One example, we issued
an accounting rule on risks
and uncertainties, that corporations
still are following today, and
it was very controversial.
So we issued proposals also
and got many comment letters,
as an aside, on that particular
one that we issued for comments.
We got 200 comment letters,
199 of them opposed
what we wanted to do.
The only one who supported it,
I think, at the time, was my mother.
But we did end up finalizing it
and it's in the literature, today.
Another committee that I served
on, for about 10 years, was called,
and still exists, only it's not
quite as active, as in my day,
is the Emerging Issues Task Force.
And that's a task force of the FASB,
referred to as the EITF,
and they too would work
on things that are similar to what
the name implies, emerging issues.
The FASB issues proposals,
they work on it, sometimes,
for many years, and finally they finalize it.
If you have an emerging issue,
corporations couldn't wait
until the EITF actually finalized it,
and we used to work on those things.
One quick example, in 1999, you may
remember, everyone was worried
that the computers wouldn't work on
December 31st because of the change.
That they really weren't set to
handle the new numbers of digits,
to go into the pronouncements.
And everybody was afraid
the computers would stop,
planes would stop flying,
and it would be a disaster.
Well, the accounting
end of this thing, obviously,
less important than the planes flying,
was that what should companies do
with all the costs that they had to incur,
to make the change from
the old computer system
to the new computer system, to
e able to go into the year 2000?
And the EITF came out with the answer.
And, therefore, the thousands of
accountants, all over the country,
that were worried about when
you incur the expenditures,
should you treat that as an asset or
should you treat it as an expense?
So instead of everybody
trying to individually figure it out,
the EITF said expense it.
Everybody had to expense it, and
we solved a big emerging problem.
It was controversial,
many of us felt it should
be shown as an asset.
Well, there was a lot
of money, all those costs.
And, in fact, I think I was at first
leaning towards it being an asset,
and I thought you should
put it on the balance sheet,
and then amortize it over
the next thousand years.
But no one thought that
was a particular good idea,
so that's how the EITF works.
So between the different organizations
that are involved in standard setting,
new standards continue
to keep coming out.
And some of the standards that come out
are similar to ones that we
worked on 10 or 15 years ago,
they're still working on it.
For example, revenue recognition,
how companies record
revenue, was a complex project
that the FASB spent years working on.
And the IMA, FRC committee
provided lots of input to help the
FASB make it the best accounting
[Indistinct] since that they could.
We had other things.
We had segment reporting,
which they're dealing with now,
but we dealt with that about
20 years ago or 30 years ago.
I remember one big issue
then was when you report
your separate segments of a business,
they had a concept that you should
take to determine the segments.
What is reported to the company's
chief operating decision
maker and people—Who is that?
Is it the CEO?
Is it someone else?
In my own household, it's my wife who's
the chief operating decision maker.
But they're still working on the same
issues, they're working on over the years,
trying to deal with what
should be done with goodwill,
and every few years
they revisit the project.
So the standard-setting
process goes on and on.
Accountants for corporations,
and obviously auditors, as well,
have to follow this
process, understand it well.
See that companies are complying
with these requirements in
their financial reporting,
and that process is a continuum.
If you're in accounting, there's lots of
stuff that you have to stay on top of.
New pronouncements are coming
out all the time, and it's not easy
to stay up with all this information.
Another common problem
that has been going on, over the
years, is what basically do you do
with the overload of information?
With all these pronouncements;
they often say what do you have
to put in your financial report
to disclose a lot of information about it.
And the financial statements get more
and more complex to read,
getting longer and longer.
So those are the ongoing process
that accountants are
continuously involved in.
– Mh-hmm, I think that's
an amazing experience,
that you've been able to be a part of,
those standard settings
and those standards
that thousands of
companies need to follow.
And I can imagine the
weight that that held,
which is why it takes
so long to set standards.
But it also can be frustrating
because as new things are emerging,
which is why you said there's
that emerging issues committee,
that can help make decisions faster.
But it can be hard waiting
for decisions from committees,
and from standards boards,
because things are constantly changing.
Especially, now it feels like things
are moving faster and faster.
How do the standards board
committees take that in,
as change is happening
quicker and quicker?
– Well, they have a whole infrastructure.
The Financial Accounting Standards Board
has the people who are on the board,
but they also have an excellent
staff that follow all the problems.
People in industry and people in public
accounting often write to the FASB
and say, "Here's a new
problem that we have to address."
The digital age has brought in
a lot of accounting problems.
When we had a big influx of more
and more companies using derivatives,
how should they be accounted for?
And the way it works is public accounting
is each of the firms have their Norm
Strauss-type person that's trying
to follow all these accounting
rules, and make some sense at it,
and then providing information to
help the staff follow all these rules.
So we, at the Financial Reporting
Committee, have a good relationship
with the Financial Accounting
Standards Board.
We meet with them periodically,
have direct input on some
of the projects of the day.
And, again, always with the goal
of improving financial reporting
whenever we can provide that
type of input for doing that.
– That's great, I mean, it's great
that they have such a structure
because I can imagine
how overwhelming it can be.
So you need that structure in place
to make sure everything's
done efficiently, I'm sure.
– One thing that the involvement with
the Financial Reporting Committee
helped me with is after I
retired from Ernst & Young,
I went right back to work, and I
went to Baruch College to teach.
I was giving back to the school
because that's what gave me the tools.
That's one good thing,
as an aside, about accounting.
When I said it was a good
field to be involved in,
what you learn in school is
actually what you do on the job.
So when you learn
accounting, it's not esoteric,
and then you don't see any relationship.
So learning the accounting
rules gives you the foundation
and the tools to be able
to have a good career.
So when I retired, I wanted to
continue to be professionally involved.
And I went back to Baruch, and they
hired me to teach a graduate course
on contemporary accounting topics,
which is, coincidentally, is the same name
of the course that I had
Professor Briloff with,
many years before that.
And, again, I was on the IMA
committee discussing the issues,
and in my contemporary accounting
topics course, we did the same thing.
We talked about, in my class,
the issues of the day.
So it was always a direct
benefit for me, personally,
to have all that involvement, over
the years, with the committee.
But teaching students about accounting
and telling them why I thought it
was a good field was very rewarding.
The other people teaching, they
all had PhDs, and this and that,
but I had the actual experience
of doing what they were going over
in the classroom.
And I think the students
got a lot out of that thing.
I was teaching over many years, and
at the beginning of every semester,
I told the class that I'm giving back,
and I'm a Baruch alumni.
And I told them that I went to
Baruch College so long ago,
that they only had debits at that time.
So my problem was the students
looked at me like it must have been true.
But, anyway, I would always try to
add a little humor to the discussion,
in fact, as an example, to
try to keep them laughing.
Otherwise, accounting can sometimes
make your eyes a little heavy, if you
don't add a little bit of humor to it.
So I told them that one of
my problems, as a teacher,
is that I'm not very good anymore of
remembering names, as you get older,
it gets harder and harder.
And I told them, this story is in the
context of some accountant subject
I was talking about.
I told them about the two
couples kind of my age
who were in the car together,
the two men in the front and
the two ladies in the back.
And the fellow in the front
said to the other guy, he said,
"What a great restaurant
we went to last night."
And the other fellow said, "Oh,
what was the name of it?"
And like many of us older
accountants tend to say,
"The name of the restaurant was um..."
And, so, he said, finally, help me out,
"What's the name of a flower
with thorns on the side,
and the top of the flower is red?"
And the other guy says, "A rose?"
He says, thank you, and then turns back
to the back seat and says, "Rose,
what was the name of the restaurant
we went to last night."
The students laughed,
and then we went back
to whatever topic I was
discussing at the time.
But the students at the college recognize,
because Baruch college is,
kind of not where if your parents
had a lot of money, that
would be your first choice.
You'd go to a much bigger type of school,
but you won't get a
better accounting education.
And, therefore, the students were very
attuned to really trying to learn this stuff.
Because this gave them a shot
that they had, maybe, they'd be the
first generation accounting students,
first generation college graduates,
and they'd be able to get
into the accounting profession
and have a chance of making it.
And that's the thing, again,
for people in accounting,
you can make it on your own.
You don't have to know anybody.
You just have to work hard,
learn the stuff, be willing to
put in the necessary hours.
And another thing that
helps is staying power,
to be able to stay in there for a
lot of years and work yourself up.
People that do that, the rewards are great.
– Well, Norm, thank you so
much for the wonderful insights.
It was great to hear your story and just
a little bit about the things you've done.
And I'm sure that we could talk for
hours, just telling about your story.
But I really appreciate the insight you've
shared, and just thank you so much
for all that you've given
to IMA, as an organization,
and to all the other organizations
you've connected with.
And it's great knowing you,
and it's great hearing more
about your story and sharing
with our audience today.
– And being with the IMA was
a great opportunity for me.
< Outro >
– This has been Count Me In,
IMA's podcast, providing you with the
latest perspectives of thought leaders,
from the accounting
and finance profession.
If you like what you heard,
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