1 00:00:00,000 --> 00:00:05,834 < Intro > 2 00:00:05,834 --> 00:00:09,667 – Today we have a special episode of Count Me In called IMA Life. 3 00:00:09,667 --> 00:00:10,690 We're going to start talking 4 00:00:10,690 --> 00:00:14,834 to different management accountants, from IMA, and hear their journey. 5 00:00:14,870 --> 00:00:18,334 Today we sat down with Norman Strauss, a veteran in the accounting profession, 6 00:00:18,334 --> 00:00:20,970 with over 60 years of experience. 7 00:00:20,970 --> 00:00:22,667 We chat about Norm's beginnings. 8 00:00:22,667 --> 00:00:25,167 Sharing stories from his early days in accounting. 9 00:00:25,167 --> 00:00:28,180 Navigating the challenges posed by technological advancements, 10 00:00:28,180 --> 00:00:31,834 and the significant role mentors have played in his career. 11 00:00:31,880 --> 00:00:34,430 Norm provides insights in his involvement with various committees, 12 00:00:34,430 --> 00:00:36,230 and sheds light on the complex process 13 00:00:36,230 --> 00:00:38,310 of setting accounting standards. 14 00:00:38,310 --> 00:00:40,860 With a dash of humor and a plethora of wisdom, 15 00:00:40,860 --> 00:00:43,710 Norm shares valuable insights in his impressive journey. 16 00:00:43,710 --> 00:00:44,833 So tune in, for an episode 17 00:00:44,833 --> 00:00:48,167 brimming with decades of experience and invaluable insights. 18 00:00:48,167 --> 00:00:55,000 < Music > 19 00:00:55,000 --> 00:00:56,167 – Well, Norm, I'm really excited 20 00:00:56,167 --> 00:00:59,190 to have you on the podcast, on our new IMA Life series, 21 00:00:59,190 --> 00:01:00,890 and you've had quite the career. 22 00:01:00,890 --> 00:01:04,119 And could you start, maybe, by sharing a memorable story of your early days, 23 00:01:04,119 --> 00:01:05,520 in your career. 24 00:01:05,520 --> 00:01:08,960 Maybe some challenges that you had, as you just got started in accounting? 25 00:01:08,960 --> 00:01:12,740 – Well, thanks for having me, and it has been a long career. 26 00:01:12,740 --> 00:01:17,860 I was 36 years with the Financial Reporting Committee, of the IMA, 27 00:01:17,860 --> 00:01:20,333 and I also was in public accounting for many years. 28 00:01:20,333 --> 00:01:21,833 And if you add it all up, 29 00:01:21,833 --> 00:01:25,510 it's about 60 years' worth of doing things in the accounting profession, 30 00:01:25,510 --> 00:01:29,170 which I've always felt is a tremendous profession. 31 00:01:29,170 --> 00:01:32,666 And I think there's lots and lots of opportunities for people 32 00:01:32,666 --> 00:01:34,900 that are getting into accounting. 33 00:01:34,900 --> 00:01:37,450 You start at a beginning position. 34 00:01:37,450 --> 00:01:39,630 You work your way up, if you keep working hard, 35 00:01:39,630 --> 00:01:41,700 you get challenges throughout your whole career 36 00:01:41,700 --> 00:01:45,130 and tremendous opportunities to continue with dancing. 37 00:01:45,130 --> 00:01:47,690 So I'm very pleased that I went into accounting, 38 00:01:47,690 --> 00:01:49,640 even though it's a long time ago. 39 00:01:49,640 --> 00:01:53,140 And I've finally gotten to the end of my career 40 00:01:53,140 --> 00:01:56,600 with the Financial Teporting Committee, after those 36 years. 41 00:01:56,600 --> 00:02:01,333 So it is nice to keep going, and it's a pleasure to be here today with you. 42 00:02:01,499 --> 00:02:03,166 – Well, I can imagine just the things 43 00:02:03,166 --> 00:02:06,166 you've seen in a 60-year career. 44 00:02:06,166 --> 00:02:09,333 That's some people's lifetimes and more than their lifetimes. 45 00:02:09,333 --> 00:02:11,999 And just thinking about everything you've seen 46 00:02:11,999 --> 00:02:14,499 how do you think accountants are handling the changes? 47 00:02:14,499 --> 00:02:17,166 Because in the last ten years alone, 48 00:02:17,166 --> 00:02:21,620 the amount of technology changes that have happened across the world, 49 00:02:21,620 --> 00:02:25,080 the industries, has just been remarkable. 50 00:02:25,080 --> 00:02:28,380 And I'm sure the first part of your career, 51 00:02:28,380 --> 00:02:31,910 the technology was changing but not as rapidly as it's happening today. 52 00:02:31,910 --> 00:02:34,819 – It is a real challenge for people in the field, now. 53 00:02:34,819 --> 00:02:38,666 In my day, we didn't have computers; and it was nice, and slow, and worksheets, 54 00:02:38,666 --> 00:02:40,499 and you did everything in pencil. 55 00:02:40,499 --> 00:02:46,499 And now with all the technology, it's a terrific opportunity to get involved 56 00:02:46,499 --> 00:02:48,110 with all of these different things. 57 00:02:48,110 --> 00:02:50,666 So depending upon where you're working, 58 00:02:50,666 --> 00:02:54,170 hopefully, as you're moving along in your career path, 59 00:02:54,170 --> 00:02:57,332 the company that you're in will give you a lot of background, 60 00:02:57,332 --> 00:02:58,666 but a lot of training, 61 00:02:58,666 --> 00:03:01,666 and a lot of people that you'll be ble to learn these things from. 62 00:03:01,666 --> 00:03:04,832 And that's one good thing about the profession, it's not stagnant. 63 00:03:04,832 --> 00:03:06,019 You have these changes. 64 00:03:06,019 --> 00:03:07,590 So there's always something new, 65 00:03:07,590 --> 00:03:10,832 and always something that's interesting that's happening 66 00:03:10,832 --> 00:03:13,849 Now, I go all the way back in the beginning, 67 00:03:13,849 --> 00:03:17,180 and one thing I always felt that helped my career was luck. 68 00:03:17,180 --> 00:03:19,499 It was always nice when good things happened to you. 69 00:03:19,499 --> 00:03:25,665 So I started at Baruch College and I was going for my master's degree, 70 00:03:25,700 --> 00:03:28,999 and I took a course on contemporary accounting topics, 71 00:03:28,999 --> 00:03:31,499 with a professor by the name of Abraham Briloff, 72 00:03:31,499 --> 00:03:32,920 and I'd never heard of him before. 73 00:03:32,920 --> 00:03:36,800 But as it turns out, I found out that he's one of the most famous professors, 74 00:03:36,800 --> 00:03:41,620 at the time, and he was a tremendous critic of the accounting profession. 75 00:03:41,620 --> 00:03:45,165 So I went into the first day of class and he said, who am I? 76 00:03:45,165 --> 00:03:46,500 And I said, "I'm Norman Strauss." 77 00:03:46,500 --> 00:03:49,040 And he said, "You go sit in the front row," 78 00:03:49,040 --> 00:03:52,510 rather, and that's where he pointed. 79 00:03:52,510 --> 00:03:54,030 But I didn't want to sit in the front row. 80 00:03:54,030 --> 00:03:57,998 So when he wasn't looking, I went all the way to the back of the classroom. 81 00:03:57,998 --> 00:04:01,332 And then he started talking, and I'd never heard a professor like this before. 82 00:04:01,332 --> 00:04:03,165 I mean, he was using big words, 83 00:04:03,165 --> 00:04:06,998 complicated accounting theories that he's imposing on everybody. 84 00:04:06,998 --> 00:04:10,332 He was even so interesting that he was making quotes to accounting, 85 00:04:10,332 --> 00:04:12,400 in the Bible, which was not easy to do. 86 00:04:12,400 --> 00:04:16,998 So I was amazed, and he was really critical of the accounting profession. 87 00:04:16,998 --> 00:04:19,070 And, all of a sudden, the student 88 00:04:19,070 --> 00:04:24,080 who was sitting where I was supposed to sit, up front said, "Professor Briloff, 89 00:04:24,080 --> 00:04:27,810 I have to object to your criticism of the accounting profession." 90 00:04:27,810 --> 00:04:30,540 And then this young fella, articulately, explained 91 00:04:30,540 --> 00:04:32,910 why the accounting profession is really good, 92 00:04:32,910 --> 00:04:36,520 and basically disagreed with the discussion that he was giving us. 93 00:04:36,520 --> 00:04:41,665 So Professor Briloff said, "That was a wonderful explanation, Strauss." 94 00:04:41,729 --> 00:04:45,998 So he thought that I was still upfront, that he had my name mixed up. 95 00:04:45,998 --> 00:04:51,150 And the next week I got there very early and I sat in that seat, 96 00:04:51,150 --> 00:04:52,350 and it worked out very nicely. 97 00:04:52,350 --> 00:04:57,440 The rest of the semester he kept smiling at me, so that's kind of luck. 98 00:04:57,440 --> 00:05:00,550 But then getting into public accounting, 99 00:05:00,550 --> 00:05:03,600 when you start at the very beginning, in the old days, 100 00:05:03,600 --> 00:05:06,530 you had the interesting title of a junior accountant. 101 00:05:06,530 --> 00:05:09,530 And that, of course, was not particularly complementary. 102 00:05:09,530 --> 00:05:11,090 But after a while, if you worked hard, 103 00:05:11,090 --> 00:05:14,660 you became what was then called a semi senior accountant, 104 00:05:14,660 --> 00:05:15,998 which was even worse, 105 00:05:15,998 --> 00:05:18,419 and eventually you made senior accountant. 106 00:05:18,419 --> 00:05:21,664 And I remember in those days, when I started as a junior accountant, 107 00:05:21,790 --> 00:05:25,498 you really had to worry that you'd get fired after the busy season. 108 00:05:25,498 --> 00:05:27,164 I know cycles come and go. 109 00:05:27,164 --> 00:05:29,790 Now, we read a lot about firms letting go off people, 110 00:05:29,790 --> 00:05:31,498 but that's the nature of the profession. 111 00:05:31,498 --> 00:05:34,664 Everybody needs accountants in business, and therefore 112 00:05:34,664 --> 00:05:36,498 the opportunities are unlimited. 113 00:05:36,498 --> 00:05:41,998 So, anyway, I was worrying about getting let go right after the tax season. 114 00:05:41,998 --> 00:05:44,164 And I confided with a semi senior, 115 00:05:44,164 --> 00:05:48,290 who I was reporting to, and, to me, he was so smart, he knew everything. 116 00:05:48,290 --> 00:05:52,498 And I told him, "I'm really worried that I think I'm going to be let go." 117 00:05:52,498 --> 00:05:55,389 And he said, "Norm, don't worry, you're really doing fine." 118 00:05:55,389 --> 00:05:59,331 And then the next day, I went to work and I found out that he got fired. 119 00:05:59,340 --> 00:06:02,250 So that was an interesting challenge. 120 00:06:02,250 --> 00:06:05,664 But if you keep doing your thing, learning from the people that you work with, 121 00:06:05,664 --> 00:06:08,497 you could keep advancing up the ladder. 122 00:06:08,497 --> 00:06:10,600 – I think that's some great advice. 123 00:06:10,600 --> 00:06:12,497 As I've read about your story 124 00:06:12,497 --> 00:06:17,630 and chatted with you, mentors have held an important part of your career. 125 00:06:17,630 --> 00:06:19,729 Maybe you can talk a little bit about the different mentors you've had 126 00:06:19,729 --> 00:06:23,040 and how they've helped you move along, as you've moved forward in your career. 127 00:06:23,040 --> 00:06:28,970 – Well, after being in auditing for quite a number of years, 128 00:06:28,970 --> 00:06:33,164 I became involved in what I would call accounting theory. 129 00:06:33,164 --> 00:06:36,830 There's lots of rules that affect financial reporting, 130 00:06:36,830 --> 00:06:41,164 and people make those rules, they're not scientific, necessarily, 131 00:06:41,164 --> 00:06:44,420 people decide, and there's a lot of judgment, it's subjective, 132 00:06:44,420 --> 00:06:47,970 and to keep on top of those rules is no easy thing. 133 00:06:47,970 --> 00:06:51,620 But I kept doing more and more of that while I was an auditor, 134 00:06:51,620 --> 00:06:53,440 but also people started to recognize 135 00:06:53,440 --> 00:06:56,997 that I seemed to be pretty good at these technical matters. 136 00:06:56,997 --> 00:06:59,330 In fact, another, you might call it luck, 137 00:06:59,330 --> 00:07:05,270 I'm not sure, turning point for me was when I was a young auditor, 138 00:07:05,270 --> 00:07:08,664 we used to do what we called analytical review. 139 00:07:08,664 --> 00:07:10,720 We probably still call it the same thing, 140 00:07:10,720 --> 00:07:12,330 but now it's all on the computers. 141 00:07:12,330 --> 00:07:15,530 In those days we had a 14-column worksheet, 142 00:07:15,530 --> 00:07:19,830 and what we did was we analyzed changes in the financial results, 143 00:07:19,830 --> 00:07:22,240 that the company had gone through for the year. 144 00:07:22,240 --> 00:07:25,810 And where there were significant differences, you had to investigate those 145 00:07:25,810 --> 00:07:27,590 because those were the red flags. 146 00:07:27,590 --> 00:07:30,599 So I prepared this 14-column worksheet. 147 00:07:30,599 --> 00:07:32,960 One column said "This Year's Expense" 148 00:07:32,960 --> 00:07:35,330 and the second column said "Last Year's Expense", 149 00:07:35,330 --> 00:07:37,163 and the third column said, "Difference". 150 00:07:37,163 --> 00:07:38,250 And when the difference was big, 151 00:07:38,250 --> 00:07:39,780 you had to find out why. 152 00:07:39,780 --> 00:07:42,000 So I had looked at the payroll 153 00:07:42,000 --> 00:07:45,330 and it went way down, and I went into the controller, 154 00:07:45,330 --> 00:07:47,650 and I said, "Why did payroll go down, this year?" 155 00:07:47,650 --> 00:07:50,163 And he gave me a very articulate answer, 156 00:07:50,163 --> 00:07:54,663 and I was very proud of myself how well I had written the explanation 157 00:07:54,669 --> 00:07:56,789 on my 14-column worksheet. 158 00:07:56,789 --> 00:08:00,600 And right before I was going to give it to my supervisor to review, 159 00:08:00,600 --> 00:08:05,830 I looked, and payroll did not go down that year, it really went up. 160 00:08:05,830 --> 00:08:09,320 And I'd put the numbers in the wrong column, last year's on this year. 161 00:08:09,320 --> 00:08:10,830 So, in fact, I then looked, 162 00:08:10,830 --> 00:08:14,663 and I had to quickly erase the numbers that I had put on my worksheet 163 00:08:14,680 --> 00:08:18,409 and then go back to the controller and ask him why the payroll went up. 164 00:08:18,409 --> 00:08:21,996 And he gave me another brilliant explanation, which I put on my worksheet. 165 00:08:21,996 --> 00:08:24,730 And it was just around that time that someone said, 166 00:08:24,730 --> 00:08:27,496 "Maybe we ought to take Norman off the auditing staff, 167 00:08:27,496 --> 00:08:31,030 and put him into the technical accounting theory end of things." 168 00:08:31,030 --> 00:08:33,760 So maybe it was luck that I made that mistake. 169 00:08:33,760 --> 00:08:35,969 But I ended up going into a technical group, 170 00:08:35,969 --> 00:08:39,380 where we were involved in reviewing financial statements 171 00:08:39,380 --> 00:08:41,996 that my accounting firm had audited. 172 00:08:41,996 --> 00:08:47,630 And that led me to be able to go up, in the end, where I was, eventually, 173 00:08:47,630 --> 00:08:52,996 the guru of the firm, and following all of the technical material that kept coming 174 00:08:53,130 --> 00:08:56,329 from the group that says Accounting Standards in the United States, 175 00:08:56,329 --> 00:09:00,163 which is the FASB, the Financial Accounting Standards Board. 176 00:09:00,240 --> 00:09:04,996 And also following a lot of the SEC requirements, of which public companies 177 00:09:04,996 --> 00:09:08,000 have many things that they have to comply with. 178 00:09:08,000 --> 00:09:14,050 Now, one thing in moving up the ladder that's also lucky, 179 00:09:14,050 --> 00:09:19,480 if you have a good mentor that can help you in learning a lot 180 00:09:19,480 --> 00:09:21,519 and moving up in the organization. 181 00:09:21,519 --> 00:09:24,640 I was fortunate, in my years at Ernst & Young, 182 00:09:24,640 --> 00:09:29,662 which is one of the major accounting firms, my boss was Denny Beresford. 183 00:09:29,740 --> 00:09:32,890 he was a long-time member of the Financial Reporting Committee, 184 00:09:32,890 --> 00:09:35,329 of the Institute of Management Accountants. 185 00:09:35,329 --> 00:09:38,810 And he was the person that I reported to, 186 00:09:38,810 --> 00:09:41,662 as we worked through all of the different accounting requirements 187 00:09:41,662 --> 00:09:45,580 that were being established by the standard setters. 188 00:09:45,580 --> 00:09:51,496 Now, another lucky thing for me was that he became chairman of the FASB. 189 00:09:51,496 --> 00:09:56,440 He was an Ernst & Young national director of accounting partner, 190 00:09:56,440 --> 00:09:58,495 and a tremendous accomplishment 191 00:09:58,495 --> 00:10:02,990 to be selected in this very important position, in the accounting world. 192 00:10:02,990 --> 00:10:04,510 And once he went there, 193 00:10:04,510 --> 00:10:08,380 I was with him, as an aside, at the time that he was named 194 00:10:08,380 --> 00:10:12,495 to be the chairman of the FASB, and I thought at first he was going to faint. 195 00:10:12,529 --> 00:10:15,529 He was so excited about the opportunity. 196 00:10:15,529 --> 00:10:17,829 And once he became chairman, 197 00:10:17,829 --> 00:10:21,690 he, of course, had to leave his partner position at Ernst & Young, 198 00:10:21,690 --> 00:10:25,162 and he also resigned from the Financial Reporting Committee 199 00:10:25,162 --> 00:10:27,019 of the Institute of Management Accountants, 200 00:10:27,019 --> 00:10:29,579 since you can't do all of those things. 201 00:10:29,579 --> 00:10:36,328 So once he went to the FASB, I was fortunate in being named his successor 202 00:10:36,328 --> 00:10:40,328 to be a member of the Financial Reporting Committee, 203 00:10:40,328 --> 00:10:43,990 well, that was in 1989 or something, and I've been there ever since, 204 00:10:43,990 --> 00:10:46,079 up until just about a month ago. 205 00:10:46,079 --> 00:10:51,662 So he went on and did a great job at the FASB, as chairman, for ten years. 206 00:10:51,662 --> 00:10:55,495 And I worked many years with the Financial Reporting Committee. 207 00:10:55,495 --> 00:10:57,162 – Mh-hmm, well, maybe we could talk a little bit about 208 00:10:57,162 --> 00:10:59,328 being a part of the Financial Reporting Committee. 209 00:10:59,328 --> 00:11:03,079 Because not everybody knows the ins and outs of being a part of such a committee, 210 00:11:03,079 --> 00:11:05,540 on the board for an organization like IMA. 211 00:11:05,540 --> 00:11:08,828 Maybe you could talk a little bit about your experience, being a part of the FRC, 212 00:11:08,829 --> 00:11:10,328 and then also maybe some challenges 213 00:11:10,328 --> 00:11:14,495 that you faced as you navigated those waters for many years. 214 00:11:14,495 --> 00:11:18,450 – The Financial Reporting Committee plays an essential role 215 00:11:18,450 --> 00:11:20,730 in the standard setting process. 216 00:11:20,730 --> 00:11:23,495 Backing up the Financial Accounting Standards Board 217 00:11:23,495 --> 00:11:27,328 establishes the accounting standards, in the United States. 218 00:11:27,328 --> 00:11:29,860 A very complex process that takes something 219 00:11:29,860 --> 00:11:31,630 from the beginning of a project, 220 00:11:31,630 --> 00:11:36,100 until all the corporations, in the United States, have to follow the new rules. 221 00:11:36,100 --> 00:11:42,589 The FASB wants input from lots of outside organizations, 222 00:11:42,589 --> 00:11:48,328 which help them evaluate whether the standards are operational, practical, 223 00:11:48,328 --> 00:11:53,494 and the best possible answer for the particular problem that's being addressed. 224 00:11:53,494 --> 00:11:56,630 Well, many people respond to the FASB, 225 00:11:56,630 --> 00:12:00,328 and one significant committee that does that is the FRC. 226 00:12:00,328 --> 00:12:05,490 The FRC is the separate committee of the Institute of Management Accountants, 227 00:12:05,490 --> 00:12:09,994 whose main objective is to be responsive to standard setters, 228 00:12:09,994 --> 00:12:13,769 particularly the FASB, but also the SEC as well. 229 00:12:13,769 --> 00:12:20,328 And this committee has members that are experts in accounting reporting matters. 230 00:12:20,328 --> 00:12:26,161 And what the committee did, which I was participating for many years, 231 00:12:26,161 --> 00:12:29,828 is to get involved with a particular proposal. 232 00:12:29,828 --> 00:12:34,661 The FASB, when they're trying to see what people think, first, issues a proposal, 233 00:12:34,661 --> 00:12:36,494 and people can comment on it. 234 00:12:36,494 --> 00:12:41,827 And the important role that the FRC plays is to give a response to the FASB, 235 00:12:41,827 --> 00:12:45,750 which they think is going to be helpful for them. 236 00:12:45,750 --> 00:12:52,709 And the FASB is very appreciative of the role that the FRC plays, in this process. 237 00:12:52,709 --> 00:12:55,827 And my role was to work with the members of the committee 238 00:12:55,827 --> 00:12:59,560 who, as I say, are very smart accounting experts. 239 00:12:59,560 --> 00:13:03,339 We also have people that were involved with the user view. 240 00:13:03,339 --> 00:13:07,327 They use the financial statements and want to know what the best answer is. 241 00:13:07,420 --> 00:13:09,680 Not from the accountant's point of view, 242 00:13:09,680 --> 00:13:13,327 but the people who actually use the product, the financial statements, 243 00:13:13,327 --> 00:13:16,100 and academics were on the committee. 244 00:13:16,100 --> 00:13:20,327 So we'd all, in an interesting process of reading the proposal, 245 00:13:20,327 --> 00:13:23,440 we were to make the choice of method A or method B. 246 00:13:23,440 --> 00:13:27,660 To be having a dialogue about which the committee thinks is the best, 247 00:13:27,660 --> 00:13:30,827 and to work that through until you have a thoughtful response 248 00:13:30,827 --> 00:13:32,827 that will go to the standard setters. 249 00:13:32,827 --> 00:13:34,994 And, then, hopefully, we'd always feel that 250 00:13:34,994 --> 00:13:37,230 they would first appreciate that we did it. 251 00:13:37,230 --> 00:13:43,160 And, on occasion, they even agreed with us and changed their proposal to meet 252 00:13:43,160 --> 00:13:45,170 the suggestions that we had made. 253 00:13:45,170 --> 00:13:47,160 – That's great, to be able to have that connection 254 00:13:47,160 --> 00:13:49,839 to such an organization that sets the standards, 255 00:13:49,839 --> 00:13:52,493 and to be able to have that input, that's really important. 256 00:13:52,649 --> 00:13:55,493 And you've held a number of roles in different committees, 257 00:13:55,493 --> 00:14:00,600 whether FRC or AICPA, or even the IASB, advisory council. 258 00:14:00,600 --> 00:14:03,827 Maybe you can talk a little bit about what that means as a leader, 259 00:14:03,827 --> 00:14:06,860 and a thought leader, in the industry. 260 00:14:06,860 --> 00:14:09,490 To be able to be a part of those committees and share your insights 261 00:14:09,490 --> 00:14:11,160 that you've learned over the years. 262 00:14:11,160 --> 00:14:16,327 – Well, I was fortunate in working on the technical matters in Ernst & Young, 263 00:14:16,327 --> 00:14:18,327 and also getting all the background 264 00:14:18,327 --> 00:14:21,570 from participating with the Financial Reporting Committee 265 00:14:21,570 --> 00:14:26,327 to move up the ranks, so to speak, in the accounting standards process. 266 00:14:26,327 --> 00:14:31,327 In addition to the FASB, as examples of the other committees 267 00:14:31,327 --> 00:14:33,639 that are involved in these different things. 268 00:14:33,639 --> 00:14:36,493 There are international accounting standards 269 00:14:36,493 --> 00:14:38,493 as well as United States standards. 270 00:14:38,493 --> 00:14:42,326 There's an organization called the International Accounting Standards Board, 271 00:14:42,450 --> 00:14:47,493 and they have an advisory council, and the FASB has an advisory council. 272 00:14:47,493 --> 00:14:51,240 So that they have lots of experts to provide them with advice. 273 00:14:51,240 --> 00:14:56,350 So I was on both; I was on the FASB's advisory council and the international one. 274 00:14:56,350 --> 00:15:00,326 The international one was fun, going around to different countries 275 00:15:00,326 --> 00:15:03,326 to meet with accountants from all over the world. 276 00:15:03,326 --> 00:15:06,826 In fact, as an aside, years ago, there was a thought that 277 00:15:06,826 --> 00:15:09,670 the way we were doing this really didn't make the most sense. 278 00:15:09,670 --> 00:15:12,420 Why have an International Accounting Standards Board 279 00:15:12,420 --> 00:15:16,140 and a Financial Accounting Standards Board in the United States? 280 00:15:16,140 --> 00:15:19,159 Why not just have one and have one set of standards, 281 00:15:19,159 --> 00:15:20,826 that the whole world would have to follow 282 00:15:20,826 --> 00:15:23,659 when they issue financial statements? 283 00:15:23,659 --> 00:15:25,589 Well, everybody thought we would have to, 284 00:15:25,589 --> 00:15:28,826 perhaps, throw away all our United States accounting books, 285 00:15:28,826 --> 00:15:30,659 and adopt the international standards. 286 00:15:30,659 --> 00:15:32,570 But what really happened, in the end, 287 00:15:32,570 --> 00:15:37,159 was the two organizations couldn't really agree on what the right answer is 288 00:15:37,159 --> 00:15:39,540 for these judgmental accounting issues. 289 00:15:39,540 --> 00:15:42,720 And therefore they decided to have each go their own way 290 00:15:42,720 --> 00:15:46,920 and try to have standards that are compatible as much as possible. 291 00:15:46,920 --> 00:15:48,590 So if you have an international company, 292 00:15:48,590 --> 00:15:51,992 they have to potentially be following international standards 293 00:15:51,992 --> 00:15:53,659 as well as U.S. standards. 294 00:15:53,659 --> 00:15:58,159 But in addition to the process of having the standards setters, themselves, 295 00:15:58,159 --> 00:16:00,326 there used to be several other committees 296 00:16:00,326 --> 00:16:03,449 that I was fortunate to participate on. 297 00:16:03,449 --> 00:16:05,826 One was called the Accounting Standards 298 00:16:05,826 --> 00:16:10,339 Executive Committee, or the AcSEC, as it was referred to as. 299 00:16:10,339 --> 00:16:13,029 And that was a committee that dealt with projects 300 00:16:13,029 --> 00:16:18,200 that the FASB itself, the senior standards setter, did not really have the energy, 301 00:16:18,200 --> 00:16:20,970 or time, or resources to work on, 302 00:16:20,970 --> 00:16:25,826 but felt that the AcSEC committee could handle it, and that was nice. 303 00:16:25,826 --> 00:16:26,860 When I was on the committee, 304 00:16:26,860 --> 00:16:30,759 I chaired it, and we worked on several pronouncements 305 00:16:30,759 --> 00:16:33,760 that actually are still part of the accounting literate today, 306 00:16:33,760 --> 00:16:36,159 even though it was many years ago. 307 00:16:36,159 --> 00:16:38,550 And, so, we were a standard setter. 308 00:16:38,550 --> 00:16:41,992 One example, we issued an accounting rule on risks 309 00:16:41,992 --> 00:16:44,410 and uncertainties, that corporations 310 00:16:44,410 --> 00:16:49,160 still are following today, and it was very controversial. 311 00:16:49,160 --> 00:16:52,410 So we issued proposals also and got many comment letters, 312 00:16:52,410 --> 00:16:56,750 as an aside, on that particular one that we issued for comments. 313 00:16:56,750 --> 00:16:58,940 We got 200 comment letters, 314 00:16:58,940 --> 00:17:02,569 199 of them opposed what we wanted to do. 315 00:17:02,569 --> 00:17:06,325 The only one who supported it, I think, at the time, was my mother. 316 00:17:06,325 --> 00:17:11,790 But we did end up finalizing it and it's in the literature, today. 317 00:17:11,790 --> 00:17:15,658 Another committee that I served on, for about 10 years, was called, 318 00:17:15,658 --> 00:17:19,970 and still exists, only it's not quite as active, as in my day, 319 00:17:19,970 --> 00:17:22,630 is the Emerging Issues Task Force. 320 00:17:22,630 --> 00:17:25,150 And that's a task force of the FASB, 321 00:17:25,150 --> 00:17:29,191 referred to as the EITF, and they too would work 322 00:17:29,191 --> 00:17:34,460 on things that are similar to what the name implies, emerging issues. 323 00:17:34,460 --> 00:17:38,650 The FASB issues proposals, they work on it, sometimes, 324 00:17:38,650 --> 00:17:42,320 for many years, and finally they finalize it. 325 00:17:42,320 --> 00:17:45,870 If you have an emerging issue, corporations couldn't wait 326 00:17:45,870 --> 00:17:50,429 until the EITF actually finalized it, and we used to work on those things. 327 00:17:50,429 --> 00:17:56,325 One quick example, in 1999, you may remember, everyone was worried 328 00:17:56,325 --> 00:18:01,549 that the computers wouldn't work on December 31st because of the change. 329 00:18:01,549 --> 00:18:06,039 That they really weren't set to handle the new numbers of digits, 330 00:18:06,039 --> 00:18:07,158 to go into the pronouncements. 331 00:18:07,158 --> 00:18:10,289 And everybody was afraid the computers would stop, 332 00:18:10,289 --> 00:18:12,825 planes would stop flying, and it would be a disaster. 333 00:18:12,825 --> 00:18:15,491 Well, the accounting end of this thing, obviously, 334 00:18:15,491 --> 00:18:17,640 less important than the planes flying, 335 00:18:17,640 --> 00:18:23,110 was that what should companies do with all the costs that they had to incur, 336 00:18:23,110 --> 00:18:26,150 to make the change from the old computer system 337 00:18:26,150 --> 00:18:30,158 to the new computer system, to e able to go into the year 2000? 338 00:18:30,180 --> 00:18:33,290 And the EITF came out with the answer. 339 00:18:33,290 --> 00:18:36,760 And, therefore, the thousands of accountants, all over the country, 340 00:18:36,760 --> 00:18:39,840 that were worried about when you incur the expenditures, 341 00:18:39,840 --> 00:18:43,991 should you treat that as an asset or should you treat it as an expense? 342 00:18:44,110 --> 00:18:47,360 So instead of everybody trying to individually figure it out, 343 00:18:47,360 --> 00:18:49,658 the EITF said expense it. 344 00:18:49,658 --> 00:18:53,824 Everybody had to expense it, and we solved a big emerging problem. 345 00:18:53,840 --> 00:18:55,510 It was controversial, 346 00:18:55,510 --> 00:18:57,658 many of us felt it should be shown as an asset. 347 00:18:57,658 --> 00:19:00,658 Well, there was a lot of money, all those costs. 348 00:19:00,658 --> 00:19:04,700 And, in fact, I think I was at first leaning towards it being an asset, 349 00:19:04,700 --> 00:19:06,809 and I thought you should put it on the balance sheet, 350 00:19:06,809 --> 00:19:09,480 and then amortize it over the next thousand years. 351 00:19:09,480 --> 00:19:12,324 But no one thought that was a particular good idea, 352 00:19:12,324 --> 00:19:14,289 so that's how the EITF works. 353 00:19:14,289 --> 00:19:19,070 So between the different organizations that are involved in standard setting, 354 00:19:19,070 --> 00:19:21,900 new standards continue to keep coming out. 355 00:19:21,900 --> 00:19:24,120 And some of the standards that come out 356 00:19:24,120 --> 00:19:27,600 are similar to ones that we worked on 10 or 15 years ago, 357 00:19:27,600 --> 00:19:28,991 they're still working on it. 358 00:19:28,991 --> 00:19:31,157 For example, revenue recognition, 359 00:19:31,157 --> 00:19:34,909 how companies record revenue, was a complex project 360 00:19:34,909 --> 00:19:37,657 that the FASB spent years working on. 361 00:19:37,657 --> 00:19:40,491 And the IMA, FRC committee 362 00:19:40,491 --> 00:19:44,760 provided lots of input to help the FASB make it the best accounting 363 00:19:44,760 --> 00:19:46,570 [Indistinct] since that they could. 364 00:19:46,570 --> 00:19:47,570 We had other things. 365 00:19:47,570 --> 00:19:50,824 We had segment reporting, which they're dealing with now, 366 00:19:50,824 --> 00:19:54,450 but we dealt with that about 20 years ago or 30 years ago. 367 00:19:54,450 --> 00:19:58,270 I remember one big issue then was when you report 368 00:19:58,270 --> 00:20:00,690 your separate segments of a business, 369 00:20:00,690 --> 00:20:05,190 they had a concept that you should take to determine the segments. 370 00:20:05,190 --> 00:20:06,990 What is reported to the company's 371 00:20:06,990 --> 00:20:10,824 chief operating decision maker and people—Who is that? 372 00:20:10,880 --> 00:20:11,880 Is it the CEO? 373 00:20:11,880 --> 00:20:12,880 Is it someone else? 374 00:20:12,880 --> 00:20:16,657 In my own household, it's my wife who's the chief operating decision maker. 375 00:20:16,657 --> 00:20:22,157 But they're still working on the same issues, they're working on over the years, 376 00:20:22,159 --> 00:20:24,770 trying to deal with what should be done with goodwill, 377 00:20:24,770 --> 00:20:27,540 and every few years they revisit the project. 378 00:20:27,540 --> 00:20:31,157 So the standard-setting process goes on and on. 379 00:20:31,157 --> 00:20:34,900 Accountants for corporations, and obviously auditors, as well, 380 00:20:34,900 --> 00:20:37,990 have to follow this process, understand it well. 381 00:20:37,990 --> 00:20:39,390 See that companies are complying 382 00:20:39,390 --> 00:20:42,559 with these requirements in their financial reporting, 383 00:20:42,559 --> 00:20:45,049 and that process is a continuum. 384 00:20:45,049 --> 00:20:49,657 If you're in accounting, there's lots of stuff that you have to stay on top of. 385 00:20:49,710 --> 00:20:53,730 New pronouncements are coming out all the time, and it's not easy 386 00:20:53,730 --> 00:20:56,323 to stay up with all this information. 387 00:20:56,323 --> 00:20:58,059 Another common problem 388 00:20:58,059 --> 00:21:03,323 that has been going on, over the years, is what basically do you do 389 00:21:03,323 --> 00:21:05,823 with the overload of information? 390 00:21:05,823 --> 00:21:06,823 With all these pronouncements; 391 00:21:06,823 --> 00:21:10,990 they often say what do you have to put in your financial report 392 00:21:10,990 --> 00:21:13,400 to disclose a lot of information about it. 393 00:21:13,400 --> 00:21:15,323 And the financial statements get more 394 00:21:15,323 --> 00:21:19,110 and more complex to read, getting longer and longer. 395 00:21:19,110 --> 00:21:20,656 So those are the ongoing process 396 00:21:20,656 --> 00:21:23,323 that accountants are continuously involved in. 397 00:21:23,323 --> 00:21:25,656 – Mh-hmm, I think that's an amazing experience, 398 00:21:25,656 --> 00:21:26,990 that you've been able to be a part of, 399 00:21:26,990 --> 00:21:29,490 those standard settings and those standards 400 00:21:29,490 --> 00:21:31,860 that thousands of companies need to follow. 401 00:21:31,860 --> 00:21:34,250 And I can imagine the weight that that held, 402 00:21:34,250 --> 00:21:36,823 which is why it takes so long to set standards. 403 00:21:36,823 --> 00:21:40,156 But it also can be frustrating because as new things are emerging, 404 00:21:40,156 --> 00:21:43,490 which is why you said there's that emerging issues committee, 405 00:21:43,490 --> 00:21:45,340 that can help make decisions faster. 406 00:21:45,340 --> 00:21:48,823 But it can be hard waiting for decisions from committees, 407 00:21:48,823 --> 00:21:52,323 and from standards boards, because things are constantly changing. 408 00:21:52,350 --> 00:21:55,090 Especially, now it feels like things are moving faster and faster. 409 00:21:55,090 --> 00:21:59,340 How do the standards board committees take that in, 410 00:21:59,340 --> 00:22:01,720 as change is happening quicker and quicker? 411 00:22:01,720 --> 00:22:04,230 – Well, they have a whole infrastructure. 412 00:22:04,230 --> 00:22:06,489 The Financial Accounting Standards Board 413 00:22:06,489 --> 00:22:08,323 has the people who are on the board, 414 00:22:08,330 --> 00:22:11,989 but they also have an excellent staff that follow all the problems. 415 00:22:11,989 --> 00:22:17,156 People in industry and people in public accounting often write to the FASB 416 00:22:17,156 --> 00:22:21,289 and say, "Here's a new problem that we have to address." 417 00:22:21,289 --> 00:22:25,656 The digital age has brought in a lot of accounting problems. 418 00:22:25,656 --> 00:22:29,656 When we had a big influx of more and more companies using derivatives, 419 00:22:29,656 --> 00:22:31,470 how should they be accounted for? 420 00:22:31,470 --> 00:22:34,090 And the way it works is public accounting 421 00:22:34,090 --> 00:22:38,489 is each of the firms have their Norm Strauss-type person that's trying 422 00:22:38,489 --> 00:22:41,489 to follow all these accounting rules, and make some sense at it, 423 00:22:41,489 --> 00:22:45,989 and then providing information to help the staff follow all these rules. 424 00:22:45,989 --> 00:22:50,656 So we, at the Financial Reporting Committee, have a good relationship 425 00:22:50,656 --> 00:22:53,110 with the Financial Accounting Standards Board. 426 00:22:53,110 --> 00:22:55,090 We meet with them periodically, 427 00:22:55,090 --> 00:22:58,156 have direct input on some of the projects of the day. 428 00:22:58,156 --> 00:23:02,822 And, again, always with the goal of improving financial reporting 429 00:23:02,822 --> 00:23:06,489 whenever we can provide that type of input for doing that. 430 00:23:06,489 --> 00:23:09,489 – That's great, I mean, it's great that they have such a structure 431 00:23:09,489 --> 00:23:12,650 because I can imagine how overwhelming it can be. 432 00:23:12,650 --> 00:23:14,155 So you need that structure in place 433 00:23:14,155 --> 00:23:16,910 to make sure everything's done efficiently, I'm sure. 434 00:23:16,910 --> 00:23:21,322 – One thing that the involvement with the Financial Reporting Committee 435 00:23:21,322 --> 00:23:24,655 helped me with is after I retired from Ernst & Young, 436 00:23:24,655 --> 00:23:29,822 I went right back to work, and I went to Baruch College to teach. 437 00:23:29,822 --> 00:23:33,322 I was giving back to the school because that's what gave me the tools. 438 00:23:33,322 --> 00:23:35,655 That's one good thing, as an aside, about accounting. 439 00:23:35,655 --> 00:23:39,060 When I said it was a good field to be involved in, 440 00:23:39,060 --> 00:23:43,130 what you learn in school is actually what you do on the job. 441 00:23:43,130 --> 00:23:45,489 So when you learn accounting, it's not esoteric, 442 00:23:45,489 --> 00:23:47,450 and then you don't see any relationship. 443 00:23:47,450 --> 00:23:50,155 So learning the accounting rules gives you the foundation 444 00:23:50,155 --> 00:23:53,155 and the tools to be able to have a good career. 445 00:23:53,155 --> 00:23:57,988 So when I retired, I wanted to continue to be professionally involved. 446 00:23:58,059 --> 00:24:02,822 And I went back to Baruch, and they hired me to teach a graduate course 447 00:24:02,822 --> 00:24:07,322 on contemporary accounting topics, which is, coincidentally, is the same name 448 00:24:07,322 --> 00:24:09,488 of the course that I had Professor Briloff with, 449 00:24:09,488 --> 00:24:11,940 many years before that. 450 00:24:11,940 --> 00:24:16,488 And, again, I was on the IMA committee discussing the issues, 451 00:24:16,488 --> 00:24:20,080 and in my contemporary accounting topics course, we did the same thing. 452 00:24:20,080 --> 00:24:23,360 We talked about, in my class, the issues of the day. 453 00:24:23,360 --> 00:24:26,590 So it was always a direct benefit for me, personally, 454 00:24:26,590 --> 00:24:29,950 to have all that involvement, over the years, with the committee. 455 00:24:29,950 --> 00:24:32,821 But teaching students about accounting 456 00:24:32,821 --> 00:24:37,470 and telling them why I thought it was a good field was very rewarding. 457 00:24:37,470 --> 00:24:40,821 The other people teaching, they all had PhDs, and this and that, 458 00:24:40,940 --> 00:24:45,299 but I had the actual experience of doing what they were going over 459 00:24:45,299 --> 00:24:46,821 in the classroom. 460 00:24:46,821 --> 00:24:49,779 And I think the students got a lot out of that thing. 461 00:24:49,779 --> 00:24:55,730 I was teaching over many years, and at the beginning of every semester, 462 00:24:55,730 --> 00:24:57,530 I told the class that I'm giving back, 463 00:24:57,530 --> 00:24:59,321 and I'm a Baruch alumni. 464 00:24:59,321 --> 00:25:03,230 And I told them that I went to Baruch College so long ago, 465 00:25:03,230 --> 00:25:05,670 that they only had debits at that time. 466 00:25:05,670 --> 00:25:09,821 So my problem was the students looked at me like it must have been true. 467 00:25:09,821 --> 00:25:14,488 But, anyway, I would always try to add a little humor to the discussion, 468 00:25:14,488 --> 00:25:17,300 in fact, as an example, to try to keep them laughing. 469 00:25:17,300 --> 00:25:18,988 Otherwise, accounting can sometimes 470 00:25:18,988 --> 00:25:22,821 make your eyes a little heavy, if you don't add a little bit of humor to it. 471 00:25:22,860 --> 00:25:25,760 So I told them that one of my problems, as a teacher, 472 00:25:25,760 --> 00:25:29,821 is that I'm not very good anymore of remembering names, as you get older, 473 00:25:29,821 --> 00:25:31,488 it gets harder and harder. 474 00:25:31,488 --> 00:25:36,059 And I told them, this story is in the context of some accountant subject 475 00:25:36,059 --> 00:25:37,321 I was talking about. 476 00:25:37,321 --> 00:25:41,154 I told them about the two couples kind of my age 477 00:25:41,154 --> 00:25:42,789 who were in the car together, 478 00:25:42,789 --> 00:25:45,780 the two men in the front and the two ladies in the back. 479 00:25:45,780 --> 00:25:48,230 And the fellow in the front said to the other guy, he said, 480 00:25:48,230 --> 00:25:51,480 "What a great restaurant we went to last night." 481 00:25:51,480 --> 00:25:54,190 And the other fellow said, "Oh, what was the name of it?" 482 00:25:54,190 --> 00:25:57,120 And like many of us older accountants tend to say, 483 00:25:57,120 --> 00:26:01,321 "The name of the restaurant was um..." 484 00:26:01,321 --> 00:26:02,987 And, so, he said, finally, help me out, 485 00:26:02,987 --> 00:26:06,840 "What's the name of a flower with thorns on the side, 486 00:26:06,840 --> 00:26:09,154 and the top of the flower is red?" 487 00:26:09,154 --> 00:26:11,487 And the other guy says, "A rose?" 488 00:26:11,487 --> 00:26:12,987 He says, thank you, and then turns back 489 00:26:12,987 --> 00:26:16,790 to the back seat and says, "Rose, what was the name of the restaurant 490 00:26:16,790 --> 00:26:18,321 we went to last night." 491 00:26:18,321 --> 00:26:20,159 The students laughed, and then we went back 492 00:26:20,159 --> 00:26:23,487 to whatever topic I was discussing at the time. 493 00:26:23,487 --> 00:26:27,820 But the students at the college recognize, 494 00:26:27,820 --> 00:26:31,487 because Baruch college is, kind of not where if your parents 495 00:26:31,487 --> 00:26:33,487 had a lot of money, that would be your first choice. 496 00:26:33,487 --> 00:26:36,600 You'd go to a much bigger type of school, 497 00:26:36,600 --> 00:26:38,987 but you won't get a better accounting education. 498 00:26:38,987 --> 00:26:44,520 And, therefore, the students were very attuned to really trying to learn this stuff. 499 00:26:44,520 --> 00:26:46,654 Because this gave them a shot 500 00:26:46,654 --> 00:26:51,140 that they had, maybe, they'd be the first generation accounting students, 501 00:26:51,140 --> 00:26:53,490 first generation college graduates, 502 00:26:53,490 --> 00:26:56,570 and they'd be able to get into the accounting profession 503 00:26:56,570 --> 00:26:58,370 and have a chance of making it. 504 00:26:58,370 --> 00:27:01,060 And that's the thing, again, for people in accounting, 505 00:27:01,060 --> 00:27:02,570 you can make it on your own. 506 00:27:02,570 --> 00:27:04,487 You don't have to know anybody. 507 00:27:04,487 --> 00:27:05,830 You just have to work hard, 508 00:27:05,830 --> 00:27:09,679 learn the stuff, be willing to put in the necessary hours. 509 00:27:09,679 --> 00:27:12,653 And another thing that helps is staying power, 510 00:27:12,653 --> 00:27:17,820 to be able to stay in there for a lot of years and work yourself up. 511 00:27:17,820 --> 00:27:20,419 People that do that, the rewards are great. 512 00:27:20,653 --> 00:27:23,320 – Well, Norm, thank you so much for the wonderful insights. 513 00:27:23,409 --> 00:27:26,487 It was great to hear your story and just a little bit about the things you've done. 514 00:27:26,487 --> 00:27:29,690 And I'm sure that we could talk for hours, just telling about your story. 515 00:27:29,690 --> 00:27:33,153 But I really appreciate the insight you've shared, and just thank you so much 516 00:27:33,153 --> 00:27:35,470 for all that you've given to IMA, as an organization, 517 00:27:35,470 --> 00:27:36,653 and to all the other organizations 518 00:27:36,653 --> 00:27:38,260 you've connected with. 519 00:27:38,260 --> 00:27:40,653 And it's great knowing you, 520 00:27:40,653 --> 00:27:43,320 and it's great hearing more about your story and sharing 521 00:27:43,320 --> 00:27:44,820 with our audience today. 522 00:27:44,820 --> 00:27:48,119 – And being with the IMA was a great opportunity for me. 523 00:27:48,119 --> 00:27:50,330 < Outro > 524 00:27:50,330 --> 00:27:51,820 – This has been Count Me In, 525 00:27:51,820 --> 00:27:55,960 IMA's podcast, providing you with the latest perspectives of thought leaders, 526 00:27:55,960 --> 00:27:57,986 from the accounting and finance profession. 527 00:27:57,986 --> 00:28:00,486 If you like what you heard, and you'd like to be counted in 528 00:28:00,486 --> 00:28:02,820 for more relevant accounting and finance education, 529 00:28:02,820 --> 00:28:09,486 visit IMA's website at www.imanet.org.