Most people always associate accountants (thus by extension, auditors as well) to be “square”, “nerdy”, “boring”, etc. If you are one of them, don’t bother reading this cos it might bore you to death…
Last week, me and 6 other colleagues were sent for this 2-day Audit Seminar at the Risqun International Hotel in Gadong. There were a few other participants from other companies and firms but we were the majority. The speaker came all the way from Malaysia, has 13 years of experience in the audit field and was in one of the Big 4.
I’m not gonna touch about the seminar. I’m just gonna share with you some “boring” happenings and conversations that took place during the 2nd day. However, to understand what I’ll be sharing, you will need at least some very basic accounting knowledge.
When you first join your Firm/Company, you are not an Asset to your Boss. In fact, you are a Liability. This is because when you first join, you are a Junior, you don’t have much experience and you only do what you are told. Your Seniors and Managers will have to spend time to guide you and you will be making errors. Thus, you are actually a Liability.
We laughed at this because we were amused. Never saw ourselves as items in the Balance Sheet before but we could relate and agree with what he said. It doesn’t matter what you work as, when you first start, you are a Liability.
Only after some time, you start to know how to do your job better then only you are no longer a Liability. At this time, you are an…
He shook his head.
No. You are an Expense.
He went on to explain:
You are not yet an Asset because at this time, even if you are there (in your Company) or not, it doesn’t really matter. Yes, you are a Senior and you are making money for your Boss but your Boss is also paying your salary…so whether you are there or not, doesn’t matter much because you are an Expense.
Again, we were amused. So now we’re Income Statement items too?
He went on:
After some years of being an Expense, you become more experienced…get promoted…become Managers…then only do you become an Asset. This is because now you are actually of value to your Boss. You are independent, and have major roles and responsibilities in your Company. Meaning, your Company cannot afford to lose you. But even then, you are a Non-Current Asset, because you are expected to still be with your Company for a number of years…
However, at one point in time, when you become SO good at your job…chances are you will be looking to move on to your next career…thus, your Boss will expect that you would want to leave the Company. At that time, you become a Current Asset.
That happened during the morning session, so you can imagine the “fun” we colleagues had over delicious hotel lunch:
Me: It’s funny. Can you imagine if at the office we would be calling each other like: “Hey Expenses!”
Colleague#1: So, are you an Asset or an Expense?
Colleague#2: I think we are Expenses since we are Seniors.
Me: Yeah, Expense.
Colleague#3: I’m not a Senior. I think I am a Liability.
Colleague#4: Liability, definitely.
[Colleague#5 & Colleague#6 are Managers and they took no part in our conversation.]
Colleague#1: I think I am an Expense.
Colleague#2: No, you Asset one…Cannot be Expense. [Colleague#1 was the most Senior of us Seniors there.]
Long story short, in the end,
-> Colleague#1 professed to be “Amount Due To Related Parties”(Asset),
-> Colleague#2 called me “Loss on FOREX”(Expense) – just because I’m a Foreigner?! – and professed to be “Loss on Disposal”(Expense),
-> Colleague#3 decided to be “Accruals”(Libility) and
-> Colleague#4 claimed to be “Short-Term Borrowings”(Liability)…
and not to miss out on the fun, they named
-> Colleague#5 as “Intangible Asset”(Asset) and
-> Coleague#6 as “Goodwill”(Asset).
The speaker also mentioned that while Assets are expected to move/change jobs, some are not even Assets yet (maybe an Expense or worse, still a Liability) when they move so in their next job they are a Liability and the cycle begins…always a Liability, never an Asset…not a good thing to be in life’s Balance Sheet.
And it doesn’t just apply to working life either. Think of this:
When you were small, you were not yet an Asset. You were a Liability to your parents. You make them worried, they spend lots of time and money on you and you don’t contribute in any way. As you grow up, you are an Expense since you may contribute by helping out here and there but the family will have to support you through school. But when you start working, then you will be an Asset because you can help the family now.
So, where are you in the Accounts of Life? Balance Sheet or Income Statement? Liability or Asset or Expense?
P.S. Hey, Short-Term Borrowings…remember, anything you read on my blog is for your eyes only ah… 😉 and no discussing any of it in front of the other Balance Sheet and Income Statement items ok? 😀