Question 1

EXHIBIT 1: Purpose of Financial Statements and Double-Entry Accounting

Accepted Answer

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Question 2

EXHIBIT 2: Public Accounting Roles and Annual Salaries

Accepted Answer

Staff Auditor (1-3 years) performs the detail work of a financial audit under the supervision of a Senior. These accountants do over 90 percent of the ceaseless grunt work that goes into an audit. Staff Auditors will often start to direct small audits at the two-year level. They become experts in scanning documents, counting inventory, and performing research. 
Senior Auditor (3-6 years) works under the general direction of an Audit Manager. Responsibilities include the direction of audit field work, assignment of detail work to Staff, and review of their working papers. The seniors keep the first-year workers in line, define for them the objective of the audit, and make certain that the engagement is completed on schedule and according to the audit plan. They also prepare financial statements, create corporate tax returns, and suggest improvements to internal controls. By the time you are made senior your salary is in the range of $75,000 to $100,000.

Audit Manager (6-8 years) supervises Seniors and Staff. Their job is to manage the audit on a day-to-day basis, dividing up the workload and checking the progress. Responsible for audit program approval, personnel scheduling, audit working papers review, financial statement disclosure, day-to-day client relationships, determination of billings for engagements, and training and evaluation of staff and seniors. By the time you were made a manager, your salary was in the range of $100,000 to $140,000.

Senior Audit Manager (8-13 years) like a new manager supervises young Managers and Seniors. They also have the same audit responsibilities but now the role as a Senior Manager is to become a trusted advisor and create a meaningful impact with their global clients. An important part of their role is to actively establish and strengthen internal and external relationships. They are also expected to lead strategies and identify business opportunities for their own firm. Achievement of this level is critical to long-term success within a CPA firm, since it is awarded only to those with Partner potential. By the time you are made a senior manager your salary will be in the range of $140,000 to $175,000.

Partner level is coveted since only about 2 percent of all persons entering CPA firms will reach this plateau. The financial rewards are significant. The Partner normally purchases equity in the firm and therefore shares in all profits. Typically, a professional must be a CPA to become a Partner. In larger firms, an equivalent position of Principal is available to deserving specialists who are non-CPAs. An Audit, Tax, or Consulting Partner is typically responsible for overall client-related activities. The Partners are there to provide leadership, ensure quality control, protect the firm’s reputation, sign the auditor’s opinion, and keep the client happy. First year partner salaries typically range from $200,000 to $250,000.

Senior Partner performs all the duties of a Partner. The achievement of Senior Partner is obtained as a result of longevity with a firm and expert handling of instrumental accounts and personalities. The title of Senior Partner may also be attained through participation as a member of the Executive Committee, which is responsible for developing the firm's policies, planning activities, or providing day-to-day management and administration of one or more branch offices or regions. Senior partner salaries start at $250,000 and could go to well over $1,000,000.

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the typical ratio of partners to non-partners in a Big 4 firm compared to mid-tier firms
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Question 3

EXHIBIT 3: The New CPA Exam

Accepted Answer

For years the CPA exam was made up of four parts, graded by the AICPA. 
The topics tested were:

· Auditing & Attestation: engagement acceptance and planning; entity and internal control; procedures and evidence; reports; accounting and review services and professional responsibilities

· Financial Accounting & Reporting: concepts; accounts and disclosures; transactions; governmental and not-for-profits

· Regulation: ethical and legal responsibilities; business law; federal tax process; gain and loss taxation; individual tax and taxation of entities

· Business Environment & Concepts: corporate governance; economics; finance, information technology; strategic planning and operations management

The examination took two days, and every candidate had to pass all four parts. Each of the parts of the examination were graded on a scale of 0 to 100, the minimum passing score was 75.

Over the past century the CPA exam, and for that matter the accounting profession, has been constantly changing. In fact, from the very first certified public accountancy law passed in 1896 to the present day, the nature of being a CPA is marked by constant evolution and transformation. Recently the current licensure model underwent a change to fit the skills and competencies that new CPAs require today and in the future. The traditional four-part CPA exam that McCord passed was modified. In a joint initiative the National Association of State Boards of Accountancy (NASBA) and the AICPA introduced a new Uniform CPA Examination.

The new exam included three core sections that each candidate takes:

· Accounting and Data Analytics
· Audit and Accounting Information Systems
· Tax

These three ‘core’ sections are supplemented by a candidate selecting one of the three separate discipline sections:

· Business Analysis and Reporting
· Information Systems and Controls
· Tax Compliance and Planning

These budding competencies allow a CPA candidate to expand their knowledge in an area that most directly aligns with a career path. After passing the three core competencies and one of the disciplines sections a person will be eligible to become a CPA, subject to state work experience requirements. A candidate is not required (or permitted) to complete more than one of the three discipline sections. The rationale for the new exams mixed core and discipline structure is that it more accurately reflects the environment in which accountants function.

Question 4

EXHIBIT 4:  T-Account Finance Education Model – WIDE and DEEP SKILLS

Accepted Answer

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Question 5

EXHIBIT 5 : The Major Differences Between GAAP and IFRS

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Question 6

EXHIBIT 6:  Common Compensation Terms in a CFO Employment Agreement

Accepted Answer

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Question 7

EXHIBIT 7: Key Financial Ratios

Accepted Answer

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Question 8

EXHIBIT 8: The 10 Steps in an IPO Process

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Question 9

EXHIBIT 9:  Chief Financial Officer Salaries

Accepted Answer

A significant number of accountants ultimately become CFO’s or Controllers, however more importantly many come to be—Quiet Millionaires—the behind-the-scenes guys at successful companies. Most CFOs are paid very well. Based on a 2024 study by Salary.com the average Chief Financial Officer fully loaded salary in the United States is approximately $437,000 with a range of typically $331,000 to $561,000. According to CFO Search Inc. the Average CFO Base Salary Range by Company Size is:

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The above is just the average base salary. When you start adding bonuses and equity awards the numbers get astronomically high. Based on a Willis Towers Watson study of CFO median pay with incentives at largest companies were over $3.7 million, $2.1 million for mid-cap companies and $1.4 million for small cap companies. On average, CFOs make about eight times as much as their company’s average employee.

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