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  • Wisdom From Experience


    by Cathy Lockman

    There is wisdom in experience, and Teresa Iannoconi, currently the Partner in Charge in the Department of Professional Practice at KPMG, has both. With a resume that includes 13 years serving clients at KPMG, more than 19 years working at the Securities and Exchange Commission, and even a stint as an accounting educator at the University of Maryland, Iannoconi has acquired a wealth of knowledge about financial reporting and auditing. She shared that knowledge and her wisdom during her recent presentation to students as part of the Department of Accountany's Lyceum Series.

    "Scenarios in the economy have a way of repeating themselves," she told the students, citing a GAO report she read recently that listed nontraditional lending, risky declines in the value of institutional portfolios, and challenges in lending as threats to the underlying health of the FDIC. It's a subject that certainly sounds current; however, the GAO report Iannoconi was referring to was written in 1989. The economic conditions were similar to the current environment, with one exception. "There was no reference to market value accounting in that report," she said. "Soon after that, there was a hearing on the Hill that concluded that market value accounting should be adopted as a way to improve transparency."

    How ironic then that 20 years later another Congressional hearing that Iannoconi attended focused on whether market value accounting was to blame for the current crisis. Although the SEC determined that wasn't the case, this example highlights one of the areas that Iannoconi believes will continue to influence the future of the accounting profession--regulation.

    "Congress is responsible for the economic well-being of the country, so it's understandable that they are involved in setting standards," she said. "I think we will see an expanded government interest in these accounting standards in the future, especially as it pertains to the predictive value of financial statements. We have to look at prediction more than we have in the past. This is something that will be at the top of the agenda in our national office."

    According to Iannoconi, the United States must also "embrace IFRS in a big way if we're going to be a player in the global environment." She cites the upcoming adoption of IFRS by Mexico and Canada as a harbinger of things to come. "We have to adopt IFRS, or we will be left behind. In my opinion, educating auditors and clients to these standards should be one of our highest priorities."

    For the students, Iannoconi also offered advice specifically on preparation for the profession. "Accounting is informational economics," she said. "We are social scientists engaging in communicating economic behavior." She believes that a multidisciplinary perspective is important to doing the job well and suggested that accounting students would benefit from learning more about economics and structured finance as well as having strong skills in public speaking and time management. She also encouraged students to pursue mastery of another language, particularly those of emerging economies where that skill will be extremely valuable.

    Lora Ley, a senior in accountancy, found this advice especially helpful. "I appreciate the opportunity to hear from someone who has so much experience in the profession," she said. "She gave us some interesting insights into the profession and some helpful suggestions about what we can do now to be a better accountant when we enter the work force."

    Iannoconi also stressed the importance of professional judgment in today's complicated and compliance-oriented environment, emphasizing the need for those judgments to be informed. She provided the students with a framework to guide them in making informed judgments. First, make sure you have all the facts, she told them. Second, be able to identify all the relevant literature. Next, consult with others. "Collective wisdom is extremely valuable to the process," Iannoconi said. The last three steps are to do the appropriate analysis, make your judgment, and document the process.

    According to Iannoconi, the ability to formulate professional judgments is the single most important skill you can develop. "Your judgment is what you will be most valued for in the profession," she told the students.

    UIUC College of Business Department of Accountancy