By Laura Hoffmann, ZGAS IC of Editor-in-Chief
On Tuesday April 29th, 2014, Executives on Campus at Baruch College sponsored “JOB$MART CPA Panel: Career Opportunities in Accounting.” The two CPA’s on the panel were Nicholas DiMola and Gene Ozgar.
Nicholas DiMola is currently working as the Principal of Quality Plus & Associates (QP&A), an internal audit service firm, which he co-founded in 2007. He has over 35 years of experience working in financial and internal audit positions in the transportation and governmental sectors of New York City. Specifically, he spent six years in the position of Chief Financial Officer (CFO) and Vice President for the Metropolitan Transportation Authority (MTA) Long Island Rail Road (LIRR), and over twenty years in the position of Chief Audit Executive (CAE) for the MTA. As CFO, he acted as the MTA’s Internal Control Officer and assessed corporate risks and internal controls, and directed employee internal control training. Further, he directed the Controller, Budget, Treasury, Pension, and Process Re-engineering departments. As CAE, one of his major accomplishments was consolidating all of the internal audit departments of the MTA into one unit, consisting of 100 people. In the new unit, he directed financial, operational, construction, contract, and technology audits of the MTA’s operational and capital program; he also created a new audit functions within the unit, for real estate, capital construction, and treasury. As CAE, he was in charge of the MTA’s investigative audit group that monitored and detected fraud in the revenue, procurement and contract divisions. He was also the staff member assigned to the Audit Committee of the MTA Board, and worked with them to develop many initiatives, such as their Charter. DiMola received his BBA in Accountancy from Baruch College, and MBA in Finance from St. Johns University. During his long and distinguished career, DiMola served as the President of the Institute of Internal Auditors (IIA) New York Chapter Board of Governors, and as Chairman of the IIA’s Professional Conferences Committee. He remains highly involved in the IIA, both as a teacher and speaker. Additionally, he served as Chairman of the American Public Transit Associations (APTA) Internal Audit Committee. He also worked as an adjunct professor at Fordham University, teaching accounting courses.
Gene Ozgar currently works in KPMG’s national office as a National Risk Management Partner in the Management Consulting Division. He is also in charge of developing IT aspects of KPMG’s audit practices, addressing PCAOB auditing standards and directing risk management in the area of IT. In his previous position at KPMG, as IT Advisory Partner in Charlotte, NC, he assessed IT functions within financial statement audits, and provided advisory services for system controls, information security, and IT governance. At the start of his career with KPMG, he was a financial statement auditor, and eventually moved into the area of IT, founding the Company’s IT Advisory Practice. Ozgar received a BBA in Economics & Finance and MBA in Accountancy from Baruch College.
After DiMola and Ozgar’s bios and introductions were made by the session moderator, Meredith McCanse, Vice President of the Zicklin Forensic Accounting Association and Graduate Assistant at the Executives on Campus Mentoring Program, the workshop session began in the format of an interview:
Meredith McCanse: Can you give us a little more insight into both of your backgrounds and how you got to your current positions?
Nicholas DiMola: I graduated from Baruch College with my BBA in 1973, when the school had one building and the Vertical Campus (VC) Building did not yet exist. Following graduation, I wanted to work for what was at the time the Big 8. I was unable to land a position at one of the firms, so I followed a different career path. I took a job at the New York State Comptroller’s Office, which ultimately led to my 35-plus year career with the MTA. I left the MTA in 2007 to co-found a company called Quality Plus & Associates (QP&A), which you mentioned before. I presently work there. I also speak/lecture in the areas of audit and quality assurance, often at Baruch College and St. John’s University.
Gene Ozgar: First, I would like to touch on one of the points Nick just made, in regards to what is today the Big 4 accounting firms. Many students think it’s a tragedy if they do not get a job at the Big 4 post-graduation. I urge them not to think this way. I’ve worked with many people from small accounting firms, and have come to realize that such individuals are better-rounded in terms of work experience, and often have a better work-life balance than those who work for the big accounting firms. So my advice is, don’t get hung up on the Big 4.
Nicholas DiMola: I completely agree.
Gene Ozgar: Going back to the question posed, as was mentioned earlier, I attained my undergraduate and graduate degrees from Baruch College. While I was an MBA student, I worked for the Dean of the Zicklin School of Business at the time. Once I graduated with my MBA, I got a job with KPMG as an Auditor. From there, I moved into a very new advisory area at the time, IT, and helped set up KPMG’s first IT Advisory Services Unit (in the early 1990’s) with a total of 37 people. By 2006, when I returned to New York City from my position as IT Advisory Partner in Charlotte, NC, I realized that the IT Advisory Services Unit had grown to 2,700 people, which I found incredible. I now work in the national office of KPMG in the areas of management consulting, IT implementation, and IT risk. Essentially, my job is to make sure that client IT methods are in compliance with SEC regulations and other requirements. Additionally, I often speak/lecture at Baruch College.
Meredith McCanse: What skills are most crucial for students today, even more so than in the past (for instance would it be soft skills, people skills, or technological skills)?
Nicholas DiMola: I would say communication skills, which include speaking, reading, and writing. As an auditor, one must also learn how to listen and observe. In fact, that’s how I learned the most in my career, by listening and observing. Additionally, many of the skills I picked up along the way were from my mistakes. I was also able to develop a well-rounded skill-set because I understood, early on, that money is not a good motivator.
Gene Ozgar: I second what Nick just said, and agree that communication skills are critical. In terms of skill-set development, the world is changing rapidly so professionals must constantly reinvent themselves. I can tell you, for instance, what technological skills you may need today to be a good accountant or auditor, which would surely include outstanding Microsoft Excel skills. However, I can’t tell you what technological skills you will need in the future for the profession. For instance, when I worked in e-commerce at KPMG, I was always developing new skills, and halting the use of others I developed at earlier points. However, there are some guiding principles upon which a basic skill-set should be developed, that will always be required in the profession.
Nicholas DiMola: I believe strongly in the guiding principles Gene just spoke of. A few examples of them would be: to always have integrity, strive to go beyond the accounting rules, learn about the industry in which one’s client operates (which some accounting firms push for, as they require industry specialization), understand why companies make and lose money, and have a thorough comprehension of financial statement disclosures and how to use them effectively.
Gene Ozgar: No matter which field of accountancy one practices in, be it auditing or taxation, the key is to be able to establish how business processes work, in order to have a foundation for those guiding principles. Further, in support of this, there must be a common understanding of how the business processes work within a company and/or division.
Meredith McCanse: In terms of the CPA Examination, did all of the material you learned while studying for it, which I’m sure was extensive, bring about any benefits once you began your careers, other than just aiding both of you in attaining your CPA licenses?
Gene Ozgar: Students may go into a job in which the CPA Examination is highly relevant, but even if they do not, the key is to have a conceptual understanding of the concepts tested, since portions of the CPA Examination are relevant for many jobs in the profession. As for the specific facts that are tested, many will not remember them after a few weeks.
Nicholas DiMola: The CPA Examination is very difficult. Studying for and ultimately passing the Examination, taught me that I had the capability of accomplishing something. I took three parts at once with scores of better than 75%, which is the passing score. In addition to studying for the Examination, I was working at my first job and just got married. Thus, Examination preparation helped me learn how to better balance my time and establish priorities.
Since I ultimately did not get a job in public accounting, the Examination helped me to better understand accounting and business processes, going back to what Gene just discussed, which was highly beneficial; as was having three initials after my name (CPA). In a hiring situation, if it comes down to a choice between someone with or without a CPA license (all else equal), even for a job that is not in public accounting, I would pick the individual with the CPA license.
On a side note, I recommend that students take the CPA Examination while they are in school or immediately after, because the material is still fresh. I also highly recommend taking a CPA review course.
Gene Ozgar: As I have advanced in my career, I have begun to see that attaining a CPA license says an individual is disciplined and they get things done. Additionally, the reason why many firms hire KPMG for an IT project, instead of our competitors, such as Accenture, is because we hold CPA licenses. The license comes with a code of professional conduct, so clients understand that we will be objective and not try to push products or services on them.
Meredith McCanse: Bank of America recently disclosed that they are to suspend share buybacks and dividend increases because of a $4 Billion error, discovered by a junior accountant. Have either of you ever been in a situation in which a major error was discovered by a junior accountant on your team?
Gene Ozgar: The question you ask is directed towards judgment. No matter which division one works in, they must make sure they truly understand what is going on within any audits they conduct or partake in, and that they do not disregard anyone’s opinions, including junior staff. When I was an Auditor, I was auditing the New York State Insurance Fund, a company that issued worker’s compensation policies for risky companies, especially those in construction, which most other insurance companies would not issue. One of the lower level auditors on my team posed the question, “How can the New York State Insurance Fund be allowed to set the discount on insurance premiums they offer, from 0-100%?” It turned out that an individual, who worked in the Credit and Collections Department of the New York State Insurance Fund, was issuing 100% discounts on the policies of companies that were run by Mafias. This huge discovery of fraud was all because a lower-level staff auditor wouldn’t take no for an answer, and senior auditors listened.
Nicholas DiMola: Does everyone remember the accounting scandal that took place within WorldCom in 2002? Cynthia Cooper, the Vice President of Internal Audit at WorldCom at that time, uncovered and revealed a huge fraud committed by the Company, amounting to billions of dollars. Cynthia, was a small player in the organization, but had the tenacity to speak out. She wrote a book about it, which I recommend everyone read, entitled: Extraordinary Circumstances: The Journey of a Corporate Whistleblower. To provide a brief summary, WorldCom operated in the telecommunications industry, which was very competitive. Cynthia and her staff did the internal audits for the Company, and one day realized that while most other U.S. telecommunication companies underperformed or broke-even, due to the fierce competition in the industry, WorldCom always over-performed. Upon conducting secretive research, they uncovered that many fraudulent activities were occurring within the Company. In particular, expenses occurring in one period were spread over many periods, which inflated income. Cynthia was warned not to go any further with her findings by many in the organization, including the Board of Directors. She did not listen to them, and because of her ethics and integrity, WorldCom went out of business, as a result of her findings. Cynthia won a Person of the Year Award in 2002, from Time Magazine.
Gene Ozgar: The tough part is acting with integrity when one knows it will implode into a nightmare, such as Cynthia’s. CPA’s have a code of conduct, as we discussed before. It is tough, often times, to get through day-to-day activities with 100% integrity, but it can be done with the right foundation and guiding principles. For example, there was an individual I worked with at KPMG some years ago, who had a team of employees working under him, and was always on the lookout for opportunities for his team to move up in the organization. He was not greedy, and never attempted to keep the best workers for himself, but always acted with integrity, and tried to help them in their career paths. Day-to-day there will always be ethical dilemmas with which professionals must deal, and the true mark of a professional is dealing with them in the correct manner.
Meredith McCanse: What was the most challenging project either of you had to deal with in your careers? How did you get though it?
Nicholas DiMola: For me, it would be setting up and consolidating the Auditing Department of the MTA; I had to bring 142 agencies together under this project, which was not easy. Further, the general feeling about the project within the organization was opposition, in my opinion, because MTA employees were taught they had to dominate all they engaged in, which was not possible for this project. An additional challenge was that I had to put people on the implementation team that would complement my skills. Meaning, I had to really know my strengths and weaknesses, so I could find people with the right skills to cover those weaknesses. Even in the face of all those challenges, in the end, the project was a success, and the MTA’s Auditing Department remains consolidated today.
Gene Ozgar: With all of the change in today’s world, most projects are transformational and require change management. Often, as Nick mentioned, people are defensive about new projects, usually because they cause changes to what they are used to. For this reason, one of our biggest divisions at KPMG is Change Management.
An example of a challenge I faced, was when I was doing an IT Audit of a public retail company at KPMG. The Controller of that company was very hard to handle when it came to the audit, but the CFO was great. Since the Controller was so difficult, we suspected that he was perpetrating a fraud. Eventually, he toned it down, but ultimately left the organization. The moral of the story is that no matter what the situation is, one must be forthright and handle it. Individuals should never avoid dealing with a situation, and always talk to all parties involved to get to the bottom of things.
Nicholas DiMola: I would like to add, that in order to be forthright, one needs to always know what they are talking about, accomplished by doing as much homework as possible.
When I directed Internal Audit at the MTA, I told my staff to never do audit work from their desks, but only in the field. The reason for this is that people in the field will talk to you, but they usually won’t respond to e-mails. Talking to people in the field also allows one to come back with a better sense of problems that may exist.
Gene Ozgar: No matter what type of audit one is doing, internal or external, they must talk to people in-person. I would say to get results from communications, a 100% success rate would come from speaking in-person, 40% on the phone, and 2% via e-mail. In an audit setting, one is trying to find problems, so people feel nervous about this. However, as they get to know you, they start opening up and talking; a result you usually will not get from the phone or e-mail.
Meredith McCanse: I would like to now open the floor for an audience Question & Answer session.
Audience Member: Going back to the discussion about fraud discovered in auditing procedures, in your opinion, what do you think caused Arthur Anderson to miss all the red flags with Enron?
Nicholas DiMola: At the time, many of the accounting firms understood their responsibilities—for them the lines were not blurred, meaning that clients were not viewed as the total package, but as financial statement audit clients. Arthur Anderson and Enron were different. The problem, often, is that people behave based on incentives. This is the main reason why most of the large accounting frauds, including Enron and WorldCom, occurred. Further, when it comes to the revenue generated from auditing clients, some audit firms, especially Arthur Anderson, felt they could not jeopardize large sums of revenue by not giving companies’ unqualified opinions.
Gene Ozgar: There are many things auditors cannot do today as a result of the Sarbanes-Oxley Act (“SOX”), enacted to deal with these large accounting frauds perpetrated in the early 2000’s, which is a good thing. Additionally, within the independent audit committees required by SOX, members usually go above and beyond the rules and regulations to ensure that everything is up to par within their company’s system of financial reporting, which is even better.
Audience Member: Are there any designations that could complement an Accountancy degree?
Gene Ozgar: I would say a Certified Fraud Examiner (CFA) license, a degree in IT, and a Chartered Financial Analyst (CFA) license, which has its own code of conduct.
Audience Member: Do you think the rules and regulations put in place post-Enron, especially SOX, have fully worked, or should more be done?
Nicholas DiMola: We tend to be more reactive. When I worked for the MTA, I always looked to be proactive, which I think should be the goal of most organizations.
Gene Ozgar: The process is important. We must always evaluate our processes in a proactive manner, as Nick mentioned, to look for weak links, in order to prevent them from re-occurring. We need to look at the surface of things, oftentimes, to find those links.
With all the regulations in place today as a result of SOX, external audits can be very costly. For instance, the SEC requires two audit opinions. However, such costs are surely necessary in order to prevent accounting frauds in the future.
One of the criticisms I have heard post-SOX, is that the auditor’s opinion on internal controls is not as pronounced as it should be. Maybe more work could be done in this area.
Nicholas DiMola: External auditors are responsible to find fraud. This can of course be difficult, because people within organizations that commit frauds are very knowledgeable. Further, frauds often occur because individuals are pressured to make numbers; and once such a fraud is started it is hard to stop, because certain thresholds have been set and financials are run with incorrect beginning numbers.
No one can say that there will never be an accounting fraud again, but with the extensive regulations we have in place today, one should hope that the probability of such frauds has decreased.
Audience Member: How come we have not seen any major accounting frauds since SOX was put in place?
Nicholas DiMola: This is probably because we have put such a strong system of regulation into place (SOX) that requires stringent internal controls. We also need to understand that internal controls are business processes, and we can’t look at them once and assume they are accomplishing their function. We must review and update them constantly. Internal controls are the responsibility of management, and the auditor makes sure they work. One hopes that with time, the emphasis on such controls does not go down.
Gene Ozgar: To reinforce Nick’s point, the commission of fraud decreases with a good control environment. It is especially successful, if management has incentives/pay based on such a control environment.
With that last question, Meredith McCanse thanked Nicholas DiMola and Gene Ozgar for their time, and insight into their careers and vast knowledge of the accounting field. Overall, the workshop was very insightful, and the Zicklin Graduate Accounting Society (ZGAS) looks forward to the next Executives on Campus-sponsored JOB$MART CPA Panel.
Hello ZGAS Members,