Current and prospective accounting students often don't understand the 150 hour rule. That's "understandable" (I couldn't resist!) because what we refer to as a rule is anything but standardized.

The truth is that though nearly all states and provinces have adopted "the 150 hour rule" it varies substantially from location to location. So here is some information to help you sort through the complexity and decide what is best for you.

What is the 150 hour rule?

There probably are a lot of correct answers to this question. In my opinion, one answer stands out…or maybe doesn’t stand out. The reason is doesn’t stand out is because it is a hidden cost. There is no line item on a budget, we usually don’t plan for it and there is little the staff accountants can do about it. I’m talking about inadequate work space in the field.

We’ve probably all had the experience. About two weeks before the scheduled fieldwork date, we delivered the list of schedules and files we needed the client’s controller to prepare. He assured us they would be ready when we arrived. A day or two before the start date, we called to ask if the schedules were ready. The controller’s response was, “We have enough done to get you started.”

A transfer of financial assets occurs when the transferor has surrendered control of the asset and has received consideration other than beneficial interests.

FASC 860-10-40-5 states that a transferor has surrendered control or sold an asset if and only if the following conditions are met:

1. The transferred assets have been isolated from the transferor and have presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership.

Many participants in my seminars over the years have shared that obtaining engagement letters are often treated as a compliance function. The professional standards require us to get one so we update a form in our Word file and mail it to the individual responsible for engaging us to audit. As an alternative, the in-charge accountant may include the engagement letter with the stack of confirmation forms for the CFO or other client executive to sign on the first day of field work.

Planning and Supervision, SAS No. 108, requires the auditor to:

• Obtain an engagement letter.
• Evaluate client continuance.
• Develop an overall audit strategy.
• Develop a written audit plan (audit program).
• Determining the extent of involvement of professionals possessing specialized skills
• Inform assistants of their responsibilities.
• Review the work of assistants.

We used to do our audit planning in the back seat of the car on the way to the client’s office. I once worked for one partner who planned the audit of a bank located in our office building as we rode the elevator to the first floor! In my early years, we didn’t do much planning because audit procedures were designed on the fly. By that I mean we obtained an understanding of a client’s business and industry, internal controls and operations and targeted the areas where risks were high. Sure, we wrote programs but mostly after the audit was done!

A supervisor’s job is a difficult one, to say the least. Learning how to motivate others to accomplish work in accordance with applicable standards without wasting time is a full-time job!

For CPA firms, new professional standards are requiring more supervision and training from their supervisors. Here are a few of the additional responsibilities of a supervisor during these changing times, even on small audits:

A standard definition of supervision you may have heard is: “Getting work done through others.” Simple in concept, this definition is difficult in application. In the real world, supervision often becomes, “Do it my way!” Manipulation may be the most common supervisory technique!

In my staff training seminar, Developing Supervisors and Managers, participants are asked to list the attributes of a person they consider their best supervisor. This is the composite list in no particular order:

A GOOD SUPERVISOR—WHAT YOUR STAFF WANTS

* HAS AN OPEN DOOR POLICY--LISTENS
* IS A GOOD TEACHER-TELLS WHAT TO DO, HOW TO DO IT AND WHY
* RELATES TO STAFF AS A PEER AND A BOSS
* IS HONEST AND SINCERE
* MAKES STAFF FEEL VALUABLE
* BUILDS TRUST IN RELATIONSHIPS
* CHALLENGES STAFF TO GROW
* INVESTS IN STAFF
* EARNS HIS/HER POSITION