I wish I was an accountant. Really. If I were an accountant, I’d be like my cousin, who’s younger than me and drives a top-end Mercedes. He’s just bought a R3.5 million house, and that’s without having to sell the one he already owns. All because he did a BCom and became a CA.
Speaking of which, Alec Hogg has written an interesting and timely article about the magical lure of those two simple letters. Together they add up to a guaranteed ability to get the big jobs and haul in the big bucks. If you’re a CA, people assume that you know what you’re doing, much as people assumed that all those frightfully clever MBAs who orchestrated the global economic meltdown knew more than the rest of us.
Why are accountants, especially chartered accountants, so highly valued in South Africa? What makes them so special? In other countries they are well paid, but hardly to the level they enjoy here. In July last year it was reported that entry-level CAs were enjoying significant pay increases of between 11% and 15%:
“Compared with their counterparts in London, Sydney and Edinburgh, South African chartered accountants are enjoying substantial annual increases,” said Anton Apps, director and founder of antonapps.
Why do we idolise the people who count the money? After all, accountants are very seldom those who produce the actual work; they merely collate and track the revenue generated by others, people who usually earn a fraction of what they do. Nonetheless, it seems that becoming a chartered accountant is the most reliable way to get rich in South Africa — or, if not rich, then comfortably off at a relatively early age. R450 000 as an entry-level salary for someone who has just qualified is not bad, not bad at all.
So yes, I wish I’d become an accountant instead of running off to drama school to spend several years lying on the floor learning how to resonate. Sure, I’d probably chew off my hands at the wrists out of sheer misery. But at least I’d have a great Discovery plan to pay for the surgery, plenty of cash to put into the self-payment gap and a platinum card to pay for the holiday in the Seychelles to recover from all the stress.
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46 Responses to “What makes accountants so special anyway?”
I have come across equally useless CAs who are less sucessful.
There is a high demand for CA’s in South Africa and a considerable shortage in the supply….especially the good ones. So the demand curve is skewed.
The majority of the top 40 companies on the JSE are run by people with some sort of financial acumen, because they understand the international corporate language….numbers!! We would all do well to consider some form financial management training in all our disciplines and chosen paths.
This is a large part of the reason why I went abroad to obtain international experience.
In the UK, it’s your experience that counts & not what you have on paper. In my 6 years in the UK, I’ve never once been asked to provide my certificate by an employer, but every one of my references have been followed on numerous occasions.
As far as I’m concerned, SA focuses way too much on what you know, rather on how to apply what you know.
Hopefully when I return to SA next year, my international experience coupled with my B.Comm will put me first in line.
I am a CA but I wont’t jump at defending CAs as I’ve currently left the big bucks behind to study journalism.
But saying that I can attest to the fact that getting the CA was extremely difficult - its almost as if the hurdles to get the qualification are so difficult that only the ‘best’ can actually make it.
But that said, luck played a big role for many of us:)
Chartered Accountants display just two attributes by putting those letters after their names, superior intelligence and the ability to complete a tough course (usually part-time after a HARD day’s work).
50% of those that try the Board Exams never get their CA and the average IQ of a CA is in the upper quartile (145 or higher).
Surely that is enough for paying them more, or have we become so socialist as to believe that a CA is equivalent to a Screech and Trauma (Drama) graduate. In a free market system, one is empowered to employ the best person for the job.
AND
you will note that CAs (and other high academic/sports/entertainment performers) often succeed in areas far outside their area of expertise, this is called signalling and formed part of an extensive study that got Michael Spence a Nobel prize. Signalling is where we use one aspect of a person to tell us about other of their attributes. For example, CA indicates intelligence, focus, goal oriented, not scared of hard work (and probably gorgeous and witty too). I am also jealous of CAs but I have to feel a grudging respect for them.
I sense that Thought Leader is worthy of more of your better work than this, Sarah Britten…
Sarah, to be fair, you should also link Saica’s response on Moneyweb to Alec Hogg’s article (it has been up since yesterday). His article was biased, which is fair enough for an opinion piece, but contained some unsubstantiated allegations.
As for your comment on increases - it is a bit misleading don’t you think? SA has an inflation rate of +- 10%, therefore increases in line with this is to be expected for any job, opposed to very low inflation rates in europe leading to lower increases.
Lastly, any successful business needs both sides - operational and financial. It is a symbiotic relationship and you cannot say one is more important than the other.
And although by no means a guarantee, the reasonable expectation when hiring a CA is to get someone who has a very good idea of how a business should work, which is worth a lot of money. You put in 7 years of very hard work to reach that point, after all.
On one thing I do agree - it can very quickly become very very boring! As a (formerly active) CA, I say stuff the money, give me mental stimulation!
@ John Bond: sorry to disappoint you. My intention was merely to start a debate, not necessarily supply any answers. As for hard work, what about other degrees that require slog? Engineering, perhaps? Architecture? Architects in particular are badly paid, and gradually being rendered irrelevant as professional regulations are loosened up. CAs owe a debt of gratitude to their professional body, which at least looks after their interests. (The architecture crowd is beyond useless, having been infected by the debilitating and incurable disease known as political correctness.)
As for the possession of a CA indicating that one possesses thinking skills desirable in other areas, I’ll have to take that one on trust.
Take it from a former wannabe- C.A., they deserve that money.
CA’s who get things wrong are no different to other professionals making judgement errors in their fields. I’m talking doctors, engineers, lawyers *stifles a laugh* right down to teachers and bus drivers.
I for one have a lot of respect for what they do and have achieved.
I cannot deny though that I am glad I lacked the desire, discipline (and maybe intellectual capacity?) to succeed in that field.
Siyabonga Ntshingila on August 12th, 2009 at 5:40 pm
The high pay for CA’s in SA is caused by the shortage of accountants and the shortage is caused by their being a massive barrier in acheiving the qualification: You have to have a post graduate degree in accounting. There are only a limited number of places at institutions that can provide the standard of education needed in order to pass the Board exams.
What is needed is a rival accounting qualification that is as stringent in its requirements however more accessible. The ACCA and CIMA qualifications that are well respected abroad do not require any previous education in accounting and you can do the entire course part time via correspondence, while you are holding a job.
@Sarah: becoming an accountant is easy if you can add up, subtract and see trends in a string of numbers, add some logic on the side “et voila”.
Getting the “CA” letters is the problem. The letters are reserved for a happy few who show dedication and perseverance. The less there are, the higher the price if you need one. Could the scarcity be artificially maintained by pushing up the standards?
Even a dullard can grind his or her way through a B.Com degree with an Accounting major. It’s not hard. Same with the MBA — you merely need grind-’em-down stickability, not serious smarts.
Passing the Board exam at your first attempt is about as hard as breaking Schumacher’s lap record at Silverstone in your first drive in a F1 Ferrari.
The Board exam filters out half the B.Coms who ever attempt it — even those who try it several times.
In order to become an SA CA it is conventionally accepted that you need an IQ in the top 2% of the population (higher than that required to become a GP, dentist, engineer (or architect); actuarial science is however more demanding).
It is, in its South African incarnation, therefore a relatively challenging qualification.
There are nonetheless many CAs in SA, and most CAs are just journeymen who doggedly do a solid day’s work. Intellectual flexibility - lateral thought, creative problem solving and an ability to see beyond dogma and convention - an “intellectual” orientation if you like - is required to lift even a quite high IQ into the “interesting” category.
That said, CAs know business. Business is to a large degree what the modern world is about.
The top of the tree in SA is occupied almost entirely by CAs and those at the top of the game are obviously very good.
Why CAs in SA? There is an element of national/cultural bias in which professions are regarded as most influential.
In response to the chauvinistic test question “what do the real men do?”, the South African real men are accountants and their also-rans are engineers. (Their romantic hippies are, presumably, game rangers.) In the US I would think the real men are lawyers and the also-rans are CPAs.
(BTW the annual increase argument is provocative but a tabloid red herring; look at the general increases that were given in different countries and the underlying country inflation rates.)
Some years ago, I got a very good MBA. I came 3rd. Of the top 6 graduates, three had previously passed their board exams. There were only 4 CAs on the course yet 3 came in the top 6 of 350 students.
Creativity
I quickly learned that two of these CAs were the most creative people I had ever met. I fall in the top 2% of the population for the attribute “Creativity, ingenuity, and originality” so I regard myself as good at spotting other creative souls. (Creative as about using the “Right Brain”, Both form and function play a part.)
Caring
We worked hard yet these CAs organised a number of charity events. When it looked like I would not qualify, two of them literally dragged me through my final 6 months.
Contribution
The one common outstanding attribute of all 4 CAs was their unstinting contribution. No shirkers in this group. They did more than was expected of them…
Since then, I’ve enjoyed scratching the surface of many CAs and most of them share many of these attributes. Yes, CAs tend to also have giant EGOs but isn’t that a small price to pay for a group that gives society vastly more than the huge salaries they demand.
My final thought is “were these souls destined to lead society anyway and the CA was merely a step along the road or did the board exam make them who they are?”
Supply and demand does indeed affect salaries to a large degree, but the salaries of some CA’s are bloated beyond reason.
To Jaco, I think we can safely agree a CA does not have to study as hard as a doctor? Why then the 1% increases for these extremely hard working, rare and PRODUCTIVE members of the workforce in state? I’m sure CA salary increases in government are exorbitant…
Admittedly there’s no Board, but we are required to DEMONSTRATE an ability to think and put into practice what we learn in a semester-long thesis at the end. I thank my lucky stars every day that I don’t sit everyday adding columns.
Thank you, Sarah, for doing a drama degree. It makes your writing interesting and enjoyable. It may not pay like an accountant, but it does bring an audience!
Great post, Sarah. John Bond doesn’t like it because you’re not supposed to question the thieves and manipulators. What Bond forgets is that the Free Market Lie has been exposed. It was not talent that got free marketeers their billions. It was skewed laws, complicit politicians and lies. When the bubble burst what did the people who say “I’m paid so much because I take risks” do? They pillaged the public purse. The CA’s professional body works with politicians to enact laws that protect them from their mistakes and reward them excessively for things often NOT of their making. If they’re so awfully clever, why do they have to set the police on people who try and do their job without their qualification? George B Shaw said it over 100yrs ago: Professions are just conspiracies against the common man. It’s plain old job reservation wearing a tuxedo.
To Mike, well done on outscoring your counterparts at UCT in electrical engineering Maths. My statement on CA’s understanding numbers must be taken in context, CA’s operate in the financial/commercial specialty and therefore understand the lifeblood of any commercial undertaking (money). Sure CA’s and Engineers understand numbers however a CA understands the “the money”. Your argument implies that all there is to a CA is being able to add and subtract is crude, there wouldn’t be a need for the profession (CA) had that been the case.
Did your training equip you with the ability to apply have Taxation regulations, Commercial Law and interpret financial results and the like??
Harper magazine had a great article about how the inflated salaries in the financial sector is killing the rest of the American industries. Banking, accounting, investment firms etc have the cash to pull the best graduates and best minds into their world. Which leaves the aeronautics, automobile, engineering industries lacking. Without the innovation of great minds these industries have begun to stagnate in the US.
Overpaying one sector will always leave you vulnerable in the long run.
@Mike
Hehe, you are basing your argument on the stereotype of beancounters? I don’t think any CA’s will claim they are special solely because they can count.
Much like engineering, the training CA’s receive focuses on critical, logical thinking and problem solving (and if you cannot demonstrate this, you will not pass the board exams). Very little adding up of columns involved.
I won’t ’safely agree’ that doctors have to study harder - these are different disciplines, but require equal dedication and motivation. The situation of doctors in state employ is disgraceful, I agree, but irrelevant to this discussion.
I have studied both Engineering and Accounts and I can happily verify that Acccounting is hardly in the same universe when it comes to difficulty, abstract thinking, problem solving, mathematics, logic and creating real products of value.
So why are they valued more than Engineers? Simple. The avenue used for creating products and selling them is the company. The company is legislated and judged on its financial performance and that whole structure is a haven for number crunchers who delight in making the whole thing as complex and rigorous as possible to ensure they are valued. Presentation and control of these finances is not something Engineers or Doctors spoend their day doing. Hence by default, Accountants find themselves involved daily with the stuff that makes the world go round. It rubs off on them and they make the loot.
Asset managers, bankers etc. All financial people who charge percentages on simple transactions because they have the control. Our society and its legislation enable this situation to continue. There should be more competition but there isn’t and so it carries on. Why? Well you try and open your own bank. You can’t because you need hefty licenses. Perfect for banks and tough for the consumer.
I tend to agree that in SA there is a strange fixation with CA – however……
Qualifying as an CA is a long and arduous road. Most of them deserve respect for that alone. The only profession that can reasonably be viewed as more challenging, is qualifying as an actuary. In fact there are so few of them, most people don’t even know the term.
There seems to be a growing distain for people who are well-educated, or those seen as elite. We are all supposed to be equal…..aren’t we??
I agree that the world needs men and women of all shapes and sizes, but to accord a little respect to those that have proven their metal ability and willingness to work very hard, especially in areas where they have expertise.
I do like the frequent reference to creativity when talking CA.
Does the term “creative accounting” ring a bell here?
Indeed one has to pay these okes well to not be found out.
Sour grapes perhaps?
As mentioned in a previous comment… Eco’s 101 (as taught in first year BComm): Supply vs Demand. Refer current SAICA statistics regarding shortage of qualified accountants in SA (refer http://www.moneyweb.co.za/mw/view/mw/en/page82475?oid=193420&sn=Detail). Although not all accountants are flash as so described. Most of them wear the dull grey suits, drive the old toyota camry’s, and oddly enough actually enjoy their work. But as per usual in our materialistic and jealous SA society - the flash ones always stand out creating this perception as perfectly illustrated by the our blogger.
@GW, well put!
I have seen many Engineering drop-outs change field of study and become accountants - hardly ever seen the opposite.
Pick up a second/third year book as follows , for Engineering (try Strength of Materials/Digital Systems) and Commerce(Finance/Costing) and Medicine (Neurology / Pharmacology ). Browse the net if you like. Pick one chapter and come and present it to us next week – I bet it’s from commerce (well at least to people like me and Sarah with Geology and FUN background)!
My point is, there is no argument that studying Accounting is challenging, but it is not a painstakingly difficult subject.
The rules of the game favours them in this century for reasons @WG has clearly articulated.
Feanor, SA does have relatively few actuaries (about 1/50th as many as CAs). The UK has many times more actuaries than SA.
Statistically and mathematically sophisticated as they are, actuaries are in a bit of trouble. With the demise of final salary pension schemes one simply doesn’t need as many actuaries doing as much work on mortality patterns, funding requirements and the like.
Accountants are very unlikely to suffer the same decline in their professional raison d’etre as actuaries.
PeterM63, The title “Doctor” is self-imposed. Any profession can decide what to call themselves (and it’s only fear of ridicule, one suspects, that stops them from choosing “His Holiness” or some such). Not to be confused with an actual PHD doctorate.
Traditionally actuaries were involved in life insurance. Since then the fields actuaries work in has increased to include pensions, general insurance, investments, banking and health insurance. (The UK branch is busy introducing exams for more fields to specialize in.)
Even now that South Africa has transitioned from final salary schemes to mainly money purchase schemes - the success or failure of which will play out in the next few decades - there is still a great demand for actuaries in general and pensions in particular. Final salary pension are not the only things that require mortality patterns and funding requirements.
Also while the UK has more actuaries than we do they have far more accountants as well.
There is nothing difficult about being an CA. The only problem is that there is a lot of unnecessary gate-keeping. From school level we all new that the smart ones are found in the Maths and Sciences, then followed by commercial subjects, then lastly the social sciences. The only reason that they earn a lot lot is that there is few of them and the only reason that there is few of them is that entry into the profession is limited by artificial means-the Board Exams. Accounting is a very simple science, if I may call it that, you only need attention to detail and patience to same thing over and over again.
Nice article. Yup a friend of mine, still a student, says starting salary is like R40 000 pm. I have one question - are CA’s really that smart? Or are they just able to do utterly boring work without complaint.
I would hardly describe the accounting profession as intellectually challenging or creative, nor is the process of becoming a CA particularly arduous (unless you regard the drudgery of articles as difficult) - maybe they’re so “special” because they’re willing to sacrifice their souls for a life without colour.
I found two copies of a senior accounting paper balanced on top of a toilet roll dispenser two months before the paper was due the be written in my university two years ago. Are SA CA certificates and accounting exams as difficult to get as they say they are? Perhaps the real issue is the deference shown to accountants by leadership in business in South Africa. We want lion tamers not accountants!
@OneFlew - that’s why actuaries are now walking the halls of Goldman Sachs, Bank of America, BarCap etc. The guys who sell complex derivative instruments don’t necessarily know the intricate details of how they work, but the actuaries do. If that’s not your cup of tea, the research departments would be more than happy to hire the odd actuary to cover insurance stocks, etc. And, truth be told, investment banks pay better than insurers… The actuaries of old used to be extremely eccentric, but these days they’re quite normal (no offense to any actuarial types), so the transition to IB has been quite easy.
Back to the topic, I didn’t get my CA. 3 weeks into my BCom and I thought there is no way I could do accounting for the rest of my life. In the end, I married a CA, so indirectly I did eventually get my CA!
Ariel, there is now a smaller requirement for actuarial time and services. FS pensions use up more actuarial time that life insurance products that also rely heavily on non-actuarial underwriters. The demise of FS pensions has left a hole in the collective actuarial timesheet, at least in the UK.
I agree there are more accountants in the UK too, but the scale difference is materially larger in the case of actuaries; just one large firm in the UK had about 7 times as many actuaries as the whole SA about 6 years ago. They have scaled down since.
Of course neither accountants nor actuaries are as worshipped in the UK as in SA but that is probably just a cultural thing.
David, I think the SA actuaries were perhaps allowed to be just a little more eccentric than their UK counterparts; it’s really just a form of prima donna-ishness. Even so, the top guys (say Marinus Daling or Mike Levett) didn’t necessarily come across as all that eccentric, though admittedly they were working in bigger roles than simple actuarial ones.
Actuaries in the UK now certainly have to be more commercial and more able to have a rounded discussion which properly weighs business risk in their discussions with trustees and companies than only a few years ago. They are not all equally successful in making the transition.
What is with the fixation over what salaries CA’s get. A company that pays a CA a lot of money is getting their money’s worth or atleast what they deserve (if they are overpaying).CAs have not forced anyone to rate them highly in SA and in business.
Anyone else who says that In Europe bla bla CA’s are not highly rated as opposed graduates with subjects such as History languages etc fails to understand te history of Europe where “high society” including royals studied these course as oppossed to finance/accountancy related course as they were seen as for plebians and not high society.
Furthermore, what is the big fuss? Come on, who cares what they earn. There will be CA’s who do well and those that are useless, just as much as there are great doctors (chris Barnard) and other weak ones, great drop outs (Bill Gates) and lots that are criminals as well.
Oh and there will be whinners like those complaining and none whinners(CAs who are favoured by the “prestige if the qualification”).
It is also good that Sarah studied drama, and we can clearly see that it is “dramatic” article based on sensationalist claims.
CA deserve the money they earn because, really, it is the mostboring and lifeless profession. I have never heard of a single person who actually enjoys working as a CA but I know many who really appreciate the money. It is much better to be a doctor, atleast you interact with people, and if you’re industrious and truly talented; you do research that will ultimately benefit humanity. That being said, the most important and difficult professions in the world are teaching and raising children (whether as a nanny or an unpaid mother). Those are the people we should celebrate.
The pay of a CA is really related to the WORK they do.
The letters CA mean in essence that this person is the Accountant Of Accountants. The CA is really there to check that none of the other money counters are ripping off the rest of us. Theoretically speaking. This is why CAs need to be a lot quicker on the take and a lot sharper on the money. They’re the keepers of Accounting Law and that’s where the money goes to: Keeping them “Above Reproach”. Theoretically Speaking.
Accountants are not players, they simply keep the score. Unfortunately SA is taking a while to realise that most accountants don’t really make great leaders. They don’t have the necessary people skills, let alone the ability to take the necessary risks in building entrepreneurial businesses.
i am a medical doctor and i think to be a doctor in south africa its a waste of time , we study for long (6 to 7 years at varsity) , we work on public holiday , christmas , festive season , during the night . we spend less time with the family but i earn 18 000 a month , thats messed up . i wish i was a charted accountant too . now i must pay for my student loan , pay for my car , my house , support my family out of 18000, oo.the only way to live comfortable life as a doctor is to open your own practice because our government underpays us , but in US ,UK Canada is the opposite , most people in those countries wish that they were doctors but in rsa we wish were ca or engineers
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Sarah Britten has written three books on South African insults. During the day she is a communication strategist in the ad industry; by night she writes books and blog entries. It helps to have insomnia.
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I have come across equally useless CAs who are less sucessful.
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