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Hiring a Bookkeeper

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#1
MWEA  
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From past comments on this board, it sounds like I'm not the only one running across a bunch of people claiming to be bookkeepers that really just went through the QuickBooks certifications and don't fundamentally understand debits/credits and the impact on financial statements.

For those that have hired this positions, how do you determine who is skilled versus who isn't in the pre-hire phase? Is there a test you like to use?
 

#2
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interview them and ask them to show you how they would prepare a bank reconciliation (when I was interviewing for my first full-time job, I was asked to do that). If they can do it, they're on the right track.
 

#3
FLAcct  
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Here's a few questions I would ask:

1) Make a list of account names and ask the "bookkeeper" to write down if the account is an asset, liability, income or expense account. Also, does the account normally have a debit or credit balance.

2) Ask the "bookkeeper" to list how many days there are in each month. It always blows me away how many people don't know this, but a real bookkeeper would have to know this as there are so many deadlines in bookkeeping.

3) Ask the "bookkeeper" to convert 10% to a decimal.

I'm sure others can add more questions.

Good Luck
 

#4
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I like HenryDavid's question about bank recs. At my last employer's I was drafted in to interview applicants for a staff accountant job. I asked all of them what the single most important part of the accounting cycle was. (It's the bank reconciliation because, without that, you have not the slightest clue whether any other number is correct. With acknowledgements to Mrs Bell, my first accounting teacher over forty years ago.) Only one person came close and she is the one that got the job.
 

#5
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I would just ask a few "what journal entry would you make in this situation" questions.

i.e. what entry would you make when an owner takes a distribution from their business? What entry would you make when a business pays property taxes? What entry would you make to record depreciation? What entry would you make to record an invoice to a customer/client? What entry would you make when a customer/client pays their invoice?

Of course, the answer to some of those questions will depend on more information, but it should quickly tell you who knows what they're doing and who is very green and is going to require a lot of time investment.
 

#6
MWEA  
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Thanks for the suggestions everyone, that's really helpful. In the end, I was overthinking it. If someone can complete the very basic journal entries and/or bank reconciliation, they at least have the general accounting concepts down and impact on the financial statements, and can likely problem solve/learn the rest.
 

#7
Soups  
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In my areas I would ask do you have a pulse?
 

#8
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I'm a bit of an a$$ in this regard. I do the following:

-Give a set of ordinary bookkeeping tasks and have them classify them as they would in software
-Fictitious bank account reconciliation
-If a balance is off by an immaterial amount, (and for sake of the "test") how long do they spend trying to sort it out before they ask me about it?
-Identify normal balances (debit or credit) for various G/L accounts
-Create basic P&L and balance sheet from a basic trial balance
-Prove basic math skills, such as the aforementioned days in a month (February being an exception depending on year), and converting percentages to decimals
-Throw in a few transactions not found in every business to determine if they can figure out appropriate treatment, or if they completely fail. They are not difficult, but may include inventory topics, posting depreciation/amortization, etc.

Can't pass 100%? I do not hire. 100%? I'll consider them for hire. I have had people with former CPA credentials that could not perform these simple tasks!
 

#9
Joan TB  
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I have definitely seen CPAs that don't really understand what the actual account entries are because their computer software just does it all behind the scenes. And CPAs that worked in a bank are really confused!!

(a bank records the check I write to have money paid out of my account is a debit to my account - because from the bank's point of view, my bank account is a liability = credit. The loan I have at the bank is an asset to the bank = debit, but on my books it is a liability = credit.

If you ever used those check registers that would come with your check orders, look at the headings. They are all from the bank's point of view (payments = debit using the left-hand column, deposits = credits using the right-hand column. Which always drove me nuts - it is MY register and should show MY point of view.

Even QB reports show things as positives or negatives to the particular account, not debits and credits. So if a newbie doesn't really get how it works, they have a really tough time. Gotta get out those "T" accounts and plot it out for them!
 

#10
sjrcpa  
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Do they still teach T accounts in school?
 

#11
Joan TB  
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They did when I was in school. If they don't do it any longer, maybe they should!!
 

#12
sjrcpa  
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I learned them, too.
 

#13
belle  
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debits on the left, credits on the right.... Anyone else learn it that way?
And also learned T-Accounts !
 

#14
CathysTaxes  
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sjrcpa wrote:Do they still teach T accounts in school?


I don't know but years ago, I was in a meeting with my new employer and the director of finance and one of her staff accountants. Boss and I were from IT and the company was building a brand new distribution center and we wanted their requirements for the financial part of the new IT system being developed. Madame Director was surprised and pleased when she saw me drawing T accounts to identify the journal entries. I used them in the meeting notes and I had to give the Boss a quick lesson on T accounts so he can use them.
Cathy
CathysTaxes
 

#15
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My first CPA employer in this country graduated college in 1994, I think. He did not learn T accounts in high school or college. He said accounting in high school was basically QuickBooks. I suppose he is incredibly lucky to be naturally smart and to have had two good employers before running his own practice. It is scary to think that there is a whole generation that does not know how to keep books manually. Which makes the future even scarier.
 

#16
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I certainly did a lot of T account work in college. I remember a person high up in the accounting department at Boeing (reasonably local to me) sharing that they would walk through T accounts with regularity, especially when it came to posting transactions among affiliates.
Gotta walk before you run.
~Captcook
 

#17
sjrcpa  
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belle Anna - I learned it that way, too.
 

#18
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And some of the above comments are a testament to Intuit's commercials for accounting software that tells people they don't need an accountant the just need to act like one and buy their software. I remember being in a class years ago and when the discussion came up about income accounts being negative, two or three people in the class thought the teacher was joking and were glad they didn't do books like that.
 

#19
Joan TB  
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Of course, income accounts aren't really "negative", they are credits. On excel spreadsheets, for example, we format them as negative numbers because that is pretty much the only choice we have available in that software. But in other places they can be identified as "cr" for credits, versus "dr" for debits.

"...their computer software just does it all behind the scenes..." so nobody knows nothing!
 

#20
CathysTaxes  
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Hubby is the HR/Accounting Manager where he works and he's going to retire soon. His boss wants him to find his replacement and to stay part time. He's shocked at the number of interviewees who claim many years experience and can't answer a simple question on what you debit and credit in a G/L entry.
Cathy
CathysTaxes
 

#21
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sjrcpa wrote:Do they still teach T accounts in school?


Yeah, it is still taught in the entry level accounting classes. I believe they remain on the CPA exam, too. Most people don't have a clue about T accounts, and I agree everything is worsened when viewing things from an accounting perspective vs. banking perspective. I had software available to me when I was in college and while I did occasionally use it for assignments, it was NOT provided by the school--we are expected to do everything the old fashioned way. I am 35, so this is not THAT long ago.

Software tends to make it worse, and people dumber. Peachtree (and whatever it is now called, Sage 50...?) says "increases" and "decreases" for various G/L accounts. NOT the way to think of it, but I lose that battle all the time. Glad Intuit has not gone that route and forces you to know normal balances for G/L accounts.

I do recall when I first started out in accounting 16 years ago, I was stunned at how the CPA I worked for could tell me how every single account would be either debited or credited depending on the circumstances. I had learned basic accounting but had not memorized normal balances, so I was baffled at how he could remember them. Well, I reached that point long ago but I still make mistakes when I do things too quickly, and I'll admit with GJEs I do not always put the debits, first, simply out of laziness.
 

#22
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I graduated from college within the last 10 years and the professors still taught how to use T accounts. Our tax class also had to manually fill out a few tax returns with different scenarios. Quickbooks is good software if you know what you are doing, but it always amazes me how some bookkeepers can manage to screw it up in ways I didn't know was possible.
 

#23
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TheAnswerMan wrote:I graduated from college within the last 10 years and the professors still taught how to use T accounts. Our tax class also had to manually fill out a few tax returns with different scenarios. Quickbooks is good software if you know what you are doing, but it always amazes me how some bookkeepers can manage to screw it up in ways I didn't know was possible.


I like to point out to people that there are bookkeepers and there are QB data entry technicians. Each has their role, but you need to know which you're getting when engaging (as an employee or contract solution).
~Captcook
 


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