Ideas in Motion:
A Marriage Made in Heaven: Larry Russell Integrates Accounting and Technology
By Scott H. Cytron, ABC
Early adopters who work in technology are the kinds of people who are ahead of the times with some kind of insight or sixth sense that the future holds a great deal of promise with bottom-line advantages. However, early adopters also tend to rapidly burn themselves out and often move on to other pursuits.
Not the case with Larry E. Russell, CPA.CITP, a Valencia, Calif.-based accounting and information systems consultant who owns AccounTec, a six-year-old company that integrates Accounting and Technology to deliver technology-based services and support – including IT risk assessment and Sarbanes-Oxley consulting – for a wide range of clients.
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Larry Russell, CPA, CITP |
What’s kept him going all these years? A successful marriage between the IT and accounting function, where his philosophy is to bring the CPA to the technology, rather than the technology to the CPA.
“It’s easier for the CPA to understand IT auditing than it is for the IT tech to understand accounting and internal controls,” says Russell, who says there is an unrealistic fear of the “black box,” yet most CPAs know substantially more about systems then they care to admit.
“Show me an accountant who has not reformatted and reinstalled operating systems with applications on their own personal computer,” he says. “With a few IT audit CPE courses, accountants could easily add IT auditing to their bag of tricks. They don’t have to be techie experts; there are plenty of individuals out there who can do the server services reviews, perimeter testing and router configuration evaluations.”
More logically, Russell believes the validity of the accounting component comes into play when the IT auditor needs to be able to interoperate the technology expert’s reports and apply them to the specific business and accounting environment. This kind of thinking is what led him to begin his own business after spending almost 20 years working in other companies.
“Back in the early ‘80s when PCs first came on the scene, it occurred to me that accounting and technology would converge, so way back then I crossed over to the dark side and became a computer geek. I was a spreadsheet junkie, database application developer, system implementations’ expert and networking professional. The list goes on and on.”
Indeed, his career transitioned back and forth between accounting and technology. Early on during his 8-year-stint at Hutchinson & Bloodgood, CPAs, he was on the professional staff performing normal CPA duties, but spent his evenings dabbling in technology. A few years later, Ernst & Young hired him to coordinate and manage its IT infrastructure for the Los Angeles offices because he was innately able to bridge the two worlds.
When he was controller for Gruber Systems – a manufacturing company also located in Valencia – he was primarily responsible for financial reporting and managing the accounting department, but quickly assumed the duties of the CIO.
“People tried to pigeonhole me as either an accountant or as a techie, and had a difficult time understanding that there is position between these two fields,” he says. “When I left Gruber to start AccounTec, I was on a quest to bring these two worlds together. My first engagements focused on Y2K issues and identifying IT data issues that could potentially harm information systems. My CPA background of auditing skills, documentation and critical thinking skills played a big part in these services. After Y2K, my focus turned to custom accounting application development and system risk analysis. The risk analysis paid off with the advent of Sarbanes-Oxley and the demand for IT people who understand internal controls. Who knew?”
In Russell’s world, the work greatly varies from small companies to very large ones, like the time last winter when he spent two months working with a Fortune 500 consumer products distributor to identify the company’s critical and important systems as the first step in developing a disaster recovery program.
The company had four divisions and five wholesale distribution centers in the United States, with an IT division that supported more than 100 distinct systems, starting with two different ERP systems. These included a data mart (mini-data warehouse) supporting a supply chain and product distribution system; a mainframe legacy system capturing all sales transactions and managed inventory; 50+ HP-UX systems with user-specific applications, custom data and user interfaces; several Internet services for internal and external applications; and more than 100 Windows fileservers supporting thousands of workstations. To illustrate even more the enormity of the engagement, there were 100 personnel in the Data Processing Support division.
“The CTO was looking for an independent assessment as to which systems were on the list of primary and secondary recoveries in the event of a major disaster, and to establish their tolerable down time,” says Russell. “The CTO turned to an independent contractor (like me) for this project because of the impact on the IT department’s budgets across multiple departments. In addition, all of his subordinates were tied to a specific department that would be impacted by the report.”
Lately, Russell has spent time in the Sarbanes-Oxley continuum with Section 404 engagements – work that he believes truly alludes to the intimate integration between financial reporting procedures and IT systems. On a recent dot.com SOX 404 documentation assignment, for example, he says it’s impossible to be in this area and evaluate financial statement internal controls without thoroughly understanding the IT infrastructure with its related controls.
“Like it or now, financial auditors must become IT auditors in the CPA profession of the future. Today, I use the example of making two fists pressed together at the knuckles to represent the current status of Financial Statement and IT controls. The two environments are equally as important and butt up against each other, but both stubbornly do not want to mix and the knuckles of each hand do not bond together. What needs to happen is for all fingers to extend and interlace between both hands, forming a strong bond.”
His advice for professionals and firms that want to get a piece of the action?
“Every firm that provides attestation services should consciously be developing its IT audit capabilities,” he says. “Something like passing the CISA exam only required about 40 hours of preparation because much of the IT audit knowledge is identical to the financial statement audits skills, such as understanding the concepts behind segregation of duties and mitigating controls. And, at the very least, these firms should have individuals with CITP credentials on staff who understand the integration of accounting and technology and who speak both languages.”
About Author:
Scott H. Cytron, ABC, is an accredited communications and public relations consultant working in the accounting, health care, high-tech and finance industries. He can be reached at scott@cytronandcompany.com or through his Web site, http://www.cytronandcompany.com.
About Column:
Ideas in Motion is a monthly column designed to focus on best practices within CPA firms and organizations involved in providing technology related services.
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