August 2001

Industry Profile

Q: How long have you worked for Loews Corporation?
A: Twenty-four years.

Q: What industry is your company most closely associated with?
A: We like to say we are closely associated with the finance industry because we own five businesses. We own an insurance company, a tobacco company, an oil-drilling company, a watch company—Bulova—and a hotel business too—Loews Hotels.

Q: What are your primary functions and responsibilities?
A: Internal auditing.

Q:What are the biggest differences between the work you perform and the work performed by CPAs who belong to other industries or public practices?
A: What I would see as the big difference is that you need to be knowledgeable in all those businesses. There’s a lot of studying to keep up in all those businesses. I read a lot of trade publications and talk to a lot of operations people throughout the company.

Q: What are the similarities?
A: The only real similarity is knowing how to do an audit and the process. But what you audit is different. In the case of a public accountant’s audit, you do work with general ledger accounts and financial reporting, preparation or review of an annual report. In an operations audit, you’re involved with internal controls. You’re also involved in enhancing revenues and decreasing costs. In public accounting, you’re looking for accuracy in financial reporting, internally, you’re looking to safeguard assets and save money.

Q: With respect to your industry and the accounting work you conduct there, what are the most significant developments to take place over the last five years?
A: The most significant development has been in technology. It has been greater than anyone could have predicted. Five years ago, it was unheard of to drill for oil in three or four thousand feet of water. Now, we can drill in 10,000 feet of water. That’s all due to technology. Digital technology has obviously improved communication; I don’t think we’re alone in this issue. Everyone has to be on the technology bandwagon, even a candystore owner.

Q: Do you consider these developments to be reflective of broader developments that have occurred in the accounting profession?
A: I think it’s the other way around. It’s these developments that created development in the profession. New drilling technology provided a need to account for cost, financial planning, and other changes to control the costs of these new technologies. That affects the accounting profession. Also, a lot of the technological developments in computers and telecommunications have helped simplify the accounting profession’s work. For companies like us, there are enterprise resource planning programs, which are huge pieces of software used to create and manipulate large databases in such a way that they can provide internal management with information to make better decisions.

Q: What are some of the current trends in your line of work? To what do you attribute them?
A: I guess the major new trend is the use of analytics to audit, as opposed to detailed testing. Using computers to compare similar items from month to month and year to year, as well as techniques like regression and correlation analysis, which are relatively new.

Q: Are these trends confined to your industry alone?
A: Some of those techniques might be applied to investment analysts, but I can’t answer that, in all honesty.

Q: For the long term, what are some of your biggest challenges?
A: The biggest challenge is always keeping ahead of the curve in knowing about what new technologies are available, what’s going on in our industries that might be available to management. To stay ahead of the curve and to understand what your competition is doing.

Q: Do you expect accountants outside your industry to face similar sorts of challenges?
A: Without a doubt. Everybody is going to be facing those sorts of challenges.

Q: With respect to the entire accounting profession, what are the advantages of working in your industry? Conversely, what are the disadvantages?
A: In my case they are the same. I’m exposed to a whole broad array of businesses, which is a pleasant challenge, but the base of knowledge is so much broader you can’t know it all. It’s something you just work at on a continuing basis.

Q: Why is the work you perform important to accountants outside your industry?
A: I don’t think it is important to anyone except internally. I don’t expect my work will make a major impact on the world to the extent that anyone will build a statue of me in Central Park.

Q: How do the major issues currently surrounding the entire accounting profession affect your work? If they don’t affect you right now, will they in the future?
A: The XYZ is probably the most important development because our company is global. For me to identify with and be able to relate to people globally will be the greatest advancement in our profession in the last 100 years. Just think about sharing a credential with extremely knowledgeable business people who have passed a credentialing test and operate within ethical metes and bounds. Most of those who will get the credential are already employed in the accounting profession as consultants, attorneys, financial planners, and business valuation specialists. The negative issue I see affecting the profession is the standards overload problem and the lack of a relevant accounting model. The current accounting model is a dinosaur that should have been made extinct 20 years ago. The profession has been unrealistic about revising the accounting model. The current system, where we report on events as much as 16 months after they occur, is too archaic and totally irrelevant. Today, people want to know what’s happening tomorrow. Also, no one wants to read numerous pages of footnotes that don’t make sense.

Q: Do you believe public practice accountants have an accurate understanding of the work you perform? If not, why?
A: I think some of them do. I would be lying to you if I said I knew everything about taxes, but there are a whole bunch of accountants who are experts in taxes. Most people in the tax and financial planning regimen don’t have a clue what I do. But people on the auditing side have a good idea of what I do, including those in our outside auditing firm. We complement each other in our daily lives, so it’s a mixed bag in terms of our understanding.

Q: Do you believe the Society adequately represents your interests? If not, what could be done to make sure you receive fair representation?
A: No, I don’t. They never have and they probably never will, but there’s a good reason for that. The reason I see for it is that the Society and the AICPA need to support the efforts of public practitioners because those organizations are the only places where the public practitioners’ professsional interests can be represented. My interests can be represented by many other organizations, and the interests of my company can be represented by an array of associations. However, I do strongly support the activities of accounting societies.

Q: Overall, have you enjoyed working for an industry? Why or why not?
A: Overwhelmingly yes. I’ve been uniquely challenged; I do a lot of things relating to getting involved in business decisions important to me as an individual and my company, with an opportunity to express myself with more than just numbers.