What Insolvency Accountants Do
While some accounting jobs focus on keeping the books organized and budget flush, and others involve auditing to see if any issues are present, an insolvency accountant only comes on board when an organization has debt that exceeds its assets. Nowadays, this is a scenario that plays out all too often for companies, whether it’s due to economic circumstances or poor management.
It’s the insolvency accountant’s job to help the organization find ways to correct this imbalance, and enable it to remain in operation or close business operations down properly. In some cases, insolvency accountants will examine business practices to see where money can be saved. They may also work with vendors the organization owes to work out new terms for repayment.
Reorganizing the business, restructuring, coordinating a bankruptcy, or helping the organization sort out its finances with the hope to sell are common activities as well. A corporate recovery and insolvency (CR&I) team is also responsible for providing advice to company executives and giving reports to stakeholders on what actions are occurring.
Who would enjoy a career in Insolvency?
Insolvency is a unique area of accounting, in that being good with numbers and budgeting simply isn’t enough. People who do well in the field have strong business skills and understand how organizations can be structured for maximum profitability, and utilize critical thinking skills to determine what avenues are available to get an organization’s finances moving in the right direction.
On top of this, there are many laws that pertain to corporate structures, finance, and repayment of debts, so being familiar with any governmental regulations that pertain to the circumstances is essential. Effective communication and negotiation skills are also beneficial, as the job requires working to get better repayment terms and explaining processes to stakeholders and executives.
Who mightn't like the career?
It isn’t only large corporations that must go through CR&I. Sometimes, small startups with entrepreneurs who have put their livelihoods on the line to build a company wind up in a bind too. This means the process can be highly emotional, as the company leaders may genuinely have no way of paying their personal bills or feeding their families without pulling a standard paycheck from the company. For this reason, a great deal of empathy, leadership, and professionalism is necessary, and the career is not a good fit for those who lack in any of these areas.
Moreover, the other people an insolvency accountant may deal with, from stakeholders to employees and vendors, are often angry with the situation. So those who can’t stay cool under pressure, even when harsh things are said, will either leave for other accounting jobs or may be relieved of their duties for responding to things in an unprofessional way. However, those who can manage the stress and emotional aspects well often feel emotionally rewarded by making the most out of a dire situation.
People who enter the field intending to become an insolvency accountant usually have a degree in accounting. For those who move in from other career paths, a finance degree is often sufficient, provided the candidate has the licensure, skills, and work experience the organization is looking for.
In the United States, candidates must test to become a Certified Public Accountant (CPA), and the requirements vary by state. The rest of the world generally uses the term “Chartered Accountant.”
Canada requires certification at a provincial level and has three governing bodies that provide it. A number of agencies across the United Kingdom are permitted to grant the title of Chartered Accountant, and the certification is usually valid throughout the UK. Australia and New Zealand share governing bodies. Following a general accounting certification, sector-specific qualifications are also expected, such as the JIEB (Joint Insolvency Examinations Board exam), the CPI (Certificate of Proficiency in Insolvency), and the CIRA (Certified Insolvency & Restructuring Advisor) designation.
To become an insolvency practitioner, accountants already need to have accounting experience and be a member of a recognized body that governs insolvency practitioners, which typically means having worked in insolvency before. For this reason, working in a general accounting firm and learning about insolvency and/ or working as an intern are essential components of getting into the field. Following this, professionals will be interviewed about their skills and experience. Due to the rigorous requirements expected of insolvency professionals, those that do have the required professional designations often have their pick of jobs.
* Preparing for the CPA Exam * Preparing for the ACCA Qualification * Preparing for Australian CA Exams * What to consider when going for an Insolvency Interview
Moving into Insolvency from another career
A career as an insolvency accountant is not easy to transition into. In fact, the JIEB exam has just a 23% pass rate. For this reason, those who do make the transition almost always have accounting experience as well as a background that includes insolvency. For more information, see: “Is it still worth training to be an insolvency practitioner?” “Insolvency Accountant - Career path?” and “Career Focus: Insolvency and Corporate Recovery.”
Role: Junior associate accountants work under the direction of senior associates. They’re typically given some of the more basic work, such as generating reports and presentations, performing audits, doing research, and keeping records.
Hours: 40+ hours per week
Senior Associate Accountant
Role: After a couple of years, most junior associates become senior associates or senior accountants. In these positions, individuals are expected to be able to carry our entire processes and perform analytical work. They may also have more client-facing duties, such as giving the clients advice and creating reports for stakeholders, but who they speak to and when is still outlined by a partner. At the later levels, senior accountants are expected to bring new business into the firm as well. Those who have shown they can complete work accurately, have good relationships with clients, bring in new business, and help make their accounting firm profitable are generally rewarded with an offer for partnership.
Hours: 40+ hours per week
Role: While some accounting firms are starting to add positions like “manager” and “director” as stepping stones before reaching partner, the normal progression is still from senior associate or senior accountant to partner. Reaching the partner-level is by invitation only, and sometimes requires that individuals pay a preset amount to buy into the firm. Well-qualified professionals may start to see invitations as early as the 10-year mark, though it’s more common after 12 years or more as an accountant. At this stage, partners are expected to bring in new business, oversee the accountants, and ensure daily work is completed. They work with all the people involved in an insolvency case, from the clients to stakeholders, vendors, and lawyers. Although they often send the work down to accountants, they ensure accuracy and present information to those who need it.
Hours: 40+ hours per week
Insolvency accountants sometimes travel to meet with clients, though it’s typically local travel. However, the larger salaries offered to partners makes leisure travel of all types possible.
Associate: According to data from PayScale, associate accountants have salaries of approximately USD$47,000 in the United States, £23,125 in the United Kingdom, CAD$43,874 in Canada, and AU$54,900 in Australia.
Senior Associate: USD$67,407, £34,134, CAD$60,804, AU$73,818.
Partner: USD$182,000, £150,000, CAD$225,000, AU$205,000.
Bonuses and profit sharing may add a few thousand dollars annually onto an accountant’s salary at the lower levels. Once in management, an additional 5-10% of the base salary may be awarded in bonuses, profit sharing, and commissions. Partners, however, earn the most through extra pay, often securing in excess of six-figures annually in addition to their base salaries.
Why Insolvency Accountants move on
Because insolvency is not a field people enter into lightly, and demand is great for practitioners, few leave the field altogether. Those who do often find themselves bored with other accounting jobs and move back into insolvency later. However, some have trouble with the emotional and stressful aspects of the career. In these cases, they’re well-suited to move into almost any branch of accounting.
* Auditor * Management Consultant * Risk Consultant * Economics Consultant * Financial Accountant * Forensic Accountant * In-House Accountant * Actuary * CPA * Entrepreneur