Q: I am working as a bookkeeper, recently hired to assist the CPA (my boss) for a small to medium-sized company. My degree is in accounting, but I do not plan on getting my CPA. The CPA exam is very difficult and a friend who studied intensely failed it twice. I am fine working as an accounting assistant. Maybe someday I will study for my CPA.

I do whatever I am told to do; my boss is nice to work for and the job is not hard. He hasn't had time to get to know me well, but I am as honest and straight-laced as can be. I was asked to review last year's ledgers and found errors in certain entries, which I pointed out to him. He said they were not important and we could let them go, that working to find the correct amounts would not be worth the time. When I heard his reaction to the errors, something in my gut told me his response was wrong. I am not a CPA, and this is my first job out of college, so maybe he is right. Maybe correcting minor errors is not worth the time to fix them. The problem is that I don't know, and I have no one to check with. I don't want to be blamed later, but I don't want to challenge him. What do I do?

A: You do have knowledgeable people to check with: You are a recent graduate and your accounting professors from college can be a good resource and a valuable connection to maintain. Good teachers welcome contact from previous students, and they certainly would welcome questions of integrity. Honesty seems like an easy thing to resolve, but accounting is not as exacting as one might think, and sometimes minor errors are not serious.

According to Barry Itzkowitz, CPA since 1979, "Accounting is an art and a science." Accounting concepts call for one's judgment. One problem is that accounting students learn the concepts in class, but students don't readily learn the applicability of an accounting concept until they get into a job.

For example, $100 that should have been posted under "office expenses" was posted under "advertising." To correct the error, either the firm's client would be charged for that time or the company itself would pay for its own accounting staff to correct it. The determining factor in whether it gets corrected is: Is it significant enough to make a difference in the totals being presented for the company's intended purpose, be it tax or financial statement reporting? For reporting purposes, if both categories are expenses, where the $100 is placed may not affect the results.

Another example of an acceptable time to not correct an incorrect balance is when the amount is wrong by a small amount (this would be considered an immaterial amount) because the amount is too small to have a significant impact on the end result.

Tax returns and financial reports have different lines for different expenses. Itzkowitz explains, "If I entered 'rent' on the 'repairs' line, I would correct it, even though it is still an expense. A layperson would ask, 'Why change it?' This requires a judgment call in the concept of materiality and cost benefit. A way to test the concept of materiality is to add $500,000 to the small amount of $100, which will help you decide whether a correction is needed. Materiality depends on the size of the company, and this is where experience matters in making a judgment call.

Regarding your fear of pursuing a CPA, Itzkowitz encourages any graduate, accounting or otherwise, to pursue credentials that will further one's career.

Email LindseyNovak@yahoo.com with all workplace experiences and questions. For more information, visit www.lindseyparkernovak.com and for past columns, see www.creators.com/read/At-Work-Lindsey-Novak.

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