Ep. 6: Richard Starkey - The Importance of Accounting in Entrepreneurship

07/08/19 • 19 min

Count Me In®

Contact Richard Starkey:
https://www.linkedin.com/in/richardstarkeyyves/

CronosNow: http://cronosnow.com/our-why/

Richard Starkey's suggested reading list:

Tim Goodenough: https://timgoodenough.com/
Tim Ferriss: https://tim.blog/.
Ray Dalio: https://www.principles.com/
Adam Grant: https://www.adamgrant.net/
Carol Dwek: https://mindsetonline.com/abouttheauthor/

FULL EPISODE TRANSCRIPT

Music: (00:00)

Adam: (00:03)

Welcome back to Count Me In and thanks for joining the conversation about all things affecting the accounting and finance world. I'm Adam Larson and I'm joined by my cohost, Mitch Roshong and today we have a very interesting episode to share with you for this week's conversation. Mitch, you had the opportunity to speak with the managing partner of CronosNow Richard Starkey.

Mitch: (00:21)

Yes, I did. Richard Starkey is what he refers to as a serial entrepreneur since his teenage years. His passion for business and education came across very clearly and we were able to talk about how important accounting and finance skills are to starting and running a business. He is also a great proponent for lifelong learning and share some valuable insight into how professionals can learn and develop through their careers. I enjoyed the conversation and learned a great deal from Richard and I hope you do too.

Mitch: (00:54)

So Richard, please tell us a little bit about your background and how you ended up as the managing partner at Kronos Now.

Richard: (01:01)

I started being an entrepreneur quite early in life. In my late teens, I started up a small kind of publication and I was actually riding horses for as a professional show jumper and realized I needed to make some money. So you know, started a couple of small businesses, nothing too sophisticated. And as I kind of got on in in my career I realized I needed a strong kind of finance background. So I studied accounting part time while working and running some small businesses and I did my accounting degree. And during that process I wandered off and became an operations manager for a large logistics firm, got into corporate finance and then really felt the shortfall of my technical finance knowledge. So then continued with the rest of my accountancy qualification or part time in my late twenties, actually. And once I kind of finished the qualification, I went back and did my internship and articles in my late twenties. I landed up in academics teaching financial reporting as my, you know, as my real teaching subject. And from that I grew into this quite a bit of an expert in financial reporting and later in corporate finance and a deal structuring for mergers and acquisitions, not a deal maker, more a, you know, a technical accounting and tax structuring kind of guy. And through that period I really just ran with academics, you know, sometimes more academics, less consulting, sometimes more consulting and less academics. But through that process a couple of years ago we did an education corporate finance deal where we brought and structured a couple of education businesses around the world. And by accident, you know, one of those deals didn't go so well and I landed up kind of holding the reins, temporary CEO for what was supposed to be for, for an interim period and landed at actually loving it and moved from technical accounting finance guy into CEO of an education business for good three and a half, four years and had to learn all the skills around strategy, building a larger systems and marketing. And in that process I had some wins, some losses, but I really fell in love with the idea of automating and developing processes from the front end marketing all the way to the back end accounting and last year off to some, you know, personal health issues in our family. We sold the business to take some time out and during the end of last year I realized I enjoyed the entrepreneurial space, not as as an entrepreneur but in helping entrepreneurs and that's where Kronos Now was born. And Kronos Now services and looks after my own entrepreneurial and my wife entrepreneurial activities from a systems accounting and finance perspective. But also we act as an accounting firm that we like to do, say there's more than accounting. And it's been a good, you know, first year and we're learning and helping small to medium entrepreneurs are doing initia...

Contact Richard Starkey:
https://www.linkedin.com/in/richardstarkeyyves/

CronosNow: http://cronosnow.com/our-why/

Richard Starkey's suggested reading list:

Tim Goodenough: https://timgoodenough.com/
Tim Ferriss: https://tim.blog/.
Ray Dalio: https://www.principles.com/
Adam Grant: https://www.adamgrant.net/
Carol Dwek: https://mindsetonline.com/abouttheauthor/

FULL EPISODE TRANSCRIPT

Music: (00:00)

Adam: (00:03)

Mitch: (00:21)

Mitch: (00:54)

So Richard, please tell us a little bit about your background and how you ended up as the managing partner at Kronos Now.

Richard: (01:01)

Previous Episode

Ep. 5: Dr. Ariel Markelevich - Blockchain in Accounting

FULL EPISODE TRANSCRIPT

Mitch: (00:03)

Welcome to Count Me In, IMA's podcast about all things affecting the accounting and finance world. Mitch Roshong and Adam Larson here with you again and today we are going to hear all about how blockchain works and how it applies to accounting. Now, Adam, can you give us a little more background on the topic?

Adam: (00:17)

Yes, thanks Mitch. Some of the biggest curiosities and ongoing questions in accounting revolve around blockchain. To get some insight on the topic, I asked Dr. Ariel Markelevich to help us answer a couple of the most common questions. Dr. Markelevich is an associate professor of accounting at Suffolk university. He has written a number of articles for academic and professional journals and has presented much of his work. I think you're going to learn a lot about blockchain. I certainly did. So let's take a listen.

Adam: (00:52)

What is blockchain? And do accountants really need to care about it?

Ariel: (00:56)

Thank you. That's a great question. So many people have heard about blockchain, and I'm guessing that many people don't really know what block chain is. So block chain is essentially a technology. So when you think about blockchain, you typically think about a list of individual records. So, many talk about the ledger or a distributed ledger. In essence, it's a list of individual records. Now the records can contain any type of information. So when you think about blockchain in the context of accounting, it could be transactions. When you think about a blockchain in the context of Bitcoin, it again could be transactions between individuals. Now what is unique about blockchain is that it forms a chain by the name. You can get that. So there are the key thing to understand is that there are many types of books and systems. The basic process in a blockchain system is that each record would include some information. As I said, for example, a transaction and it would contain a digital signature for each of the parties. Now the records, before added to the chain, they're checked and they're approved. We'll talk a little later about different ways to prove the records, but in essence, they need to be checked and approved before they're added to the system. Once they're approved, they're record is added to a block and then the blocks are in essence linked to each other and create the chain and we get the block chain. Now there are other common characteristics of blockchain. One of them is that it uses group cryptography. So instead of just having the information there we go through a crypto process to create what's called the hash, which essentially is a list of digits and letters that represent, in essence, the record, you can also think about it is the key to the record. Now the hashes connect the records and the blocks together in a specific order. If you were to make any change to the record, that would cause the hash to change as well. And hence you would know that there was a change in the record now because the next block contains still the old hashes. If you wanted to hack and change a potential record in the system, you would need to change all the subsequent records. Because again, all of them contain the previous hashes for the previous records. And that makes it hard, which is one of the key advantages or interests in blockchain. A key thing to understand is that blockchain is not Bitcoin. So many have heard about Bitcoin, which is a cryptocurrency. I'm guessing that some of you are sad that they didn't buy Bitcoin years ago. But anyway, Bitcoin uses blockchain. Blockchain's was introduced when Bitcoin was introduced, but the two are different. So the way Bitcoin uses blockchain is just a specific use for blockchain. And in many cases, when you think about blockchain, blockchain could be converted or used in a variety of different situation and variety of different settings and not just the one that Bitcoin is using. So for example, the Bitcoin use of blockchain is what's called a decentralized or a Galatarian network. The basic idea there is that there's nobody in charge of the system. There are many users within the Bitcoin blockchain system. All those users or nodes, sometimes that's the technical term, but again, no central authority. You don't need to get approval from anybody to join the system. In the Bitcoin network. The members are kept anonymous. Now I'm saying all this because you need to think about blockchain for potential business uses. And for example, you may not want to keep the blockchain system decentralized or egalitarian. You may not want to keep the members anonymous, but the fact that Bitcoin is using it that way doesn't mean that all blockchain applications would be the same. Another characteristic of the blockchain use in Bitcoin is the fact that...

Next Episode

Ep. 7: Mark Nickerson - Risks and Rewards of AI

Mark's Article: https://sfmagazine.com/post-entry/april-2019-ai-new-risks-and-rewards/

FULL EPISODE TRANSCRIPT

Music: (00:00)

Adam: (00:00)

Welcome to count me in IMA's podcast about all things affecting the accounting and finance world. I'm Adam Larsen and with me is my co-host Mitch Roshong. Our topic for this week's episode is actually based on an article written about artificial intelligence. Mitch, can you tell us a little bit about our speaker and what the article says?

Mitch: (00:18)

Yes, absolutely. So I recently came across an article titled AI new risks and rewards written by Mark Nickerson. Mark is a CMA, CPA and MBA and is a lecturer for the state university of New York at Fredonia. I was interested in learning more about where the idea for the article came from and if Mark had any other insight into what kind of risks accounting and finance professionals should be aware of. He was nice enough to answer a couple questions for us. So let's listen to how AI could potentially increase finance fraud in the future.

Mitch: (00:52)

Can you tell us what led you to researching and writing the article, AI new risks and rewards?

Mark: (00:58)

Yes. Thanks so much for having me. I wrote the article in response to a number of stories that I had seen recently, all of which seem to focus on the positives of utilizing AI, artificial intelligence or RPA, robotic process automation in both the finance and accounting industries. However, there was very little, if any credence given to what the potential negatives or drawbacks of instituting these technologies would be. Now,i'm not adverse to new technologies. I'm not adverse to being on the cutting edge of utilizing or implementing new technologies. Quite the opposite. However, I always want to make sure to play devil's advocate as well as take a realistic look at what the potential negative impacts are. I think it's always important in our industry to be proactive to what could go wrong instead of being reactive as we've been in the past now in these articles that speaks quite often about how corporations and businesses will use and implement and have already implemented AI in their respective finance departments or their internal audit departments and I believe wholeheartedly that those companies are seeing a large benefit. I cited in my article a recent MIT Sloan management review report where they surveyed 3000 executives and over 85% that they felt AI would give them a competitive advantage over those companies that were not using AI. And of those individuals, 79% felt it would increase productivity. I believe that they're correct. I also believe though that it opens up a brand new world for potential fraudulent transactions, potential accounting and fraud scandals that could go undetected for years or never be detected based upon the reliance of AI to find these things. And what I mean, there circles back to what AI really is in artificial intelligence. While I'm not a technology expert, I can break it down and have had it explained to me many times in a simple format of artificial intelligence does learn, but it doesn't learn on its own. It learns from you and I, it learns from millions and millions of data points that it is fed through in analyzing information. Those data points come from situations and occurrences that have taken place where humans have been interacting in some facet of the data that we are then feeding through the artificial intelligence because humans have interacted or touched some portion of that data point or that transaction. Human bias is inherently being fed into these technologies, into the artificial intelligence, into these quote unquote robots. And I cite a couple of studies in my article, one of which took place in the university of Virginia where a professor down there was utilizing AI and determined that it began exhibiting sexist views of women. simply again, based upon the data points containing human bias and human bias. Unfortunately, still today being skewed towards towards sexist views towards a female gender. Another study this time at the University of Massachusetts showed that a AI was able to put learn in quotes again because it does take it's lessons or it's education from human interactions. But AI was able to learn from these data points to essentially exclude African American individuals from data sets that were used for important items such as polling information, based upon their vernacular. So it was able to learn and essentially pull those data points out of the data sets. My concern then is the human bias that led to the large accounting and financial frauds in the late nineties and early two thousands such as greed a...