A career in audit

All those who have studied ACCA Paper F8 (2.6 under the old scheme) would know the basics of what a typical audit involves. For those of you who are still not familiar with the subject, the objective of an audit as defined by ISA 200 is as follows: íThe objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework.

The applicable framework may be International Financial Reporting Standards (IFRS), US GAAP or any other framework depending on the country in which the audit is being conducted in. 

An auditor has to obtain sufficient appropriate evidence in order to draw conclusions regarding the truth and fairness of the financial statements. Audit evidence is obtained through various audit procedures as set by International Standards on Auditing (ISAs). I will be explaining more about this in a future post. 

But there is much more to an audit than just verifying account balances and being proficient in ISA and IFRS. The most interesting part of being an external auditor is that you get to experience variegated organisational cultures. You may be auditing a multinational company one day, with perfect internal controls and highly competent staff members, while the very next month you may come across an organisation in its initial year of trading with very few real controls, and accountants who will just not co-operate.

Another skill acquired through working as an auditor, is the ability to communicate effectively. The general perception is that auditors mainly deal with financial data obtained from the accounts department. This is not true; an auditor needs to develop a detailed understanding of an entity and its environment to be able to identify business risks that may eventually result in material misstatements in the financial statements. For this, an auditor has to deal with people from all levels of an organisation, ranging from engineers to procurement managers, and from lawyers to sales and marketing staff.

What is the relevance of non-financial data to an audit? Consider the following example. There may be certain laws governing the particular industry the audit client belongs to. Without detailed knowledge of these regulations, an auditor may fail to detect non compliance which may result in penalties. Consequently liabilities would be understated.

For anyone interested in attaining extensive commercial awareness and business know-how, a career in audit is highly recommended.

Comments

[rahna]

Dear Azhar,

I am an ACCA affiliate (Dec 2008) from Dubai, UAE. Since then I have been trying for my career in audit in any Big Four company and also as an internal auditor in both local and MNC firms.

I have been unsuccessful - could you tell me in what other field can an ACCA affiliate find a suitable opportunity?

My email address is rahna.hamsa@gmail.com

[Momeza]

Hi people,

I am already working as an internal auditor, completed my ACCA as well. I wanted to professional develop my skill towards audit, so am thinking of further studying the field of audit.

I am getting confused as to whether go ahead and take CISA or CIA as a qualification. Can anyone provide depth in regards to these two certifications, and if possible let me know which ones more commendable in the business field.

Thanks,
Meeza

[Ashhad]

Hi there!

I am weak in my Research and Development topic although I have passed my F3 paper with good numbers.

This weakness will lead to difficulties in the advance subject of Financial Accounting. However, I have read this topic in books (Kaplan & BPP) but I am still unclear about it. I think it is not explained clearly in the book which I have studied. Tell me, how do I get extensive knowledge on this particular topic?

Thanks and regards,
Ashhad

[Maxine Lewis]

I found a great site for finding opportunities all over the world. The site is www.auditorcrossing.com where you can find internal audit, IT, and Finance Auditing Manager positions.

Right now there is a Senior Auditor/ Audit Manager position available in Livingston,New Jersey and an IT Audit Staff II in Atlanta, Georgia.

It is totally worth checking out!

[Azhar Azim]

Hi Irfan

It depends really. You will be satisfying the practical experience requirements as long as you are working for an approved employer regardless of whether it’s a Big4 or not.

But you need to decide what is right for you. You may prefer the personalised environment a small firm has to offer. Apart from that, it is generally believed that you are given responsibility at an earlier stage in a smaller firm as compared to a Big4.

The Big4 audit firms generate the highest revenues. This means that they audit the largest companies. This will allow you to develop an understanding of dynamic business environments coupled with complex accounting treatments. In terms of remuneration, the Big4 offer better salaries.

Taking a long term view, it can be argued that you can reach to the top if you are competent enough, regardless of where you got your training form.

Hope this helps.

Regards,
Azhar Azim

[Muhammad Irfan Ahmed]

Nice post.

I would like to know what difference does it make if you do PER from a Big Four firm as opposed to a small firm?

[Afzaal Shaukat]

Hi Azhar

I am thinking of joining some audit firm.

Can you guide me more on this? I see that you are working in Ernst & Young as an auditor. Would you like to share your experience with us?

[Usman]

Yep, it diversifies your knowledge and makes you more flexible and professionally competent by auditing different industries and organizations.

It really takes you out of books and lets you know what is happening in the practical world and how to deal with it without compromising your objectivity...

That's why I think for PER, auditing firms should be preferable no matter if you are not going to adopt it as profession. It just gives you a real sense of practicality.

[Career search]

Hi...

Your blog posting is very good and a good basis for all students who are very careful with their career.

Thanks

[Managerial jobs]

Great to see a good collection of blogs. Thanks for sharing...