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.