Financial Auditor

The life of a financial auditor...

External auditors

In most companies today, external auditors are called in periodically to check over their operations and books to (hopefully) give the organisation a clean bill of health.

An auditor’s role therefore involves certifying the company’s accounts, verifying that the information and figures recorded in the company’s accounts are correct. In other words, an auditor’s job is to ensure the accounts reflect the true picture of the company’s economic outlook.

Auditors have to pour over company balance sheets, income statements, as well as various other items, including records of sales, costs, cash transactions, stocks, etc.

Usually, and depending on the size of the company being audited, external auditors work in teams. The make-up of these teams will vary from project to project, but as a general rule will consist of:

  • Interns and trainees
  • Junior auditors
  • Senior auditors, responsible for supervising junior members of the team. They also act as relays between clients and managers
  • Managers, who may occasionally take part in client meetings but whose roles are generally more central
  • Partners, who are responsible for maintaining excellent relationships with clients whilst managing teams

The main auditing firms operating today are usually known as the BIG 4 (Ernst & Young, Deloitte, PricewaterhouseCoopers and KPMG). The audit departments within these companies are generally structured by sector, e.g. finance, insurance, industry, consumer goods, etc.

Audits generally take place over 3 key phases.

Phase 1: Preparing the audit

The purpose of this phase is to help auditors really get to know their clients (the companies being audited), in particular:

  • Checking they’ve properly identified their potential accounting risk areas, i.e. areas where there could potentially be an error in their accounts.
    • Example 1: stock that doesn’t really exist or has been miscounted
    • Example 2: a building that has been overvalued
    • Example 3: an unrealistic estimate of turnover.
    • These examples would clearly lead to erroneous accounts being filed.

Phase 2: Auditing the company

During the actual audit phase, external auditors travel with their teams to the client’s premises. The team is usually assigned a dedicated room where they’ll be given access to all the documents they need to see, including accounts, invoices, etc. But auditors also have to use this time to meet various contacts within the company to find out supplementary information.

When working on site with their clients, auditors need to identify the internal monitoring systems that oversee the risk areas identified during the preparatory phase.

  • Example 1: how does the client verify the existence of stock? By introducing an automatic counting system. Here, the auditor’s role is to then verify the automatic counting system works properly, efficiently and fairly.
  • Example 2: how does the client verify their turnover estimates are correct? By checking invoices match the deliveries actually made, something the auditors will look at very closely.

Phase 3: Reporting and presenting

Once all their on-site checks have been completed, junior auditors will return to their offices to put together - under the careful supervision of senior auditors and managers - their final reports on the company’s accounts. The goal is to reach a final financial assessment of the client’s accounts or make certain adjustments, wherever necessary.

These reports are then presented to the client’s board of directors and shareholders.

Main contacts

When working on site with clients, an auditor’s main contacts include the chief financial officer, the chief accountant, management controllers, as well as operational staff, depending on the areas being investigated (sales managers when checking invoices, production managers when verifying stock levels, etc.).

Special duties

Auditors may sometimes be called upon to work on projects that are somewhat out of the ordinary for external auditors, particularly during exceptional events in the lifetime of a company, for example, when fraud is detected.

Required skills

Extremely diligent, comfortable working with numbers, good relationship skills, an analytical mind and a curious and organised nature are all must-haves.

Typical educational background

5 years of higher education, including:

  • business studies,
  • masters in accounting and finance
  • masters in management sciences
  • masters in political sciences

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