I’ve been an associate auditor at a Big 4 firm for three months now, and am currently assigned to my third client, a nonprofit. My first two assignments involved public company interim testing, and this one is a 9/30/09 year-end audit.
Considering there will be a lot of year-end testing to do during busy season in January, February and March, I’m glad to be learning now how to do year-end audit work in what I think is probably a less stressful environment than the busy season will be. It’ll be nice to know to some extent what I’m doing when busy season starts.
There’s a lot to learn. I mean, from one perspective, most audit work sounds fairly simple. For Cash, you confirm account balances with the bank, tie and agree the comparative summary to the general ledger (or trial balance), examine the reconciliation, and look into any significant reconciling items such as deposits in transit or outstanding checks that haven’t yet hit the bank account. Sounds fairly simple. And it can be, especially if the client is organized and provides you with coherent, easy-to-follow reports and documentation.
But in large companies, there’s a lot going on and things can get more complicated, or at least seem so, by just the sheer volume of transactions and supporting documentation.
For example, let’s say you’re working on PP&E. You want to look at any fixed assets that were purchased or built during the year and added to the PP&E balance. So you get a detailed listing of fixed asset additions, make selections, and request supporting invoices, checks, requisition forms, etc. You want to see what the supporting documentation tells you about the additions. Were they approved? Were they added at the proper amounts and in the right period? These seem like fairly simple questions.
But your selections come back, and it’s a HUGE pile of checks, invoices, and all sorts of other pieces of paper attached. Why? Because the selections you made might include pieces of large projects, or entire projects, that are made up of tens or hundreds of invoices each.
So you begin. You begin examining your selections, and of course you must document what you’ve done so it takes much longer than it otherwise would as you input all the invoice and check numbers, amounts and dates. Many of the invoices are easy to read, others are more difficult to follow. Some are e-mails from contractors that don’t have formal invoices. Some have no checks attached. You make note of those to be able to request them once you’ve finished your first round.
After a day working on fixed asset additions, you realize it’s only one of about ten things you need to test for PP&E. And don’t forget you’re also in charge of testing Cash, AP, Payroll, Prepaid Expenses, Accruals, etc., all of which have at least one or two similar tests to perform. All to be finished and reviewed in three short weeks.
It seems easy in theory, but in practice auditing can sometimes be more time consuming and complicated than you would have thought. At least that’s how it has been for me.
Interestingly, that’s a very good thing in my book. I like challenge and I like deadlines (reasonable ones). Challenges force me to learn and to become more efficient at the work, and deadlines make time pass quickly and encourage me to be energetic and focused as I work.
So I’m three months in and happy to be where I am, working with great teams and great clients, and learning the basics of auditing. Let me know if you have any questions or comments. You can e-mail me at mpablogger[at]gmail.com.