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Consultant opinion
Who are the auditors and what do they want? (this is a very concise management tutorial) |
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Well, we are inch-close to year-end closure and the balance sheet. Many companies are in a position to have their financial statements audited for the very first time. Perhaps they have been able to figure out who the auditors are and what they want, but we should also say just a couple of words about those who have not had this opportunity... so far.
Why... opportunity? What is it so cool about being cornered with questions from all angles, preparing tons of photocopies, inhaling dust from archives, just because someone needs "exactly that particular invoice"? What about overtime...? At the end of the day, the client gets a piece of paper and possibly some comments that you didn't do your job well here and there...
That′s exactly the reason for it! Since the auditor is really the „critical eye" that can see beyond the place where you′ve stopped seeing and where you don′t usually look. Since you′re supposed to cope with the demanding business that is on your hands every day, you try really hard to cope with the deadlines that are ever more pressing, so you′re not quite in the mood to prepare global analyses or constructive analyses about your own performance or other people′s performance. Do you think that everything is fine as it is, just because your wheels keep spinning and nothing is broken so far?. And after all, why change something that you are already familiar with?
Since they are putting so much pressure on you with their questions, auditors manage to dig up bygones or things that you considered to be less important. And this is how questions come to you - well, why is that? How things should really be?
Since you′re processing "piles" of photocopies, you start to realise how superficially some transactions have been treated - they could pass without approval, some invoices have been lost, some undue commissions have been paid...
Since, while being lost among hundreds of archive boxes, you start to realise how useful another archiving method would have been, something more up-to-date, more reliable, running on an IT platform, and you say to yourself that that′s exactly the topic that you will present in the meeting room next time you get there...
And since, if it hadn′t been for the auditors, you would have never known that you have unaccounted invoices that are somewhere in the drawers of shift supervisors - because no one told them what to do with them! Also you would not have found that millions in penalties have been paid just because there is no list of contractual clauses and deadlines! And also you would have never known that the piece of software that was so... "yesterday" in your opinion can generate so many useful reports, while in the neighbouring offices an army of clerks write numbers in dozens of columns and send them over to them managers...
So what if they have found all of these problems and many others on top of them? Auditors came up with some proposals to improve things - and not all proposals are that bad and some of them are quite simple actually (how could I fail to see them, actually?). It is still hard to accept criticism, but it is still them who insist that you should do that for your own good. Additionally, they will come back next year to see what you have solved in the meantime!
What about the audit report, is it just a piece of paper? Do you know what auditors say? The shorter, the better! And audit report that is several pages long is an indication that some issues could not be checked, are unclear or the treatment that they had is subject to disagreement.
Although everybody worked hard and there were times when you lost patience, you are ultimately satisfied that your financial statements look a lot better, they are better balanced, they lot the "ballast" of previous years, stocks value is updated by the book, you have a paper trail procedure, you have a bookkeeping procedure, all invoices have been processed and the system warns users about maturing invoices.
You really feel like calling your auditors, just now when everything works so fine! But there′s one more year to go...
Auditor Daniela Jinaru
Principal Ensight
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