Apparently, a lot of people know the word "auditor" but doesn't know what an auditor does or what this role entails. There's actually an inside joke and also a funny thing to talk about with my colleagues when we try and remember school elections. Many would want to be the auditor because, as people would say it, auditors don't do anything and just are "displays" in the school officers (how I wish this was true. HAHAHA) That's why I wanted to tell you more about what it means to be an auditor, what is our role and would probably start this series where I just basically write about what I do and spoiler alert! 50% of it is thinking about resigning! HAHAHAHA.
What is an auditor?
An auditor is a person authorized to review and verify the accuracy of financial records and ensure that companies comply with tax laws. They protect businesses from fraud, point out discrepancies in accounting methods and, on occasion, work on a consultancy basis, helping organizations to spot ways to boost operational efficiency. Auditors work in various capacities within different industries.
I know that definition has a lot of technical jargons but to put it simply, for general audit, when a company says in their financial statements or more simply, reports, that they have PHP 1,000,000 in the bank, we have to ensure that the company really have PHP 1,000,000 in the bank. This has the same concept with their inventories and receivables, as well. And when the company say, they only owe a bank or supplier PHP 10,000, we have to ensure that they are not hiding any liabilities from their part.
To put it more simpler, if Ana says she has 10 cookies in her cookie jar, we have to ask Ana to give us her cookie jar and let us count it for ourselves. Through then, we can make sure that Ana is telling the truth.
This is basically the simplest form of it and it just gets more and more complex.
And how I wish this is the case in real life, that we would only have to count cookies. HAHAHA. How I also wish I could it them while counting. We basically audit companies, and each company, like a person, is unique to its own. It has its own process, manuals and standards on how to do things and it definitely varies per company. Each company audit we conduct is like meeting a new person, you have to take your time and dig deep to truly know the company to make your audit more efficient and valuable.
Right now, I am an auditor in one of the Big 4 audit firms and I am based here in Manila. I can say that our job is really diverse, it has the same foundations but in applying it you really have to understand and the company you are auditing. You have to apply your analytical skills and adjust per company that you will audit.
Why do we do this and why people hire us?
An audit usually takes weeks or even months depending on the size of the company. After conducting all of the procedure we need to do, like checking hundreds of documents, going to warehouses to count their inventory, communicating with the banks to know their balance. We would have to furnish an opinion as to the truthfulness of their financial statements, this is called the... "Audit Opinion". It's an opinion as to the fairness of the financial statement a company produces. It's just a document saying that their financial statements are fairly presented and that the employees, owners, government and even the public can rely to it.
But many of you might say, why do people spend sleepless nights and drink galloons of coffee just to produce an audit opinion. It's because financial statements is usually one of the most important thing a company produces for the following reasons, but not limited to:
It is a requirement by the Bureau of Internal Revenue (BIR), as a basis for taxes.
It is also a requirement of Securities and Exchange Commissions (SEC) for companies to file their financial statements, not doing so will lead to, in extreme cases, company closure.
It serves as a basis for the analysis of the company performance in both present and future. This is usually used by management to determine trends and figure out ways on how to improve the business.
It can be useful for the public, especially if it is a listed company and can be used for their analysis on which stock to invest to.
As you can see, this financial statements are not just document with numbers and words. It tells the financial condition of the company and usually affects a lot of people or as we call them, stakeholders, so the fairness and truthfulness of it, is a must.
Our job is one of the most stressful jobs out there, we usually rush from deadline to deadline. This is the reason why auditors usually spends sleepless for months, can't live without coffee and usually are considered grumpy, due to the exhaustion from all the deadlines that we are meeting. We also use to render tons of overtime, I remember filing 100 hours for a week, which was alarming considering that a week only has 168 hours and a regular person need at least 6-8 hours of sleep.
Auditors are usually referred to as "the doctors of the corporate world" because most of the time, we are the one who discovers the errors in a company's process and we fix it with the company. We also tend to discover some frauds that prevents the company from a whole lot of legal cases and fines. But we must keep in mind that finding error and fraud is not our job, because apparently, many people think it is. Our job is just to make sure if what you are saying is true and in finding out if it's true, we discover those error and fraud, it's just a by-product of what we do but it's not out job.
I know this is a lot to take in and hopefully, you gain some insight on what an auditor is. I wish I could sum up everything in one article but that would be impossible to do. I just wrote this article so in your next class election, you would know what an auditor needs to do. HAHHAHAHAHA. But seriously, I just want people to know what an auditor do and the importance of them especially in the corporate world.
See you around! 🌤
Lead Image: Photo by Scott Graham on Unsplash
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It's not an easy to work as an editor, you can barely have friends in work place. Besides sometimes not all are proffessional enough to accept their mistakes when you found something during yout audit.