Optimize your sales audit process for Accounting

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when most people think of an audit they imagine IRS agents arriving unannounced calculators in hand ready to go through boxes of invoices receipts and notes that's certainly one type of an audit but it's not the only kind most of the audits that big four firms do have nothing to do with tax day and none of them are unannounced publicly traded companies are required by the Securities and Exchange Commission to validate their financial positions with an audit and although they're not legally required to privately-held companies often perform audits at the request of banks investors and other key stakeholders their goal to assure investors and other stakeholders that their cash flows balance sheets and profit and loss statements aren't materially misstated firms like KPMG are often hired to perform these audits because they can provide an independent review of how a company operates and whether public or private companies that go through an audit have the opportunity to gain valuable insight into how their business is performing so that's why companies perform audits but what is an audit engagement like hmm the word audit means to evaluate so you could say auditors are the ones who evaluate where money is coming from where it's going and what it's doing each step of the way accounts receivables vendors acquisitions operating expenses there are a lot of channels that money can flow through and the bigger the organization the more accounts there are to follow which is why a career in audit can be so dynamic especially in this global economy now take a typical audit team say for a multi-billion dollar company now to serve a client like this there may be multiple partners working in multiple locations around the world there may be managers senior associates of associates working in multiple times there may even be specialists from tax or advisory practice offering their expertise on everything from tax compliance to IT controls testing senior members provide leadership and direction but there's a fair amount of autonomy so each team member should be capable of self-management of course communication skills are essential but in order to really excel at being an auditor you need to be able to think critically to understand what business decisions drive the transactions you're auditing why does this transaction benefit the company and how does it fit in the company's strategy auditors who understand motivations for each transaction bring the right level of professional skepticism to the project which is important because it's our job to look at the financial statements and see what companies say and verify that it's correct or not an audit engagement can take anywhere from a few months to a full-year depending on the size of the client and the complexity of the project unlike advisory where most of our clients are engaged on a project-by-project basis most of our audit clients are annuity clients meaning we work with them year after year in fact we spend so much time at our client sites that some of us even set up permanent workstations at their offices while we're there we spend a lot of time poring over their documents and drinking their coffee we compare the documents the company uses in their day-to-day operations against what they've recorded in their financial statements for example we might take their receivables a company plans to report and compare them with actual orders that customers have placed may also contact vendors to ensure that the number is listed and the purchase orders are accurate high yeah can we go ahead and send confirms to the vendor we then take that information and compare it with the information companies are required to report in their SEC filing and then we state our opinion as to the accuracy of those statements and our audit report I'm not gonna lie awed it can be hectic we're working in a real business environment which is always changing a major contract and be revoked or won by our client meaning now there's a new transaction on it for our client could purchase another company requiring us to do an audit of that company and its assets or a subsidiary could go bankrupt requiring us to evaluate its vitality to the parent company now changes like this they can occur at any time and have a profound impact on work that we've already done but that's the real world and it's one of the great advantages of working an audit no other practice gives such an intimate view of how business works as an auditor you see why companies make the decisions they make in the financial impact that has across the organization you also see what companies gain from the services and accounting firm offers after all and all it's not done just to meet investor or SEC requirements many companies use their audit findings as a basis to make strategic plans for their future as such an auditor provides one of the most important business functions they verify one of the results of companies reporting are correct while insuring the obligations they've made the stakeholders are being honored and that's kind of a big deal