What Do You Actually Learn Doing Audits?
In the wonderful field of accounting, there are many positions that prefer previous audit experience. This begs the question, why is this experience so valuable and what do you actually learn from doing audits? Today, I'm going to break down some of the things you learn as an auditor and why that experience is so valuable. Let's jump in!
Disclaimer - Your Mileage May Vary
If you are a current or aspiring auditor, it's important that you understand that your individual client experience will dictate what you learn. Depending on the firm you work for, the clients you work with, and your specific responsibilities on those clients, you may see more or less exposure to the following areas. If you find yourself in a position where you aren't learning as much as you think, you should, reach out to your managers and try to gain that missing experience.
Understanding the Entity and Internal Control Walkthroughs
At a fundamental level, auditors need to understand how the financial reporting of a business works. For most new auditors, control walkthroughs and documenting their understanding of the entity's operations are fundamental job responsibilities. In the first days of an audit, an entry-level auditor gets exposed to organization structure, key business objectives, and summarizes the high risk areas of the business. Internal control walkthroughs provide a similar Grand exposure. Walking through an entire transaction from start to finish allows an auditor to gain an informed perspective on various areas of the business very quickly to see how things are done. As an auditor, being exposed to the business in this way early on in your career allows you to have a perspective that an industry accountant probably wouldn't have.
Touching the Financial Parts of the Business via Testing
It's one thing to see every key process area walk through one time and in an internal control walkthrough, but it's another thing to flip through dozens, if not hundreds, of invoices to substantiate transactions. There is a level of familiarity and comfort that comes with looking at real invoices for real services over and over again. As they gain this familiarity, auditors will be able to pick out key information very quickly. During a single audit, an auditor will test bank reconciliations, cash coming into the business, cash going out of the business, vendor bills, invoices for revenue, and sometimes stock option grants. I cannot understate how valuable this exposure is when it comes to learning how a business works. Good auditors are rightfully praised for their ability to pick up a new client, explore all this documentation, and quickly understand it.
Experiencing Multiple Clients Doing Things Right and Wrong
Everything mentioned above is true for a single client. When I was an auditor, I was working with at least 15 clients every single year. That's a lot of documentation! Being exposed to that many clients allows an auditor to understand both company specific processes as well as broader standards and best practices. Speaking of best practices, auditors will Have a great understanding of what best practice looks like because it's their job to check it. Even now, years after I stopped working with a client, I remember a specific process for raises and payroll approvals at a specific company because it was so easy for me to audit. At the same time, auditors are also built to catch mistakes and when they are working with many clients, they are exposed to a lot of them. Auditors are in the unique positions where they get to learn from their own mistakes as well as the mistakes in their clients, and that knowledge is incredibly useful down the road.
In addition to the wealth of knowledge that auditors gain through their time in the role, it should also be mentioned that the work is inherently technical. Especially if a company needs to be audited at some point, that technical knowledge is needed by someone on the team. In today's world of teams that come from varying backgrounds and experience levels, that knowledge isn't as easy to come by as you might think. So if you are an aspiring or current auditor, keep these things in mind and try to maximize your learning so you can take this experience into your next role or interview!