I have a question - how do you deal with auditees (especially those who have prior audit experience and therefore think that they know everything) who question your audit methods? I could explain my audit methods, but I don't see why I should, and it seems like the client is just being difficult for no reason (or to stall for time).
To be honest, back when I was a staff associate, I liked it when clients challenged my audit methods - this made me understand why I'm doing what I'm doing so I could create an effective argument for it. Clients are inherently difficult just because they don't like doing additional work if it doesn't add value for them - unfortunately nature of the beast, and this is a majority of clients. Best way to overcome this is to explain why your methodology is necessary. Sometimes, if you don't agree with the methodology or think the requests are excessive, sympathize with your clients but explain to them that it's just the rules we have to follow. Some will get it, some won't.
Clients who were previously auditors are an interesting lot - the worst of them being ones who spent less than 4 years in the audit practice, and now think they know everything there is to know about auditing. You'll see this everywhere - you'll win some over, and butt heads frequently with others. Unfortunately there is no magic answer. Adapt and achieve.
Monday, 28 October 2013
Future of the Big 4
How do you see the future in this industry, say 5 years down the road? Hours are inevitably longer, and pay may never catch up to the hours worked since no one ever agree on the fee inflation. All of our work are statutorily based, and we are never really adding too much value that will generate revenue for the clients in my opinion. Is it better to switch out to other areas of the firm like non assurance services where it may be more meaningful?
The way I see it, audits aren't really a growth area for the Firms, but rather, just their bread & butter to chug along at a mature growth rate. And the Firms know that, they've known that for years, which is why they invested heavily in consulting, and then got completely sidetracked by the Arthur Anderson fiasco. Now the Firms are slowly building back their consulting business, albeit very careful to make sure that everything's straight from an independence standpoint. They know if that they want their profits to increase, given the increased regulation in the audit world, they can build on their resources and consult on a variety of projects. This can be very uneven and cyclical due to the economy, and will not provide the job security that auditors have, but it's definitely what the Firms intend to do over the next 10-15 years.
In terms of whether you should switch out, it all depends - do you value job security, do you like the consulting aspect (travelling a majority of the time, uneven times where it's really busy or not busy at all), your future career goals, etc. All these factors play a role in what you want to do.
A little history is in order here for anyone interested:
a) PWC sold its consulting business to IBM in 2002 - IBM's consulting unit is doing pretty well.
b) KPMG spun off BearingPoint in 2000. BearingPoint is now bankrupt.
c) Ernst & Young sold its consulting business to Cap Gemini in 2000. Cap Gemini is doing well.
d) Deloitte elected to keep its consulting business, and it has proven to be a great decision in hindsigh.
e) Arthur Anderson split its consulting business in 2001. That consulting business is Accenture, which has obviously gone on to do really well, unlike Arthur Anderson.
Notice something about these years? All occurred during 2000-2002.The Enron scandal happened in 2001.
Now we're slowly trying to build it back up - with the benefit of history though.
The way I see it, audits aren't really a growth area for the Firms, but rather, just their bread & butter to chug along at a mature growth rate. And the Firms know that, they've known that for years, which is why they invested heavily in consulting, and then got completely sidetracked by the Arthur Anderson fiasco. Now the Firms are slowly building back their consulting business, albeit very careful to make sure that everything's straight from an independence standpoint. They know if that they want their profits to increase, given the increased regulation in the audit world, they can build on their resources and consult on a variety of projects. This can be very uneven and cyclical due to the economy, and will not provide the job security that auditors have, but it's definitely what the Firms intend to do over the next 10-15 years.
In terms of whether you should switch out, it all depends - do you value job security, do you like the consulting aspect (travelling a majority of the time, uneven times where it's really busy or not busy at all), your future career goals, etc. All these factors play a role in what you want to do.
A little history is in order here for anyone interested:
a) PWC sold its consulting business to IBM in 2002 - IBM's consulting unit is doing pretty well.
b) KPMG spun off BearingPoint in 2000. BearingPoint is now bankrupt.
c) Ernst & Young sold its consulting business to Cap Gemini in 2000. Cap Gemini is doing well.
d) Deloitte elected to keep its consulting business, and it has proven to be a great decision in hindsigh.
e) Arthur Anderson split its consulting business in 2001. That consulting business is Accenture, which has obviously gone on to do really well, unlike Arthur Anderson.
Notice something about these years? All occurred during 2000-2002.The Enron scandal happened in 2001.
Now we're slowly trying to build it back up - with the benefit of history though.
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