Interested in a Big 4 career? 💼 Check out my channel for other videos on how much graduates are paid in their first five years, and what you could earn as a Partner 💷 Fancy a free share worth up to £200 from Free Trade? Click here 👉 bit.ly/2RCVPPE
I have so many friends who went into Big 4 Accounting and never actually asked them what they did. Appreciate the clarity in which you explained audit!
Thanks Davos. Of course, what an oversight - It may be the fact I dislike controls with a passion! If you're after more content, I’ve just launched my new website/newsletter which will be packed full with even more insider tips and knowledge. I've also opened up my diary if you had any questions you wanted to talk about over a video call. Check it out 👉 www.jsalberts.com/
Nice video. Not an auditor myself. However, I have been working with KPMG auditors recently. I guess in this case you would call me the client. Now that I have watched the video I understand their role better, and how these consultants may be able to help us.
In the UK we also have tests of controls. Mostly to determine whether a systems-based approach is appropriate. If internal controls are effective, there is a higher chance that figures produced are appropriate, so we can get away doing less substantive testing than if the internal controls were weak. Also, if we find control deficiencies, we recommend improvements. Although we have no duty to comprehensively test and report on all controls (that's for internal audit).
@@Komdwy For example, bank reconciliation is an internal control to ensure accuracy of records and could also detect fraud. To be effective it should be done periodically and reviewed by a senior. A test of control would be to check the reconciliation reports, that they are duly signed by an appropriate employee and were indeed done periodically. Other example, hierarchical usernames and passwords is an internal control. Simply logging in as a junior and trying to change supplier or employee bank details would be a test of control. If the system allows it then the control is ineffective. External auditors design tests of controls because if they determine the company has a robust control system, then they can get away with less work testing the actual statements (substantive testing). The good thing is that control testing can be done during year, while substantive testing has to be done after year-end (financial statements must already exist to test them). So in a way control testing lets you anticipate / distribute some of the workload before year-end. But all the external auditor cares about are risks of misstatements in the financial statements, they don't really care about business risks. Profit or loss, happy or unhappy customers, the external auditor doesn't care as long as the statements are correct. (I'm simplifying a bit, there is the going concern thing, but you get me.) So they don't do extensive control testing, they do just enough for their own benefit. Internal auditors on the other hand are working for the benefit of the company and try to mitigate all risks (both misstatement and business) and most of their job is control design and control testing.
@@counterleo Thank you very much dude. Audit is an amazing and interesting domain. I haven't beem in an audit company for a year and i really miss it..
Videos like this make me think about how I was the victim of two scams in a row: it's very easy to be a victim if I don't have someone i trust in my company, if there isn't a team of competent auditors and consulting acting, you can actually lose a lot of money invested. What is the main criterion when choosing an audit team in this sector?
Interested in a Big 4 career? 💼 Check out my channel for other videos on how much graduates are paid in their first five years, and what you could earn as a Partner 💷
Fancy a free share worth up to £200 from Free Trade? Click here 👉 bit.ly/2RCVPPE
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I have so many friends who went into Big 4 Accounting and never actually asked them what they did. Appreciate the clarity in which you explained audit!
Glad it helped Matt!
My G, mad one tonight! 😂
Haha, glad you enjoyed it!
A good high-level summary - you forgot to mention controls in the planning stage!
Thanks Davos. Of course, what an oversight - It may be the fact I dislike controls with a passion!
If you're after more content, I’ve just launched my new website/newsletter which will be packed full with even more insider tips and knowledge. I've also opened up my diary if you had any questions you wanted to talk about over a video call. Check it out 👉 www.jsalberts.com/
Thanks for the video!! Just got an internship offer from one of the Big 4 in London and I really needed a video like this to set out the basics!!
Awesome! That's great to hear John - let me know if you have any other questions, I'm more than happy to help!
Nice video. Not an auditor myself. However, I have been working with KPMG auditors recently. I guess in this case you would call me the client.
Now that I have watched the video I understand their role better, and how these consultants may be able to help us.
Epic video mate! 🤙🏻
Boss man, get back to USM.
Made a pretty serious topic very interesting. Solid video!
Thanks Gary - glad you enjoyed it!
Good to understand the role better, thank you
Glad you liked it Beth!
Thanks James! Im from a Canadian Big 4 and would love to hear more about the difference between North America and UK audit regulatory!
Hi Tina, great to hear from you! That sounds like a great idea, let me put it on the list 😃
These are definitely getting funnier and funnier! But still a great balance, not try hard for the sake of it. Loving it, keep it up
Thanks mate!
Nice video mate!
Thanks, glad you enjoyed it!
In the UK we also have tests of controls. Mostly to determine whether a systems-based approach is appropriate. If internal controls are effective, there is a higher chance that figures produced are appropriate, so we can get away doing less substantive testing than if the internal controls were weak. Also, if we find control deficiencies, we recommend improvements. Although we have no duty to comprehensively test and report on all controls (that's for internal audit).
Can you elaborate more on test of controls?
@@Komdwy For example, bank reconciliation is an internal control to ensure accuracy of records and could also detect fraud. To be effective it should be done periodically and reviewed by a senior. A test of control would be to check the reconciliation reports, that they are duly signed by an appropriate employee and were indeed done periodically.
Other example, hierarchical usernames and passwords is an internal control. Simply logging in as a junior and trying to change supplier or employee bank details would be a test of control. If the system allows it then the control is ineffective.
External auditors design tests of controls because if they determine the company has a robust control system, then they can get away with less work testing the actual statements (substantive testing). The good thing is that control testing can be done during year, while substantive testing has to be done after year-end (financial statements must already exist to test them). So in a way control testing lets you anticipate / distribute some of the workload before year-end.
But all the external auditor cares about are risks of misstatements in the financial statements, they don't really care about business risks. Profit or loss, happy or unhappy customers, the external auditor doesn't care as long as the statements are correct. (I'm simplifying a bit, there is the going concern thing, but you get me.) So they don't do extensive control testing, they do just enough for their own benefit. Internal auditors on the other hand are working for the benefit of the company and try to mitigate all risks (both misstatement and business) and most of their job is control design and control testing.
@@counterleo Thank you very much dude. Audit is an amazing and interesting domain. I haven't beem in an audit company for a year and i really miss it..
Thank you James for this informational video!
Informative and educational!! More please
Glad you enjoyed it! Let me know if there are any specific videos you'd like to see!
in this video the amazing way it is prepared with it
thanks sm! this video is so useful
something really appreciating and awesome
really brilliant loved it so amazing so brilliant
Videos like this make me think about how I was the victim of two scams in a row: it's very easy to be a victim if I don't have someone i trust in my company, if there isn't a team of competent auditors and consulting acting, you can actually lose a lot of money invested. What is the main criterion when choosing an audit team in this sector?
There's a variety of factors to choose from - mainly experience of auditing similar companies!
i loved it really amazing loving it
great video!
Glad you enjoyed it James! Let me know if there is anything else you'd like to see.
@@JamesAlberts One suggestion I have would be on ACA exam strategy and work life balance
@@Finance-Thinking sounds good, I’ll whack it on the list!
Hi James. I will be joining one of the Big4s in India. This video helped me to get a clarity of what i will be doing. Cheers
Thanks, Saurabh, I'm glad you enjoyed it!
something amazing and knowledgeable
Wait, do auditors in the UK not test controls?
How can I be like you when I grow up?
Been learning from you since day 1 mate.
Do you feel like an auditor has to have a high level intermediate skill level with Microsoft excel to do good as an auditor?
Absolutely. Microsoft excel is one of the main tools auditor use
Terrance Mission
really amazing the way it is amazing way prepared cool
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Exactly
Very informative and interesting content 🤞❤️🫡 I like the way you explained it 🫵💫🥇 even a two year old would understand 😅