Business Management zone
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FD's Diary: One of those rare moments
May 28 – There are days, well if I’m honest, there are moments when life at work is very good.
4pm on Friday with a bank holiday coming up, matched with the realisation that I can take the whole weekend off because there is nothing so pressing that I need to take it home with me, is one of them.
They don’t happen often, so I thought I’d share it.
* * *
May 26 - The discussion with #4 makes me realise that not only must I face the auditors in the near future, I really should consider staff reviews. It's some comfort to realise in advance of the auditors arriving that there are things you hate even more.
I liked old style reviews where you could say "OK Jack or Jill, you’ve been a good boy or girl, take a £1,000 promotion rise and X% for inflation" and expect them to get up, mutter something which might have been thank you, but probably wasn't, and get on with the next one, still leaving most of the day available for something that felt altogether more useful, like the mess on the sales ledger control account before Sage almost guaranteed it would balance.
Now you have to have long, painful preparations, with streams of form filling, scoring, and deep, meaningful discussions on their objectives for the coming year, which are always best left well alone unless they come out in conversation, as they did with #4.
What gets me is that I'm pretty sure none of this has ever motivated anyone, most of the objectives set are a nonsense if the person is not motivated to get on with things anyway, and I'm not allowed to (even proverbially) kick them if they fail and inflation is so low and budgets sufficiently tight that I've got little to offer in the way of reward.
Well, almost nothing. What has bugged me since I got here is that this company has a mean holiday policy. So, after discussion with Ops we're changing it this year so that additional holiday is being offered to all staff based on length of service initially as we reckon this is more motivational than anything we could offer in cash.
I guess it will be something to talk about, but it's the tedium of it all just to ensure that if we ever go to tribunal we can show we've been good employers that gets me.
I think I'll get the audit done first.
* * *
May 25 - #4 came to see me yesterday to offer her resignation (again). With a sinking heart in case the problem of her being victimised as a result of the "incident" at last year's Christmas party had raised its ugly head again I asked her why. Her reply was simple. "I have to," she said "as I need to work part time".
"OK," I replied "you've got a part time job. Now, what are you going to do with the rest of your time?"
She clearly missed the point and persisted with her attempt to resign. And I made clear that if the only problem she had was a need to work part time I would change her hours immediately.
This isn't just fear of any consequences of the rough time she's had. I’ve come to appreciate that #4 is an incredibly valuable member of my team. She has initiative, charm, a good sense of humour, an ability to try what is asked of her and even more important, an innate understanding of when things are going wrong and help must be asked for. And she simply makes the office a better place by being there. Of course I want to keep her, even if part time.
When I persuaded her this was the case she told me the reason for her request. She does, apparently want to go to university. She's not sure what she'll do with a degree in history, but has always wanted to do it and has decided if she doesn't now she never will.
Good for her! And it took only minutes to agree that she would work full time in vacations and flexibly in term. It does mean I think I'll need another part timer, but there's been a case developing for that for a while to assist the flexibility of cover in the office. But lose #4 voluntarily? No way.
* * *
May 20 - Well, that was easier than I expected.
When I met Ops this morning he had what I can only describe as that "pre-exam" look. It's fear of what might happen coupled with the suppressed expectation of liberation in a few hours time. I'm not sure I was feeling a lot better. But in practice things went much as I expected.
There were five of us. Mrs CEO's man came along and the CEO did his very best to insinuate all he good about him without, thankfully ever going over the mark. Ops chaired the meeting on the basis he was the only person who could as I was taking the minutes. And the shareholders agreement, service contracts and outline approval of an option all went through on the nod, as I’d hoped given that lawyers had already had their go. Mrs CEO's man offered to review the option and we agreed, but on condition he didn't bill us but would let us have his comments. I'm not sure that was the arrangement he had in mind.
When it came to the accounts life became more interesting. I couldn't help but think that the CEO and Ops sat back and enjoyed the bout between me and Mrs CEO's man. I knew he was a pain, but I now discovered he was a pain with a Companies Act checklist. The minutiae of disclosure are his apparent delight. Had I considered segmental reporting? No, I hadn't, I said, but then we didn’t need to given our size. How was I defining operating leases? The same as everyone else does, I said, as far as I know. Had I considered splitting out the service element of vehicle rental from the rental obligation for disclosure purposes? No, I hadn't, I said and refrained from adding “who cares anyway?” And on, and on it went.
What was the net result? Well nothing as far as I can tell, except I agreed to pass on to the auditors any concerns he put to me in writing. I'm sure they’ll love that. I called that a victory though because as far as I could see absolutely nothing changed, just as I wanted.
And it was a victory in another way. By the time we'd been through this both the CEO and Mrs CEO were clearly beginning to feel that they'd had enough of each others company which meant they were quite happy to curtail discussion of the budget. Mrs CEO's man had a long list of questions on it but before we'd covered three points of trivia (what interest rate had I assumed implicit in new lease contracts? being indication of the level of irrelevance) Ops decided to suggest lunch time was approaching and would we like to move to any other business? No one objected, so we minuted approval of the budget and since there was no AOB Ops suddenly developed a broad grin, which only get broader as three cars left the premises.
Now let's get on with it.
* * *
May 18 - It had to happen that we would finally agree to have a board meeting. The CEO and Mrs CEO will have to eventually face each other over the table without their divorce lawyers present.
That time is nigh - indeed, it's Thursday given that both have now agreed the date. It's a simple agenda. It has on it just five items.
1) Approve the draft year end accounts prior to audit.
2) Approve the new shareholder agreement.
3) Approve the new service contracts.
4) Approve shore option plans for Ops and me in outline and subject to Inland Revenue valuations.
5) Approving a budget to reflect this structure, which is a requirement of the shareholder agreement and which provides Ops and me as the working directors with operational control so long as we stay within budget.
Realistically I think there are two ways this could go. Either it could take forever, and then end in a farce, in which case I have no idea as to what the future of the company might be, or it could be almost a rubber stamp job. Given that the issues that directly affect the shareholders have been bashed already i.e. both sets of lawyers have contributed their tuppence worth for what I guess has been about £5,000 each into the shareholder agreement and service contracts (which are the same for all of us - only the Appendices as to what we will actually do plus remuneration and hours of work changing) I'd expect those bits to go through. And I can't see the accounts causing a problem since neither have ever really had issues with them before, which is why they were so bad. Nor can I see the options actually being an issue - Ops will have options prior to sale or after 5 years over 6% and I get 4% (which given his length of service I can agree with) so all that's really left is the budget.
Why is it that this is the area I fear? Maybe it's because it's the area where nit picking will be so easy. I’ve never written so much to support a budget in my life before. But I'll be pleased when it's all done and dusted.
* * *
May 13 – Had a meeting with the CEO yesterday. After all, I’d had a meeting with Mrs CEO’s man, so we had to keep things fair (which is not easy).
I’ve got to say I enjoyed the meeting – much to my own surprise. He’s clearly been doing a lot of thinking about the future of this business, and I’m impressed by what came out of it.
Admittedly, I’m sure the best idea he had was one I told him about a few months ago. But who am I to complain if he now thinks it’s a good idea, and his? I’ll get what I want, so I can live with that.
But what really did get me was that time away has let him stand back and actually appraise what we do in a broader light. And the benefit of that was that he now sees that working in isolation might not be of complete benefit in the long term. In some areas there are simply better routes to market for us than branding under our own name. We could partner with others. And in other cases we might be able to sub contract what we are laboriously and hopelessly inappropriately doing ourselves (which is what I’d put to him).
But in either case it’s clear he’s open to working in partnership in a way that wasn’t the case before he was liberated to look at things in a new light by simply not being here, and I think we’ll be able to do some good things as a result.
Perhaps it’s true that every CEO needs more time thinking and less time doing (whatever it was he claimed to be doing before he went, that is). I know it’s often said, but it’s doing wonders for him. The plus side is that if I’ve got to put up with Mrs CEO’s man it might be worth it to have the CEO in this mood.
* * *
May 11 – A friend sent me the following e-mail a couple of weeks ago:
"I've been using Mozilla Firefox as my web browser for the last few weeks in place of Internet Explorer
Having given it a go it is quicker (by far), generally easier and, because it can open multiple pages at once by tabs vastly easier to search, especially if you're doing downloads
It's available free at http://www.mozilla.org/products/firefox/ and it will import your IE favourites
I'd give it a go.
I never understood why people used anything but IE until I tried this - now I do
Cheers"
All I can say is I trusted him, so I did. And I’ll never go back to Internet Explorer now. So I pass the tip on because it’s brilliant.
What bugs me is we employ an IT chap. Why can’t he find this sort of thing? I have now got him looking at rolling it out across the company. And we’ll make a donation to Mozilla if we do.
* * *
May 7 – Met the chartered accountant advising Mrs CEO today. Ops and the CEO thought I should to suss him out and find out what was really desired by him (and her).
I have to say I wasn’t impressed. I know I’m at risk of upsetting one or two people in saying this, but the real problem is he’s an auditor to the core as far as I can work out. And the more time I spend out of the profession the more I realise that partners who have progressed through the ranks to be promoted into their current, rather safe and secure positions of receiving what is effectively an annuitised annual income stream have about as much right to be business advisers as have bank managers. The commonality is that neither of them have actually done the real thing and run a business.
Howls of protest are likely, but from my perspective there is almost no correlation between running a professional firm and the real nitty gritty of grubby commerce. Frankly, and to be rather old fashioned about it, trade is not the same as a profession. And if you want to put yourself about as a business adviser you really ought to have been out there running a real business at some time in your career. Better still, if you want to advise entrepreneurs you ought to show you have had the wit to be one.
And Mrs CEO’s chappy has neither the wit nor the experience (nor the charm come to that – in which respect he and she are ideally suited). Not only that, the sectors he claimed to know from his past work (before he sold out to a consolidator, apparently) are quite unrelated to what we do. So in terms of value added I have, yet again, the feeling of his being an encumbrance.
But things aren’t all bad. He appears not to think much of the internet – so there’s little chance he’ll be reading this. He also made clear he is being paid by Mrs CEO (who I now know has more money than sense) and would just like to be an observer at board meetings.
He’ll be a pain in the proverbial, I can feel it. But so long as I keep on top of what I’m doing I guess I’ll have to live with it. I feel I’m just about to find out what it’s like to (almost) have a non-exec director. I just wish I thought he was going to be a good one.
* * *
May 6 - Given my enthusiasm for the auditors yesterday I didn't get to sales.
We keep small accounts because they pay full list price - usually at least 20% more than big clients. And they fill in routes - which is cost effective. I have still not proven where we make profit (and that's a nightmare I ought to tackle) but my gut instinct is our pricing problem is with the large accounts, not the small ones. I think our discounts are too big.
As for our DD offer - the ethics of it never occurred to me. We will impose a price increase on those who don't take it, by the way.
And I do believe once we have DDs we will solve a lot of the debt issue and can increase prices more easily in future - without the hassle of the changes ion price. We just tell them this way, and if they don't object, we take it. That has to be good. Any other way they have to take action, and that's when small accounts fall out in our experience. So we're very hopeful for this option.
But in the meantime, I’ll put pricing policy on my list of things to do.
* * *
May 5 - I'm staggered by the comments over the last week on some of the issues I just thought I was idly jotting down. Let me respond to one or two.
First the auditors. The credit notes that cancelled bad debt last year (and which were validly credit notes in some cases and ambiguously so in others, depending on whether the service had been cancelled or not) amounted in value to over 20% of pre tax profits. Now like it or not, that's significant, especially as it effectively doubled the rate of effective bad debt to 29 February 2004, given that I have included this year's provision.
Was it material? Well, that's subjective I guess. We still showed a profit. The cash flow was not misstated. No one has directly lost (apart from some interest on tax paid early I guess). So frankly in this case there is no real liability issue with the auditors. The shareholders were the directors. It could be argued they should have known better. And it's they who don't wish to change the auditors this year (there's only so much change you can take at a time).
But what bugged me was that the auditors seem to have done a bad job. The audit was completed within six weeks of the year end. They didn't circularise the debtors. They could have got relatively little comfort from cash after date by then (or if they looked at it, it would have shown a problem). They just asked the old #1. They didn't even ask the CEO. To be honest, I think that was poor auditing. And unless they convince me of their worth this year their number's up.
But that then leads, as some have asked, to what I do expect from an auditor. Well, I'd like them to do their work properly. Why? Because when this show is sold (and I think it will be, sometime) I want their files to stand up to due diligence - and I've now told them that, and I'd expect them to make them available. That's the only reason why I still want an audit in the future (because it looks like we'll be one of those who could, just, fall out under the new rules). This is the real value added to me - it might improve the sale price.
Second I want some useful comments on how things could be done better. I've been accused of being smug on this site - but I reckon we can all learn from others experience - and they should know something I don't, or have smarter ways to do things based just on their reviews of our systems. But the management letters I've seen have been trite, to be honest, especially in the light of what I've found. And I expect a good management letter as the other value added component of an audit.
And if they can do these two things then I’ll buy more (maybe). But why do that if they can't prove they can do a basic audit and issue a good management letter?
Which still leaves me with a problem. Do we restate last year? The answer is no, I think. The simple fact is that although I'm irritated, the shareholders aren't. The auditors (unsurprisingly) aren't insisting on it. And if I'm interested in selling I'd rather say this last year was bad due to sorting out an inherited mess from which we'll bounce back. I'll find that easier to sell than raking up too much of the past. So since no one else seems to want restatement I’ll go along with it.
But it does make me think the government might actually have been right in raising the audit limit. I also wonder whether paying an accountant for a detailed systems review might be as good value as an audit in future. Except for that due diligence point.
Number of comments: 19
AccountingWEB.co.uk 28-May-2004
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Times read: 20722
Dear FD,
I have used this approach very succesfully with one of my team when they decided they wanted to do full time study, and can highly recommend it. Resource is available as and when you need it and no need to spend half the day explaining what to do, just point them in the right direction and it's done.
Happy part-timing!
P.S. Love the column - long may it continue.
Pete Smith and Jason Piper both comment on software that makes IE work the way it always should have, and Pete asks "Why replace internet explorer and risk possible incompatibilities?"
Although there are some sites that have problems with non IE browsers, the main reason and advantage of getting away from IE, is that any other browser is not integrated into your operating system. Therefore even if it were being attacked as IE continually is, the worst that would happen is that your browser would be trashed, not your operating system.
Alternate browsers are just not attacked as much as IE is and so are inherently safer.
It also helps to use the free defensive software that is available. Ad-aware has been mentioned, in addition there is Spybot Search & Destroy, which not only cleans some things Ad-aware misses (it works the other way round too) but also has an Inoculation feature to prevent some of the worst spyware from reporting home if you do get caught.
The free firewalls that are available not only block incoming attacks, but also any software trying to get to the internet, unless you let it – why does Word (for example) want to connect to 82.123.456.789? I use Kerio 2.15 as later versions try to be all things to all men, like ZoneAlarm.
Finally. Turn off your preview pane. If that email titled To?day from twig@hotmail.com is coming from someone you know, open it. Otherwise delete it without looking as they ARE out to get you.
I have gone the other route to our friend, from FD of a reasonably large company t/o £45m to a business advisor/sole practitioner so I have to admit I have really enjoyed the diary.
I agree wholeheartedly that most accountants from practice are not particularly good at advising businesses once out of their area of expertise e.g. audit, tax or corporate finance. But there are some good ones out there, they just take some finding.
In my last role we ditched one of the so called big 4, for our audit, and put it with a local 2 partner practice and got excellent service at a better price. So I can agree with Philippa's comment.
When I first moved from industry to advisor I helped out at a couple of smaller firms with some consultancy work that they didn't have the resources for. And I was horrified at their general lack of information systems and internal controls, debtor days of over 120!! Perhaps that is more to do with the size of organisation rather than the profession, however how can you talk to a client about cash flow when your own is so appalling?
Perhaps it's like builders never doing up their own house?
I've been using a package called iRider since last September - it sits on top of IE (so you are tied to running Windows to sit it on), but converts it into a package which I find easier to use than either Opera or Mozilla (both of which do make vanilla IE look pretty lame). Like the non-MS offerings, you can open multiple pages in a single window, but instead of tabs it uses hierarchical thumbnails in an easily hidden toolbar down the left of the screen. There genuinely isn't enough space here to list all the ways it outperforms every other browser I've tried as a research tool or just a day to day news/info source; OK, it does cost for a license ($29Aus for an individual), but the one time I had a query the support team actually provided support promptly and with good humour. I reckon its paid for itself both in chargeable hours saved at work and time/aggravation saved at home - do check out their website - http://www.irider.com/
Thank you for your comments Mr FD, it is nice to have a recognition that accountants do work hard, often for small reward.
I also agree with the comments of Gary Clark & Matt Byrne, having done my training with a large firm, who sent me out to do an audit entirely on my own within 3 months of starting with them straight from University. Of course I didn't have a clue what I was doing, so slavishly followed last year's file!
Surely what this proves is that big is not always best. We may run small firms but this gives us the ability to tailor work to individual clients, instead of having to follow a country-wide system that we are not allowed to vary. I, and I'm sure many other small practices, have lost expanding clients because they have been recommended (usually by banks and the like) to use a 'more suitable firm', who cannot give them the individual service they really need.
So Mr FD, and all you other FDs and business owners who are reading this, try us instead of the bigger firms. Sole practitioners and 2/3 partner firms give a good service and have real business experience, which allows us to understand your problems. We even talk to each other, so if you have a branch out of the area we work in, we can arrange to have this visited by a more local firm. And by the way - we're often cheaper!
I thought Gary Clark's post was spot on. I used to be an auditor in a Big 6 firm and I bet the wool was pulled over my eyes more than once, because as a recent arts graduate I simply didn't have any real business experience to draw on. I now run a limited company and I finally understand the relationships between the numbers in a way that was always academic before. I'm sure that I would have been a far more effective auditor if I had spent time on the other side of the fence.
Ad-Aware is a utility that scans your whole system (files and registry) looking for tracking cookies and similar bugs. In the 'Support' section on the left hand side click on 'Downloads' for the Ad-Aware page.
I guess there has to be an exception that proves the rule and you may be it Philippa. Indeed, I accept many sole practitioners might be because by defintion they've probably set up the show and faced the risks and taken the knocks along the way as you describe.
My experience is of bigger firms (5 partners plus) and large firms. And there I come across "business experts" who have never taken a risk of the sort I see every day (and for which in the end as a director I am responsible - and I would go unpaid before any staff did, so I'm not sure your arguments hold true there).
And, quite simply I doubt their expertise to advise, especially in the SME sector where owners and directors do face very real risks which seem entirely alien to professional firms.
But I accept, your risks might be like those of your clients, and if so you might well give them good advice on their circumstances and issues. But as I say, I think that't the exception.
I really must take issue with the FD over his comments that accountants don't run a real business. I have been a sole practitioner for nearly 20 years, and have had exactly the same business experiences as my clients.
I sell a product, as I assume the FD's company does. This means that I have to get the right pricing structure and marketing strategy. If either the price or the product is wrong, or faulty, I lose that customer. OK, if the client is happy I have an annual income stream from them, but surely the same is true of the customers of the FD's business.
I then have to have a proper cost structure in place, in order to make a profit. I have staff, so need a personnel system, and all the other issues of running a small business.
In addition, unlike the FD or other high paid employees, I only get paid if there's any money in the bank at the end of the month, which there frequently isn't! Has the FD's company, or any other business he's been connected with, ever been guilty of saying 'we can delay paying them, we won't need them for another year', which is the attitude of a lot of other businesses?
Running a real business involves losing money if it goes wrong, and only getting an income from it if it goes right. Of course accountants in small practices run a real business. I wish my salary was paid every month regardless of how the company is doing. So, Mr FD, why don't you try it before you knock it!
Apart from this, love the diary!
Why replace internet explorer and risk possible incompatibilities? I have used Avant Browser (www.avantbrowser.com) for some months. This uses internet explorer settings but also additional options that can prevent flash animations and pop-up ads etc. It also uses tabs and is faster, contains a built in google or yahoo search engine and is freeware!
I've found it robust and reliable and like the way you can save open web pages to return to them next time you open the browser.
One of our IT guys (who is only contracted periodically) told me about this when we were talking about the number of Trojan Horses I was getting at home. I have to say that I had never heard of it, but, like you, trusted him and now will never go back to IE either. I think what I like most, apart from the tab system is the fact that there are no adverts flashing all over the place - you can work, or play, in peace.
Another thing that he put me onto is AD-Aware, which is a pop-up stopper and spy-ware finder and destroyer. That's very good too. Unfortunately I don't know that address but it wasn't hard to find.
If Mr Unwanted-Non-Exec is going to be involved then can this be turned into an Opportunity rather than a Threat? He is now the communication channel to Mrs CEO, so can this be utilised in a worthwhile and constructive manner. (Constructive for you and Ops that is). Perhaps there's a nice little knotty problem that would benefit from "ulitising his knowledge and expertise". Rearrange the words 'Exocet' and 'Chaff' into a well known defensive strategy to make sure you're managing him rather than vice-versa.
Several decades ago I acted as a non management director of a small family firm. The auditor did two things of great value to us. He insisted the accountant (housewife, in the family, qualified) keep up to date professionally.
When the MD (new, young, not that experienced, following from father) made bad errors, he called it to the stockholder's attention.
This does not mean that an auditor can detect accounting problems in a small business when the owner managers are the perpetrators. Nobody knowledgeable expects him to.
The characters and events depicted in the following script are based on reality.
AUDITOR enters the FINANCE DIRECTORS office.
AUDITOR - The Last thing I've got to do is an analytical review.
FD - Ok. Fire away.
AUDITOR - Looking at Marketing expenditure, it seems that it's gone down in the past year by 50%. Why is this ?
FD - Oh well, obvious really. We've changed our marketing strategy. We're selling more stock to existing customers rather than new customers. So, we're not spending as much getting into new markets.
AUDITOR - (thinks) That's a good answer. I'll make a note of that. My manager will be pleased.
AUDITOR is about to leave, but double-takes
AUDITOR - Oh, sorry... I've just realised I've got the calculation wrong. Marketing expenditure has gone UP by 50% in the year.
FD - Oh Well, obvious really. We've changed our marketing strategy. We're selling more stock to existing customers rather than new customers, and so are spending more in marketing to existing markets.
AUDITOR - (thinks) That's a good answer. I'll make a note of that. My manager will be pleased.
Thought this article might be worth a read.
http://www.top-consultant.com/UK/Editorial/Article_display.asp?ID=900
in my experience audits of SME are usually a waste of time for differing reasons
1) most firms work to a cost budget and it is extremely difficult to do all the tests that they had planned in the time, never mind the extra ones that may become necessary. there has to be a financial cap on the price of an audit or small firms could end up spending all their profit on it.
2) small jobs are often allocated to newer and less qualified staff on the grounds that the 'risk' factor is lower so they have not yet deveoloped the ability to critically examine evidence and tend to be more occupied tick and signing off the audit program
3) the need to prepare statutory accounts ina clearly defined format (FRSEE or whatever) even with computer accounts software takes up a dissproportionate amount of time which should be used to better effect elsewhere
for these and other reasons i am actually in favour of an audit liability cap for SME audits ONLY; i have no sympathy for larger firms who send out unqualified staff who are paid £10 ph and charge them out at multiples of anywhere between 5 & 8 and then wonder why it all goes wrong.
hopefully if anything good comes out of the moneylaundering NCIS set up it will be the awareness of directors and accounting staff in SME of the need to prepare 'truer' accounts
The ICAEW Members' Handbook statement "Tech 32/96 - The interpretation of materiality in financial reporting revised" is the relevant authority for preparers of accounts. It states that preparers of accounts need to consider the needs of relevant users, not just shareholders. 20% of pre-tax profits would surely be quantitatively material to most users; the SEC rule of thumb (para 35 of Tech 32/96) is 10%, and that is increasingly becoming accepted.
So FD needs to think beyond Mr and Mrs CEO in deciding whether to restate, starting with identifying “relevant users” and their “decision-making needs”. The auditors’ views may reflect their position of owing responsibility to the members only, and may not take FD's wider responsibilities into account.
If there was manipulation in earlier years, restatement could involve calculating last year’s correct opening and closing provisions and so the misstatement of last year’s P&L movement in the provision, with the difference on the opening balance representing cumulative misstatement of reserves from earlier years’ “tweaking”. This leads potentially to two P&L restatements: of last year’s movement in the provision and, quite probably separately, of the amount needed to correct the cumulative misstatement.
The alternative to restatement is a large current-year P&L hit that does not reflect the current year’s results. So not restating could mean *this* year’s P&L will be materially misstated, unless the cumulative prior years’ misstatement is shown as an exceptional item, probably on the face of the P&L, and properly explained (FRS 3 paragraph 19 is relevant). Is FD happy with the prospect of including in his first set of financial statements a current-year P&L account that is intentionally materially misstated? Will that really be any easier to explain to prospective purchasers?
I can only give a viewpoint from the auditors side but I have worked in a few different firms (from Big 4 down to Sole Practitioner) and although I am pleased to say that most people I have come across are competent, I agree that there are some exceptions.
As a junior (few years ago now) I was taught by a supervisor and manager how to prepare a meaningful analytical review. This can mean asking "awkward" questions of the auditee but diplomacy is part of the job! AR provides a good basis for highlighting where there are likely to be issues/problems although this may not be comprehensive.
I was also taught to give the client feedback on their systems and figures - "added value" was the buzzword but I feel that this is a service that all accountants should provide. If we are assessing the systems in a business then we are well placed to let clients know the good and bad points (constructively).
I feel that this training gave me a good start in my career and I have tried to pass this knowledge on to people I have trained over the years!
Having been an auditor and been the audited, it has always amazed me that auditors seem not to ask the right questions. On the occasion that they do, they are satisfied by some pretty vague, unsubstantiated answers.
As a Co Sec and group accountant, I have found that if I present the audit manager a complete audit file with properly indexed analysis and lead schedules, and a full set of accounts, including the audit report ready to sign, I get remarkably little hassle. Perhaps they don't quite know what to do, especially if they've been brought up on shoe box assignments!
