How to Audit (Part 18): Alight Here for Connecting Trains

A Big 4 training contract is like taking the train. The journey takes three years. Emotions range from boredom to terror to farcical humour. The dining car has dry lunchtime sandwiches and gourmet client meals. It is always well stocked with alcohol.

There are many stops for exams. Some passengers will be kicked off for failing. Others will get off even if the train is moving. With great incredulity and relief, the train makes arrives at its qualification destination. Strangely, it looks like Crewe.

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The favourite pastime of 3 out of 10 auditors. Photo by JohnGreyTurner

Crewe is regarded as the railway nexus for Western Europe. Here, you can change your career journey. The first class upgrade is complimentary. If you are unsure about where to go, then staff (aka recruitment consultants) are ready to help.

Having this choice is a marked contrast from the fixed path trainees have been used to. It is probably the first major career decision. Going through the education system is a broadly fixed path. Choices were dictated by parents. Attainment came from parental pressure and self expectation.

A training contract continues this fixed path. The difference is that you pay more taxes than at university. It’s a valuable first-time experience of the business world. However, at the end of it is the time to decide and specialise on a career.

For the time poor qualified-accountant, this blog post is a quick guide to your career choices.

Take a Plane

The Big 4 is a good option for living abroad because of secondments to overseas offices. The interview process is less onerous because it’s internal. There is support for work visas and moving costs. You maintain a professional job without any retraining.

The disadvantage is that all countries outside Europe work harder and have less holiday. You’ll find that the inside of a plane is the same as a train, i.e. the work is all the same.

Change Coaches

This means trying a different function within the firm. This is possible because bean counters don’t actually count beans. The majority of the Big 4’s revenue comes from consulting and tax services, not audit. The main benefit is being able to stay within the firm and try something new.

The main hurdle is making a business case saying that it is better for you to work for to earn money for a different department. Secondments are the hottest trend in the audit fashion world. This reflects Generation Y’s desire to have a variety of experiences (and to put off major decisions).

Change Trains

Aka working in industry / the client side. That is to say, being the internal preparer of accounts rather than the external checker of accounts. Generally, the work lifestyle is more stable. You perform the same tasks for the same team in the same office.

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There's a world outside audit, but I have not known it. Photo by eamoncurry123.

A recruitment consultant can guide you to the right job. Magically, your telephone number becomes known to 25% of recruitment consultants as soon as you qualify. The remaining 75% get your number from chain letters.

Stay Seated

In the short term, most newly-qualified auditors will stay on. The most sensible (and depressing) piece of advice I’ve been given is that I will have a long career. Due to growing life expectancies and the future insolvency of social security, I will be working for another 50 years. Changing for the sake of change is silly.

Eventually, everyone will leave audit and will usually go to industry. The timing does matter. A year in audit is worth more than a year in industry. Those with long experience in audit can move onto very senior positions. That is, more senior than those who start in industry after qualification.

Is That It?

There are wider options available to the newly qualified auditor. One is becoming an anti-capitalist anarchist. However, if that was ever a remote option, then they wouldn’t have boarded the audit train in the first place.

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Bringing peace to controversial accounting policies. Photo by Cranky Media Guide

How to Audit (Part 16): Auditphobia

Public knowledge of auditors is shrouded in fear and ignorance. Fear of the awesome variety of pens that auditors wield. Ignorance of what auditors actually do. This has lead to “auditphobia”. This article is the start of the campaign to rid humanity of this evil psychological condition.

Definition

Auditphobia is defined as the irrational fear and ignorance of audit and its associated persons. It affects both auditors and non-auditors (who are also known as nauds).

Symptoms

In nauds, auditphobia is characterised by ignorance and half-truths. Auditors will be confused with accountants. Subsequently, nauds will ask auditors to do tax returns. This can lead to dire financial consequences, because auditors know little about personal taxation. You’d be better off filling in a tax return with the results of a bingo game.

Nauds won’t know who Big 4 are, nor realise how big they are. In 2010, combined Big 4 revenue was $95 billion (source: big4.com). In comparison, the top 10 investment banks billed $83.4m (source: ft.com).

Among finance professionals, auditors are treated with fear, pity and disdain. Unfortunately, audits are as enjoyable (and expensive) as seeing a private dentist. You’d rather do without, but your teeth may fall out.

Taken as a whole, trainee auditors have low self-esteem. Few are openly proud to be an auditor. Conversations have a cynical tone. The work is not considered terribly worthwhile. Saying someone loves audit is used as a cheap taunt.

auditphobia
By atelier renskeherder

 

Diagnosis

The “Enron-Anderson” test establishes if a naud suffers from auditphobia. Three out of the following need to be satisfied for a positive diagnosis:
- Ignorance of the large companies tax rates
- Fear of spreadsheets
- Physical repulsion at the sight of an auditor
- Confusing auditors with ear doctors

Causes


Research into the causes of auditphobia is, sadly, very sparse. Nauds usually suffer from child-onset auditphobia. It is often triggered while doing long division. Auditphobia is more likely if both parents are accountants. Such children usually become musical prodigies or best-selling novelists.

Finance professionals develop auditphobia while being audited. The following situations are likely to cause auditphobia:
- Having your mistakes pointed out
- Answering questions from clueless trainees
- Working overtime to get your normal work done
- Requests to compile unfeasible reports
- Answering pointless questions
- Answering hard questions

Trainee auditors will suffer from adult-onset auditphobia. Audit work is stressful, monotonous and exasperating. The exams are horribly insane. Many graduates sign up for a training contract because they can’t decide on a firm career plan. This leads to the constant and unsatisfying feeling that they should be doing something else.

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So, what's the cure? By doug88888

 

Prognosis

Auditphobia helps no-one. Nauds miss out on the benefits of spreadsheets. They lack financial skills, such as budgeting, investing and avoidance of bad debt. Such skills would have prevented the credit crisis and we’d all be in a happier place. However, the bankers also lacked these skills.

For finance professionals, audits become more painful than they need to be. A good audit should mean more accurate accounts. This prevents jail-time for directors.

For trainees, auditphobia prevents contentment in work. It doesn’t have to be this way!

The Cure

Nauds can overcome auditphobia by befriending an auditor. This fosters mutual understanding and trust. Nauds can also join a NAYG (Numbers Are Your Friend) group. In time, the fear will disappear and they will gain useful financial skills.

Trainees can overcome auditphobia by gaining a proper perspective. This could involve spending a month in a Chinese textile factory. For those short on time, you should go to a busy street and proclaim “audit is good!”

How to Audit (Part 15): Exams

Date:11 DALSE (Days After the Last Sodding Exam).

I feel strange. After finishing all the ICAEW exams I do not feel ecstatically happy, but oddly disorientated. My skin is not used to so much sunlight. I am re-learning how to cope with free time. One day, I may be able to have some fun again, but such drastic change does not happen quickly.

Qualification requires taking 15 exams over a three-year training contract. They have been long, tiring and emotionally crippling. I am in a strong shock of complete relief. Three years is a long time to aim towards a single goal. You dare not think about life after qualification because the route is so fraught. 15 exams is 15 chances to fail and get fired. The consequence is work in a different spreadsheet-less profession.

So I have reached my intended destination without thinking about how I would feel. It is like hopping on a random plane at Heathrow and arriving quite bemused at Baghdad/Manchester*. Eventually, I will feel satisfied and proud. Qualification is a fantastic achievement. The following is an overview of the last three years

The 15 exams are split over 3 stages, as demonstrated by this ICAEW chart (link):

Exams

1) Knowledge Stage

The Knowledge Stage is 6 multiple-choice papers that give a background understanding. The accounting and audit papers are taken as soon as you start the training contract. The accounting paper is terrifying. Understanding double entry is like riding a bike - at some point it becomes easy and natural. You hope that point is before the end of the exam.

The other exams are more straightforward. The material is not hard and the syllabus is manageable in size. This means that it is learnt to exhaustion for no reason. There are (literally) no prizes for first place.

The oddest part of the Knowledge Stage is the ICAEW's insistence that students use an awful calculator for the exams. The buttons have the responsiveness of a slough. An abacus would be more useful.

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Accountants are traditional in nature by Photo-Fenix.com

 

2) Application Stage

The 6 Application Stage papers make the knowledge stage look as easy as taking a Facebook break. They are taken about 9 into the training contract.  You are introduced to the accountant's bible - the IFRS (International Financial Reporting Standards).

These are 3.5 hour written papers. 55% is the pass mark. 1.5 minutes per mark becomes a golden rule because most failures are down to bad time-keeping.

Wobbly tables are a threat but the invigilators will provide free cardboard. You must use a ICAEW mandated pen (black ball-point), however, you can use any calculator/abacus (hurrah!).

The material is harder and learning the whole syllabus is close to unfeasible. The tax paper is especially horrid. As before there is no point revising everything to death, but there are prizes for first place – link.

3) Advanced Stage

The Advance Stage consists of the two Technical Integration (TI) papers and the Case Study. Helpfully, the pass mark is reduced to 50%.

The TI papers combines the knowledge in the application stage plus harder technical material. The tax material is especially horrid. The TI papers supersede all other exams ever taken for difficulty and time pressure. The learning of the whole syllabus is measured tortoise lifespans. Again, revising everything is impossible, however, it feels necessary in order to pass.

The TI papers (and the Case Study) are open book, so you can take anything and everything into the exam hall. To do so requires a trolley case. Unfortunately, the time required to look through it during the exam will probably result in failing.

At 4 hours, the Case Study is the longest paper. However, it is more straightforward than TI. The aim is to write a report about a company. The report uses information publish by the ICAEW before the exam and some new material during the exam. There is no technical material to learn. A few days of preparation is sufficient.  The hardest aspect is demonstrating the required report writing skills during the exam. Preparing the material to death actually increases the chance of failing.

Books

The Journey

I won’t miss the exams, but I did enjoy college and I will miss that. The class of 2011 has journeyed through much hardship. It has cost much: in pens and paper; in evenings and weekends; and in stress and cholesterol. But for the cost, I do believe that the journey was very worthwhile.

This whole article assumes that I have passed before knowing the results. They come out in the Financial Times on 02 September 2011. There is a good chance to be an arrogant and vainglorious idiot.

*Apologies to the people of Baghdad for the Mancunian association.