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FACING THE AUDITORS by Juliet Stella Mutesi

The relationship between the Management and Shareholders is a one of stewardship in the sense that the share holders entrust their finance resources with management and management in return gives accountability for the resources in form of financial reports (statement of comprehensive incomes, statement of financial position, statement of cash flows) prepared in accordance with the International Accounting Standards (IAS). The preparation and production of such financial statements is done by the Finance and Accounts department in particular.

For Shareholders to place reliance on the financial reports produced by the finance department a third and independent opinion is sought and that is the Auditor’s opinion.

In a way, an examiner simply gives a tick where the student has the right answer with reference the notes and a cross for a wrong answer and at the end of the day gives his remarks (Excellent, good, fair e.t.c), the auditor simply gives an opinion on the truth and fairness of the financial statements that is whether the financial statements have been prepared in accordance with the accounting standards and if they are free from material misstatements and bias but not criminal investigating like we usually perceive  it except for cases where their engagement is particularly fraud investigation.

Like a student who shies away from the teacher because he neither has any work to show, nor the right answers, so do most of accountants shun the auditors.

My first audit experience

While awaiting my graduation in January 2012, I got an opportunity to work with Interface Consulting Ltd’s Finance team three months to the end of their financial year (31st December, 2011) and personally preparing for the first audit was like preparing to testify on the witness’ stand in a court room for a case to which I was not a witness. I spent sleepless nights wondering how it would be like facing the auditors, what they would exactly require of me and whether they were going to harass me for every mistake on every voucher. For a minute I thought I needed to review my career choice.

During the audit, the story was still not so different because I had to postpone all my other work and be on standby to print ledgers that the auditors needed, give all sorts of explanations and also find documents for them from my records. However by the end of the audit I had come to a conclusion that changing my career is not what I needed but rather only to challenge myself to grow career wise in order to gain more skills. Thanks to the company auditors (PKF Uganda) who exercised the appropriate level of patience and cooperation with me in addition to their professionalism, I was left me with a thought of becoming an auditor myself.

This is what I and perhaps other people who have been through such situations refer to as experience. The following are a few of the tips I picked from my first audit experience which am using as I prepare for the next audit;

  • Be clear and precise when presenting data. For all transactions, an accountant should imagine they are to present it to a lay man and keep the “it’s obvious attitude aside”. This minimizes time spent explaining to auditors and other users of the accounts. Always make sure that even after five years, a user would still be in position to comfortably use and understand the accounts in the absence of the accountant.


  • Keep proper custody of accounts. If the accounting system is partially computerized, say you write vouchers and at the end of the day post the vouchers to the system to generate the financial statements like at Interface Consulting Ltd, the accountant should endeavour to keep all such documents in a highly organized manner. This is not only for audit purposes but for the company at large since if documents are well organized, they can easily be accessed by other users. Ways of organizing documents may include, proper labeling of files, grouping of transactions (having a separate file for capital expenditures), organizing documents according to months, to mention but a few.


  • Make accurate postings. For transactions that the accountant is not sure of the corresponding entries, they should consult with other accountants and also with the accounting standards to make sure they treat them the right way. For example I am considering the most appropriate treatment of leases since the Company has obtained land on lease from Buganda Land Board and it is the first transaction of its kind in the accounts.


  • Obtain all necessary duly signed supporting documents. This further stresses the point of clarity. These supporting documents may include, Invoices, receipts, signatures for acknowledgement of receipt of payment. Some other transactions call for management’s authorization and may include, approving employee advances, cash payments in place of cheques. Such documents give explanation to the transactions even in the absence of the author.


  • Make periodic reconciliations. In addition to carrying out the mandatory end of month statements on time, the finance personnel should have regular periods to review and reconcile all accounts say weekly, monthly as this helps to easily identify the mistakes and corrections made accordingly than it is for the lump sum of end of accounting period transactions.


  • Be prepared. When it is time for the audit, keep in mind that the auditors want to ascertain the truth and fairness of your financial statements thus print off all ledgers supporting the lump sum figures in your financial statements and be ready to present all source documents.

With the tips above, the audit will be close to a normal day at work.

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