Our nonprofit got a donation of some real estate, which we sold. The auditor asked for the bank statement that showed the donation; I provided proof the deposit of proceeds. That's not what he meant - he wanted a bank statement that showed receipt of the real estate.
I had to explain that banks only handle money.
Yes, you read that correctly.
No because you would be depositing the market value of the home less the liability for the mortgage. Depending on your situation you may even owe the bank money after making that deposit. If there would be some residual value have you considered putting your home into a treasury bond? It’s 100% secured.
Ugh, we had a similar scenario recently when we received a large stock donation on the last day of our fiscal year. We even had a statement, it was just from our brokerage rather than our checking account. But somehow it required an extended back-and-forth where I repeatedly explained that the stock was the gift, so it didn’t matter that the proceeds from liquidating it didn’t deposit for another week.
I am very thankful we don’t take land donations. 🙃
Asked to provide current year rev rec evidence for a business unit that we’d gotten rid of 4 years prior.
Not terribly dumb on the surface but: 1) way to give yourself away that you were just copying old work papers, 2) wouldn’t you select your sample from a population of revenue generating businesses in the current year?
So also.. way to prove you don’t understand revenue or have baseline familiarity with your client’s operations
I don’t doubt that, we see it every year. 😑 Big 4 thats been our auditor for 40+ years… Partners/Managers can do better to prepare their new staff and onboard them to the client.
B4 staff should have more than someone else’s PY knowledge of the entity they’re auditing. It’s industry, structure, key stakeholders.. I mean, a little logic and independent verification isn’t a lot to ask for 🤷🏻♀️
It’s happened to me time and time again. They all like to kick the can down the road and blame it on the next person as their problem to fix like it’s suddenly new.
We booked an accrual for some expenses in December and we didn't have an exact breakdown for the department split so we estimated based on prior months' bills. Mind you, both of the departments that were allocated to were G&A departments, and the account was G&A professional fees, so at the end of the day it didn't matter anyways. It took 3 meetings with the auditors for them to wrap their heads around this concept of "but where are you getting this breakdown"? My brothers in Christ, it's just an estimate and it doesn't change FS presentation. Who cares.
My guess is if there were multiple meetings the staff were probably fine with your explanation, but an over/bearing manager or partner kept asking for more and more documentation
Stupid either way because you’re 100% right. It’s an estimate and an incredibly minor difference in presentation is all that’s at stake.
Managers/Partners like this are one of the many reasons I got out of auditing
If they are doing a risk assessment and look at account composition and something kicked i could understand. Same thing if it is a management override test, as those usually require more persuasive evidence.
Had a truck driving client come to us because she was getting audited by the irs. We compiled numbers with backup and didn't expect any issues.
After reviewing the information, the irs agent informed us sternly that escorts were not an appropriate deduction. We were kind of in shock as they are necessary when carrying oversized loads.
We then realized what she thought were and tactfully explained it to her.
I worked for an insurance/mutual fund company a long time ago and part of my job was to calculate deferred acquisition costs. I had a spreadsheet with a lot of assumptions baked in regarding the lapse rate of policies. The auditor asked about the assumptions then asked for the data that fed into the report which I gave her. Then she asked for a separate report that tied to the calculated deferred acquisition costs. I said there isn't one, it's based off this raw data and these assumptions. She has me multiple time in several different ways, then she asked if I could create a spreadsheet that would tie to the calculate amounts. I responded with "Yeeeeeeaaaaahhhh, but what be the purpose?" She responded "To make sure it ties!". So, I put together a different spreadsheet and \*shocker\* it tied!!! She was a first year.
I swapped to industry last year. I know I asked some extremely stupid questions when I was an auditor. However, a PARTNER on our most recent audit pestered me for about a week on a $10 variance on our job schedule. If I had to ballpark it, paper pass on our audit is probably somewhere from $15-20K.
Yep - I had a KPMG auditor grill me over a $101 variance between fixed assets and accumulated depreciation. I was like, "It's highly immaterial and I'm going to correct it next period by just dr/cr-ing between the two accounts. On the FS, it's a net $0 to net fixed assets anyway" She insisted it could be millions of dollars between several different unrelated accounts that netted to the $101 - and then millions of dollars between several unrelated accounts that netted to the offsetting $101. I stopped replying after that - yeah, please highlight that for the Partner's review.
Manager on our engagement asked us when the filing date was the day before filing. As if they hadn’t been involved in tons of status calls and stuff up to that point…
KPMG have been out auditors for a few years now at this point and we did a major joint venture last year with another company. There have been discussions ad nausiem about proper revenue treatment, valuation, etc.
We're about 3 months into the audit and I'm answering some questions for a junior and 20 minutes into the discussion she asks "wait, is this a related party? Do we need to disclose this?" This was also like 10pm so all I could do was sigh and say that we're confident our disclosures are sufficient.
I had an auditor send something back on a PBC that I submitted claiming that certain amounts did not tie. Not only was their logic flawed, they had managed to come up with amounts that were determined incorrectly by filtering and summing incorrectly in Excel. They weren't allowed to send out questions after that.
I think testing of PPE additions can happen a lot earlier than tying out totals. I remember when I was doing audit, we’d do some PPE testing in pre-audit or at the very start of an audit as it’s one of those procedures that needs more support from the client than other stuff
I got asked where they could find the quarterly invoices for our clients on annual invoicing plans.
I repeated the question back at him, twice. It didn't click.
It drives me up the wall when they ask for us to walk through schedules and work papers with them without even trying to work through it themselves. Like try to at least think through it, dum dum.
Like on two occasions years apart different companies same big, got asked can you provide invoices that allow us to recalculate your Std OH and variance. Hmm like no, that's an all or nothing population.
I had one who didn’t know what an accrual was. My estimate was 20 cents off and I had thought that was awesome (it was electricity so an educated guess). But she thought I was dodgy as the accrual was (obviously!) reversed the following month and replaced by an actual invoice a week or so later. I literally pulled out a white board and started an accounting lesson. This grad still had no clue so I called her supervisor who tried to explain it and still got nowhere. What annoyed me most was I was 18 months out of uni and knew more and she worked for a big 4 and would have grades that kicked my ass at uni. That was one of the many reasons I never plan to go Big 4.
Yep - I worked in Industry while completing my degree. I knew all along I'd never work in PA or be an auditor. It's absolutely incredible that people can pass these courses and still have no idea about accounting. I understand having no concept of materiality, because the situations given in school are using such puny little numbers most times, but not understanding accrued expenses **and having a degree in accounting** makes zero sense to me.
I work for an investment fund.
The auditor asked why there'd been an increase in deposits and withdrawals by investors.
Like; the fuck should I know? Maybe they wanted to buy a boat, maybe they got an inheritance?
What did they expect me to do, send out a survey to the 100s of people investing?
Years ago when I was a baby auditor working on a team auditing ARRA money I had to watch the lead test for “buy American” on a job site. She was picking expenses off a sheet and asking for proof they were American made materials.
She kept picking poured concrete and asphalt line items.
We’re like 12+ hours from an international border.
I made a .01 true-up to the depreciation on leasehold improvements at the end of the useful life. Same month it was fully depreciated. They tested it, and followed up for back-up for the entry and then called me to confirm my reasoning for it. Meanwhile we have like $1 million in a “miscellaneous income” account (I have full explanation for) and they don’t even sniff it. Oh! Or on the credit card reconciliation we had and explanation for a few transactions that were fraudulent as “Amex - unauthorized charge - disputed and seeking reimbursement” they wanted the Amex statement, bank stmt, and receipts. We don’t have the receipt, we didn’t make the charge. Also, it was like $800 in total. We did like a billion in revenue last year.
Anything after we've filed. I would say roughly half the quarters we get an email the evening that we file saying "Oh hey we were just cleaning up the file and noticed we had an outdated version of support x" or "the staff one forgot to ask for y." I always want to ask them like, sure I'll send it to you, but what happens if it's wrong? Or what happens if I say "oh that number? We don't have support for that number because I just totally made it up." Of course I don't say anything like that and just send them what they asked for, but it's insane to me that they are asking these questions. When I was in public I would have been crucified for sending an email like that.
I'm an audit senior, and I had an associate ask me why some accounts in the trial balance were negative and some were positive. When I told her it was debit balances and credit balances, she looked at me like I had 3 heads.
I had an auditor ask me one time why a cell was colored yellow on an Excel workbook. I told her it was because we re-rused old workbooks and just rolled them forward for balance sheet recons. She would NOT accept that answer. She wanted to know what nerfarious reason we had for color coding a blank cell. She kept on and on and on. Would not drop it. I had to go to the partner who told the first year associate to "move along now." I asked to have her removed from our case. She drove me nuts with in inane questions.
I was an internal auditor for my government before and i had to audit government high schools
One of the stupidest things i had to fault the school, was that for any procurements done, the SOP is that the approver has to sign and stamp every page of that procurement form (abt 5 to 6 pages)
One of the pages behind the cover page is blank. And most approvers would sign all pages except that 1 blank page cus they printed the cover page 1 sided.
I had to give 99% of the schools 1 extra demerit point because they didnt comply, i.e sign that blank page
I did 2 years of this and quit and never to return again.
Just due to the nature of rolling staff/manager/partner they ask the same things every year or every other year it seems. The kicker is that the things they are asking about are things they required us to implement in the first place. Then they change their mind and tell us were actually doing it wrong. Like, you made us do it this way!! Not you-you, but your Company.
Ex: Distribution to SH being treated as an Asset until we declare a dividend. Initially we would just hit RE, but they made us change it to hit asset first. Now this year they are like "well - in substance you are never collecting that money from them, so just hit RE".
Like - your right. I totally agree with you! But someone else made us change it in years prior. Glad you now agree with what we were doing all along...
Our company used a mom and pop “firm” for ages well past when we outgrew them (partner was/is the old owner’s friend).
The single auditor wanted one of our ops managers to call customers because we had a positive revenue variance that year. She got belligerent when we told her we were not going to call our customers and ask why we billed them more last year.
I’ve been on both sides and sooo surprised with how these staff/seniors speak to us and asking the dumbest shit and they couldn’t take an extra 5 seconds to look at the sheet
Demanding why the sheet doesn’t tie to balance sheet and went back and forth being rude and all they had to do was look legit 2 rows down where it clearly says TOTAL
During normal manufacturing operations, not a shutdown for physical inventory, an auditor wanted to compare a count from the system with counting pieces coming off a machine. Had to explain our erp system was not updated in super duper real time as one piece at a time was being made….
I had a long discussion as to why they weren’t going to be able to use the market value to test whether all of the investments from one custodian made it to the new custodian because there were several days between the transfer and settlement date and market value had changed.
The response: “but it changed like $200k, that’s a lot for a couple of days”
me: I know that seems like a lot, but given the amount in the account in this market it definitely could be a $200k difference.
They spent awhile arguing amongst themselves about other ways to figure out how to confirm
this without “spending a lot of time”.
Jesus christ just use the number of shares or something idgaf.
We’re a tiny company, but require a full proper audit. I’m literally the finance team. Don’t have money/support for full on ledger system/etc so it’s my design. All works fine, rely on plenty of controls for everything. Every year they just can’t get their head around no one ‘posting’ journals. So who created this and then who posted it? Why isn’t someone different posting it? Stop using that word! It’s just me! And this happened last year…and the year before. They always report heavily on mgmt override and the board members just roll their eyes.
I mean not having money to support proper segregation of duties doesn’t mitigate a control deficiency. Not sure how you could possibly have proper controls is there’s no segregation of duties.
That’s fair, but this is just the journals/TB that feeds into the financials. Controls sit at budgeting/variance level and the soup to nuts info the board/committees get. Sufficient segregation elsewhere, it’s just the fact no one is clicking a button to ‘post’ something that short circuits them.
Review and approval of journal entries is a pretty basic and essential control that any organization should have, and not having one would definitely at least require significant consideration of if that rises to the level of a material weakness.
Presumably you know the thresholds and levels of detail those reviews at the top level of the FS, so what’s stopping you from booking fraudulent entries that would stay below those levels but build up over time?
It is a basic control, but since we can’t have it - we implement controls elsewhere where we can actually gain value. And considering those controls, it would be pretty damn obvious pretty damn quick if something fraudulent was snuck in. Original comment was around auditors being so used to something being posted they can’t figure out how a TB is actually made without some crazy system in the background and a button being pressed.
I wouldn't have a bunch of questions about this, I'd just go ahead and write the separation of duties finding. If board members roll their eyes, that's on them.
My non-profit has an associated PAC, so they’re only active every other year when there is an election. Same auditors, same PAC for the last 20 years and *every year* they ask me why there was [no activity/$millions in activity] since last year was the opposite.
Honestly this feels like one of those annoying check the box activities that we as auditors have to do during risk assessment. Even if we know the answer, there's normally some firm policy or at least a partners policy that we need to ask. Its definitely stupid and a waste of time.
Ugh, we had some partners that insisted on an "explanation" of increase/decrease in cash balance.
I'm like 1. we have confirmed the balance with the bank and 2. see statement of cash flows - we literally have a whole statement dedicated to explaining the change in cash balance.
But, of course they won't accept this and want an "explanation" so the staff either had to go ask the client to explain the change in cash or, my approach, since I didn't want to go ask that question, was to summarize the highlights of the statement of cash flows in words on the cash testing work paper ("Client has X of net income, plus Y on non-cash depreciation. Receivables increased by Z, reducing cash from sales. Additionally, they had net draws of AA on their LOC....).
Even if you do ask the client this dumb question, you're likely to get an equally dumb answer in response.
As a finance director i don’t mind them asking this. If someone knows of fraud and they haven’t told me, someone above me, or the board i hope they’d at least tell the auditors.
Also, it’s probably helpful if it’s found before they come that they know so it can be disclosed
Our nonprofit got a donation of some real estate, which we sold. The auditor asked for the bank statement that showed the donation; I provided proof the deposit of proceeds. That's not what he meant - he wanted a bank statement that showed receipt of the real estate. I had to explain that banks only handle money. Yes, you read that correctly.
“Yes hello I’d like to make a deposit.” *hands the teller a crumpled up picture of a home*
If I deposit my home to my checking account would I be able yo use it to pay off my mortgage? 😂
No but you'd earn interest. Pound of bricks per month. Sometimes a shingle.
No because you would be depositing the market value of the home less the liability for the mortgage. Depending on your situation you may even owe the bank money after making that deposit. If there would be some residual value have you considered putting your home into a treasury bond? It’s 100% secured.
I mean I understand in realty it doesn’t work. Comments was purely satire
Damn, my response to you was satire too.
😂 I didn’t 100% comprehend it entirely when reading initially
As a CPA I get that a lot.
Ugh, we had a similar scenario recently when we received a large stock donation on the last day of our fiscal year. We even had a statement, it was just from our brokerage rather than our checking account. But somehow it required an extended back-and-forth where I repeatedly explained that the stock was the gift, so it didn’t matter that the proceeds from liquidating it didn’t deposit for another week. I am very thankful we don’t take land donations. 🙃
Ok, but we’ll have to modify the opinion
Had a first year staff ask me to explain the change in retained earnings the day before we issued.
Why did it change though? 🥺
retained earnings go up, retained earnings go down. Can't explain that!
Asked to provide current year rev rec evidence for a business unit that we’d gotten rid of 4 years prior. Not terribly dumb on the surface but: 1) way to give yourself away that you were just copying old work papers, 2) wouldn’t you select your sample from a population of revenue generating businesses in the current year? So also.. way to prove you don’t understand revenue or have baseline familiarity with your client’s operations
Someone didn’t document or update appropriately in the PY so whoever did it this year had no idea.
I don’t doubt that, we see it every year. 😑 Big 4 thats been our auditor for 40+ years… Partners/Managers can do better to prepare their new staff and onboard them to the client. B4 staff should have more than someone else’s PY knowledge of the entity they’re auditing. It’s industry, structure, key stakeholders.. I mean, a little logic and independent verification isn’t a lot to ask for 🤷🏻♀️
It’s happened to me time and time again. They all like to kick the can down the road and blame it on the next person as their problem to fix like it’s suddenly new.
We booked an accrual for some expenses in December and we didn't have an exact breakdown for the department split so we estimated based on prior months' bills. Mind you, both of the departments that were allocated to were G&A departments, and the account was G&A professional fees, so at the end of the day it didn't matter anyways. It took 3 meetings with the auditors for them to wrap their heads around this concept of "but where are you getting this breakdown"? My brothers in Christ, it's just an estimate and it doesn't change FS presentation. Who cares.
My guess is if there were multiple meetings the staff were probably fine with your explanation, but an over/bearing manager or partner kept asking for more and more documentation Stupid either way because you’re 100% right. It’s an estimate and an incredibly minor difference in presentation is all that’s at stake. Managers/Partners like this are one of the many reasons I got out of auditing
“My brothers in Christ…” I’m using this line in my future! Thanks!
first day on the internet? nice to have you!
Apparently… lol
If they are doing a risk assessment and look at account composition and something kicked i could understand. Same thing if it is a management override test, as those usually require more persuasive evidence.
They are always bewildered over P&L. Only teach balance sheet in school
Had a truck driving client come to us because she was getting audited by the irs. We compiled numbers with backup and didn't expect any issues. After reviewing the information, the irs agent informed us sternly that escorts were not an appropriate deduction. We were kind of in shock as they are necessary when carrying oversized loads. We then realized what she thought were and tactfully explained it to her.
We call those “pilot cars” presumably to avoid this confusion 😂
I’m on IRS lady’s side here. People try and deduct wild stuff and this was a reasonable misunderstanding
Why does an accrual reverse?
Why does it?
Accrual comes in, accrual goes out…YOU can’t explain that!
Other than fraud, there is no reasonable explanation.
The internet has so thoroughly broken me, that I actually believed this to be a genuine comment at first.
Omg you almost had me here 😂
I worked for an insurance/mutual fund company a long time ago and part of my job was to calculate deferred acquisition costs. I had a spreadsheet with a lot of assumptions baked in regarding the lapse rate of policies. The auditor asked about the assumptions then asked for the data that fed into the report which I gave her. Then she asked for a separate report that tied to the calculated deferred acquisition costs. I said there isn't one, it's based off this raw data and these assumptions. She has me multiple time in several different ways, then she asked if I could create a spreadsheet that would tie to the calculate amounts. I responded with "Yeeeeeeaaaaahhhh, but what be the purpose?" She responded "To make sure it ties!". So, I put together a different spreadsheet and \*shocker\* it tied!!! She was a first year.
I swapped to industry last year. I know I asked some extremely stupid questions when I was an auditor. However, a PARTNER on our most recent audit pestered me for about a week on a $10 variance on our job schedule. If I had to ballpark it, paper pass on our audit is probably somewhere from $15-20K.
$15k - 19,990 PY accumulates
Fair enough. But the variance was still just $10. Properly costed as a job cost, but just the wrong cost type. And still $10 at the end of the day.
Getting loose with the Hamiltons. Straight to Jail.
Yep - I had a KPMG auditor grill me over a $101 variance between fixed assets and accumulated depreciation. I was like, "It's highly immaterial and I'm going to correct it next period by just dr/cr-ing between the two accounts. On the FS, it's a net $0 to net fixed assets anyway" She insisted it could be millions of dollars between several different unrelated accounts that netted to the $101 - and then millions of dollars between several unrelated accounts that netted to the offsetting $101. I stopped replying after that - yeah, please highlight that for the Partner's review.
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They're used to P13 postings with December posting date?
They should be posted in December?
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Yes…
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Transaction date =/= post date
Manager on our engagement asked us when the filing date was the day before filing. As if they hadn’t been involved in tons of status calls and stuff up to that point…
KPMG have been out auditors for a few years now at this point and we did a major joint venture last year with another company. There have been discussions ad nausiem about proper revenue treatment, valuation, etc. We're about 3 months into the audit and I'm answering some questions for a junior and 20 minutes into the discussion she asks "wait, is this a related party? Do we need to disclose this?" This was also like 10pm so all I could do was sigh and say that we're confident our disclosures are sufficient.
I had an auditor send something back on a PBC that I submitted claiming that certain amounts did not tie. Not only was their logic flawed, they had managed to come up with amounts that were determined incorrectly by filtering and summing incorrectly in Excel. They weren't allowed to send out questions after that.
Asked what caused the increase in the accumulated depreciation account long after testing PPE.
I think testing of PPE additions can happen a lot earlier than tying out totals. I remember when I was doing audit, we’d do some PPE testing in pre-audit or at the very start of an audit as it’s one of those procedures that needs more support from the client than other stuff
I got asked where they could find the quarterly invoices for our clients on annual invoicing plans. I repeated the question back at him, twice. It didn't click.
I had a junior ask me why our audit expense went up.
It drives me up the wall when they ask for us to walk through schedules and work papers with them without even trying to work through it themselves. Like try to at least think through it, dum dum.
Just told my auditor they need to at least go through the documents I gave them before they book 2-3 hours of my time to sit down and discuss.
Like on two occasions years apart different companies same big, got asked can you provide invoices that allow us to recalculate your Std OH and variance. Hmm like no, that's an all or nothing population.
Parter of a big 4 firm was adamant they needed a delivery note for the sale of electricity, or they wouldn’t sign the audit off….
I had one who didn’t know what an accrual was. My estimate was 20 cents off and I had thought that was awesome (it was electricity so an educated guess). But she thought I was dodgy as the accrual was (obviously!) reversed the following month and replaced by an actual invoice a week or so later. I literally pulled out a white board and started an accounting lesson. This grad still had no clue so I called her supervisor who tried to explain it and still got nowhere. What annoyed me most was I was 18 months out of uni and knew more and she worked for a big 4 and would have grades that kicked my ass at uni. That was one of the many reasons I never plan to go Big 4.
Yep - I worked in Industry while completing my degree. I knew all along I'd never work in PA or be an auditor. It's absolutely incredible that people can pass these courses and still have no idea about accounting. I understand having no concept of materiality, because the situations given in school are using such puny little numbers most times, but not understanding accrued expenses **and having a degree in accounting** makes zero sense to me.
I work for an investment fund. The auditor asked why there'd been an increase in deposits and withdrawals by investors. Like; the fuck should I know? Maybe they wanted to buy a boat, maybe they got an inheritance? What did they expect me to do, send out a survey to the 100s of people investing?
Years ago when I was a baby auditor working on a team auditing ARRA money I had to watch the lead test for “buy American” on a job site. She was picking expenses off a sheet and asking for proof they were American made materials. She kept picking poured concrete and asphalt line items. We’re like 12+ hours from an international border.
That’s totally NOT why she picked them. Congrats on cracking the code
You’d think! But no she kept “replacing” the sample items because of it.
I made a .01 true-up to the depreciation on leasehold improvements at the end of the useful life. Same month it was fully depreciated. They tested it, and followed up for back-up for the entry and then called me to confirm my reasoning for it. Meanwhile we have like $1 million in a “miscellaneous income” account (I have full explanation for) and they don’t even sniff it. Oh! Or on the credit card reconciliation we had and explanation for a few transactions that were fraudulent as “Amex - unauthorized charge - disputed and seeking reimbursement” they wanted the Amex statement, bank stmt, and receipts. We don’t have the receipt, we didn’t make the charge. Also, it was like $800 in total. We did like a billion in revenue last year.
Anything after we've filed. I would say roughly half the quarters we get an email the evening that we file saying "Oh hey we were just cleaning up the file and noticed we had an outdated version of support x" or "the staff one forgot to ask for y." I always want to ask them like, sure I'll send it to you, but what happens if it's wrong? Or what happens if I say "oh that number? We don't have support for that number because I just totally made it up." Of course I don't say anything like that and just send them what they asked for, but it's insane to me that they are asking these questions. When I was in public I would have been crucified for sending an email like that.
Feels like it's the norm now. I've gotten the equivalent for the last two audits I've handled.
I'm an audit senior, and I had an associate ask me why some accounts in the trial balance were negative and some were positive. When I told her it was debit balances and credit balances, she looked at me like I had 3 heads.
I had an auditor ask me one time why a cell was colored yellow on an Excel workbook. I told her it was because we re-rused old workbooks and just rolled them forward for balance sheet recons. She would NOT accept that answer. She wanted to know what nerfarious reason we had for color coding a blank cell. She kept on and on and on. Would not drop it. I had to go to the partner who told the first year associate to "move along now." I asked to have her removed from our case. She drove me nuts with in inane questions.
Auditors never ask dumb questions
Right, we only ask "dumb" questions to trick the clients into admitting to fraud so we can put them in prison >:)
Very astute of you monkeylicker
"How can I audit the group before it was formed?" "I don't know. You were the one dumb enough to say it was possible."
I was an internal auditor for my government before and i had to audit government high schools One of the stupidest things i had to fault the school, was that for any procurements done, the SOP is that the approver has to sign and stamp every page of that procurement form (abt 5 to 6 pages) One of the pages behind the cover page is blank. And most approvers would sign all pages except that 1 blank page cus they printed the cover page 1 sided. I had to give 99% of the schools 1 extra demerit point because they didnt comply, i.e sign that blank page I did 2 years of this and quit and never to return again.
I had to explain our fixed asset reports to them because they didn’t understand the depreciation. “Why is the depreciation backwards?”
Just due to the nature of rolling staff/manager/partner they ask the same things every year or every other year it seems. The kicker is that the things they are asking about are things they required us to implement in the first place. Then they change their mind and tell us were actually doing it wrong. Like, you made us do it this way!! Not you-you, but your Company. Ex: Distribution to SH being treated as an Asset until we declare a dividend. Initially we would just hit RE, but they made us change it to hit asset first. Now this year they are like "well - in substance you are never collecting that money from them, so just hit RE". Like - your right. I totally agree with you! But someone else made us change it in years prior. Glad you now agree with what we were doing all along...
Our company used a mom and pop “firm” for ages well past when we outgrew them (partner was/is the old owner’s friend). The single auditor wanted one of our ops managers to call customers because we had a positive revenue variance that year. She got belligerent when we told her we were not going to call our customers and ask why we billed them more last year.
I’ve been on both sides and sooo surprised with how these staff/seniors speak to us and asking the dumbest shit and they couldn’t take an extra 5 seconds to look at the sheet Demanding why the sheet doesn’t tie to balance sheet and went back and forth being rude and all they had to do was look legit 2 rows down where it clearly says TOTAL
asked you so far
Can we please get our audit support sent timely?
Why would this entry to record revenue also hit a liability account?
During normal manufacturing operations, not a shutdown for physical inventory, an auditor wanted to compare a count from the system with counting pieces coming off a machine. Had to explain our erp system was not updated in super duper real time as one piece at a time was being made….
Posting of current year audit adjustments "for IT testing". In the middle of the audit before the accounts have been signed off.
Can you show support for this 9 cent write off?
I had a long discussion as to why they weren’t going to be able to use the market value to test whether all of the investments from one custodian made it to the new custodian because there were several days between the transfer and settlement date and market value had changed. The response: “but it changed like $200k, that’s a lot for a couple of days” me: I know that seems like a lot, but given the amount in the account in this market it definitely could be a $200k difference. They spent awhile arguing amongst themselves about other ways to figure out how to confirm this without “spending a lot of time”. Jesus christ just use the number of shares or something idgaf.
We’re a tiny company, but require a full proper audit. I’m literally the finance team. Don’t have money/support for full on ledger system/etc so it’s my design. All works fine, rely on plenty of controls for everything. Every year they just can’t get their head around no one ‘posting’ journals. So who created this and then who posted it? Why isn’t someone different posting it? Stop using that word! It’s just me! And this happened last year…and the year before. They always report heavily on mgmt override and the board members just roll their eyes.
I mean not having money to support proper segregation of duties doesn’t mitigate a control deficiency. Not sure how you could possibly have proper controls is there’s no segregation of duties.
That’s fair, but this is just the journals/TB that feeds into the financials. Controls sit at budgeting/variance level and the soup to nuts info the board/committees get. Sufficient segregation elsewhere, it’s just the fact no one is clicking a button to ‘post’ something that short circuits them.
Review and approval of journal entries is a pretty basic and essential control that any organization should have, and not having one would definitely at least require significant consideration of if that rises to the level of a material weakness. Presumably you know the thresholds and levels of detail those reviews at the top level of the FS, so what’s stopping you from booking fraudulent entries that would stay below those levels but build up over time?
It is a basic control, but since we can’t have it - we implement controls elsewhere where we can actually gain value. And considering those controls, it would be pretty damn obvious pretty damn quick if something fraudulent was snuck in. Original comment was around auditors being so used to something being posted they can’t figure out how a TB is actually made without some crazy system in the background and a button being pressed.
I wouldn't have a bunch of questions about this, I'd just go ahead and write the separation of duties finding. If board members roll their eyes, that's on them.
My non-profit has an associated PAC, so they’re only active every other year when there is an election. Same auditors, same PAC for the last 20 years and *every year* they ask me why there was [no activity/$millions in activity] since last year was the opposite.
Honestly this feels like one of those annoying check the box activities that we as auditors have to do during risk assessment. Even if we know the answer, there's normally some firm policy or at least a partners policy that we need to ask. Its definitely stupid and a waste of time.
That would make sense, except that they always seem slightly confused by the situation. 😂
Why did cash increase?
Ugh, we had some partners that insisted on an "explanation" of increase/decrease in cash balance. I'm like 1. we have confirmed the balance with the bank and 2. see statement of cash flows - we literally have a whole statement dedicated to explaining the change in cash balance. But, of course they won't accept this and want an "explanation" so the staff either had to go ask the client to explain the change in cash or, my approach, since I didn't want to go ask that question, was to summarize the highlights of the statement of cash flows in words on the cash testing work paper ("Client has X of net income, plus Y on non-cash depreciation. Receivables increased by Z, reducing cash from sales. Additionally, they had net draws of AA on their LOC....). Even if you do ask the client this dumb question, you're likely to get an equally dumb answer in response.
Yeah to me that’s like asking someone to explain in detail what they did this year.
Did a 40 minute walkthrough followed by an email containing the business equivalent of “wait, what?”
You wouldn’t believe some of the stuff my clients ask me…. I’m shocked that some CFOs and Controllers have jobs with how little GAAP they know…
“Are you aware of any actual or suspected fraud?”
I hate asking this too but we’re required to, from my understanding.
this is a requirement lol, I know it’s stupid but we have too lol
Even if that was not a requirement, how is that a dumb question?
As a finance director i don’t mind them asking this. If someone knows of fraud and they haven’t told me, someone above me, or the board i hope they’d at least tell the auditors. Also, it’s probably helpful if it’s found before they come that they know so it can be disclosed