What is an audit, and what do auditors do? Here we explain this important part of the business world and get some insights on working within it from a partner at leading accounting firm KPMG.
Conducting an audit means reporting to shareholders or other stakeholders on whether a business or other organisation's accounts show "a true and fair view" of its financial activity.
So auditors provide an important service that enables the business world to function, can help to identify and prevent fraud and injustice, and helps the UK's economy to remain stable.
Auditors also provide a wider set of audit-related services, known as assurance.
Auditors involved in assurance work use their specialised industry and financial knowledge and analytical techniques to get an in-depth understanding of organisations and how they function.
They then use this understanding to give them advice to help them thrive in their particular marketplace, now and in the future.
David Yim, a KPMG partner and head of the firm's assurance team for investment management clients, explains audit work, where it's taken him in his career, and the opportunities in audit available to graduates at KPMG.
How would you describe audit?
Auditors give confidence to stakeholders of a business, like investors, customers and even regulators, that the business is stable and well-run.
To do so, you need to understand business - how they're run, how they identify and manage risks, how they present themselves in the marketplace, and how the industries in which they operate work. Understanding accounting is an element of that, but only one element.
I got hooked on audit on my second day as a graduate at KPMG. I was given what seemed like a quick adding-up exercise, but I asked some questions about what I was doing and it turned out I was working on a document that was being used in a takeover bid being made by one FTSE company for another.
The next day, the deal was on the front page of the Financial Times, and I realised that I'd contributed to a huge event in the business world. I still have a copy of that issue today.
What opportunities has a career in audit given you?
Working in audit for a firm like KPMG means you get access to some of the most senior people at some of the biggest organisations in business.
I've just come back from a meeting with Aviva, and I'm seeing HSBC, another client, tomorrow. I also work with Man Group, one of the largest alternative investment managers in the world.
In addition, I've worked with family businesses and startups in the sector, and clients outside investment management during my career, including the Bank of England and a large security company.
Because many of our clients have global presences, working in audit at KPMG is very international. I've been to over 20 countries in the course of my work - including trips to New York, Japan, South Africa, the Middle East, and all across Europe.
Other than progressing, like you, into a senior role at an accounting firm, what other career paths are open to graduates who train as auditors?
Starting out in auditing gives you a strong foundation for a career in business because of the way you learn to understand businesses and think commercially.
Many of the people who started at KPMG at the same time as me are now in senior positions in business. If you look at the people on the boards of FTSE 100 companies - the chief executive officers as well as the chief financial officers - many of them have accounting or auditing backgrounds.
Qualifying as an auditor is a springboard that allows you to progress very far and very fast in business.
Why is KPMG in particular a good place to start a career in audit?
Joining a firm like KPMG as a graduate in audit means that you quickly get to work for top-level clients and for the most senior people at those organisations. For example, within six weeks of starting at KPMG I was interviewing directors and senior compliance officers as part of auditing their companies.
But you're not thrown in at the deep end - KPMG gives you all the resources you need to do your job well. The amount of training you get is incredible, and more senior people always oversee what you're doing and guide you where necessary.
What kind of person is suited to a career in audit and what do you look for at KPMG?
You don't need to have a particular degree to join KPMG as a graduate - we simply look for bright individuals with a 2:1 degree or better and some commercial awareness. And we don't just look for those with business, economics, or accounting degrees. Some of the best auditors I've worked with have had degrees in science, pharmacy, and music.
To be an auditor you've got to be able to analyse complex financial information, but also get under the skin of a company's culture and understand the big picture. You've got to be able to communicate well with people but, if necessary, be professionally sceptical about what they're saying.
At KPMG we're really proud of the diversity of our employees. In my team, for example, there are 20 people from 11 different cultural backgrounds, some from overseas and others from all over the UK. I think this commitment to employing a real mix of people is one of the things that makes KPMG such a great place to work.
What have been the highlights of your career in audit?
One of the most satisfying projects I've worked on was helping a family business to professionalise their investment process. It involved understanding a very complex system in multiple international locations they'd had in place for years and how the people within that organisation worked with each other.
We had to change work patterns and how working relationships functioned, which was challenging at times because we were changing the DNA of the organisation. But the clients were receptive, and we ended up with a structure for the business that meant it had a sustainable future.
I currently sit on ICAEW's (Institute of Chartered Accountants in England and Wales) working party that's writing new assurance standards for the financial services industry. Last year we provided guidance for auditors reporting on interest rate benchmarks in response to the Libor-setting controversy, and it's hugely satisfying to help shape the way businesspeople up and down the country, and even overseas, will work in the future.