Partner Interview (audit)

#1

Hi,

I was wondering if anyone could help me with the partner interview prep. I got one coming up next week and i’m slightly nervous…

I know it’s competency based and i think i will be okay with most of the areas. the problem is, i don’t have good business knowledge (i study maths…) that business focus always let me down.

Could you please explain to me about SOX (what kind of effect it has etc…) and how credit crunch is affecting audit???

thank you…
Kimi

#2

Hey Kimi,

Would you mind telling us where you are applying? We might be able to give you more specific advice…

Good luck!

Ed

#3

woops, sorry.
I’m applying for EY Audit (well, in particular, it’s Japanese Business Programme where 60% of your clients are Japanese companies in UK… but it’s a bit minor division so the question was Audit in general…)

When i had a management interview they asked me What significant factors have affected the industry in recent years? which is quite common question but i really can’t think of a detailed answer.

Thank you for your help!
Kimi

#4

Kimi,

I am not sure how much use this will be but if you go to 2008 Internal Audit and IT Audit Market Report - Barclay Simpson and have a look at the “Market Report 2008 - Internal & Computer Audit” you will find some material that relates to the affect the Credit Crunch is having on the internal audit profession, at least from a recruitment angle.

I hope this is helpful. Good luck.

Ian

#5

OK… Here we go!

The two most important factors currently affecting the audit industry:

Sarbanes-Oxley

Look here:
http://www.wikijob.co.uk/forums/accounting-accountancy-professional-services/170-sarbanes-oxley.html

If that’s not clear enough do ask!

Credit Crunch

The credit crunch does not directly affect audit firms so much as the way it affects the work auditors do.

One of the key things that auditors do is test to see if the client they are auditing is a ‘going concern’. This means that they are likely to survive the next 12 months in business without any major risks. The credit crunch is a buzz word for an increasing cost of borrowing. It will affect all clients who have borrowed money, and the question for auditors is, will this increased cost of borrowing put some companies over the brink, and they will have to default and close their business?

The second aspect of the credit crunch is for clients involved not just in borrowing but also in lending - i.e. banks. Banks have lent too much, to people who cannot repay, and the bank has to foot the shortfall.

This is what happened to Northern Rock. Northern Rock was given a clean bill of health by its auditors, PwC, who I believe are being sued by the shareholders. This is a key example of how the credit crunch has affected audit - PwC should have examined Northern Rock’s debt more carefully and identified that it was a significant risk.

If you have any questions please fire away.

#6

Hi,
Thank you for the reply.
I got a question…

Could you please explain to me the subprime stuff from investors prospect?
If a company is investing on subprime, isn’t it hard to value that at the moment? (so you have to be careful when you are auditing?) or am i talking complete nonsense?

Thanks,
Kimi

#7

No you’re absolutely right.

Sub prime refers to the lending of money to people who are at risk of defaulting - in this case, the US mortgage market. As interest rates increased, loads of people defaulted, and it became clear that banks and other mortgage lenders had over extended themselves, and they were never going to get this money back. Consequently banks tighten their lending pockets to help get back on track, and that affects the economy.

The risk for auditors is when auditing any firm that has lent money to sub prime lenders and, as you rightly point out, fair determination of the value, if any. Auditors will have to do more work to make sure that the figures the client is reporting are fair, and not ‘optimistic’.

This is exactly the disaster that Northern Rock got into.

#8

What about SocGen’s Kerviel. has he done anything bad that might affect the bank’s Auditors who made a clean and clear decision about the bank’s future. Here i would say internal control is it…?

#9

Spot on ; the internal controls and computer controls should have prevented that disaster.

#10

Hi,
just finishied my partner interview.
it went okay, they didn’t ask me anything about business though!!! lol
it was quite similar to the management interview but tiny bit different questions.

thank you so much for your help!

Kimi

#11

good to hear about your interview progress. keep us posted about results. good luck

#12

Hi Kimi,

Same as you I am going to have a partner interview too - is it possible to give me any hints?

and chrism2671, can I ask you a question too? - I understand how credit crunch affects audit, but how it affects IT audit specifically? Thanks for your help!

jiajia