Understanding a financial statement audit | 11
Auditor qualifications and skills
Auditors are generally qualified accountants who are
members of a professional institute in their respective
countries. Although this varies between countries,
qualified accountants normally must meet certain
educational requirements, take several years of
studying and professional exams and have sufficient
practical experience.
Becoming an auditor is a challenging process that
requires a combination of significant academic study
and a large amount of learning on-the-job. This
means the people who qualify as auditors benefit
both from an understanding of the principles of
auditing, accounting, finance, law, business
management, among other topics, and hands-
on experience.
In addition to the technical knowledge, auditors need
to have good analytical skills to be able to effectively
analyse the company’s information, properly
interpret the analysis, apply professional judgement
and arrive at appropriate conclusions. Auditors must
also possess broad communication skills (both verbal
and written). As auditors communicate to the
company’s senior management and those charged
with governance, it is very important that they do so
in a clear and professional manner.
Auditors possess the analytical and logical skills
needed to evaluate the relevance and reliability of the
systems and processes responsible for recording and
summarising financial information. These skills
enable auditors to understand how to gather and
assess evidence to evaluate representations made
by others.
Throughout their careers all auditors must undertake
continuing professional development to maintain
their qualifications. Most audit firms invest
significant resources in training and professional
development of their staff which go beyond the
requirements of the territory professional
regulations. Overall, the training that auditors receive
provides them with a significant array of skills, which
form the foundation for a wide range of careers in
various fields and contribute to the overall
recognition and high regard for audit professionals.
Multi-location audits
In many cases, a business comprises several legal
entities (which may be located in different countries),
whose results are consolidated into a single set of
financial statements that present the financial
position and performance of the consolidated group.
Large companies may have dozens or even hundreds
of entities. Audits of such clients normally involve
audit teams from audit firms around the world
performing work in different locations.
The lead auditor responsible for issuing the opinion
on the consolidated group financial statements
develops the audit strategy and defines the scope of
work to be performed at each component (location,
entity, etc.) of the group. The lead auditor
communicates with the audit firms responsible for
component audits and typically reviews component
auditor's work in order to obtain evidence to
support an opinion on the group consolidated
financial statements.
As a result, multi-location audits entail more complex
considerations regarding audit strategy, planning,
execution and communication.
Required procedures to obtain understanding of the
component auditors by the lead auditor (e.g.,
evaluating their professional competence, etc.);
Different regulatory requirements, e.g. different
laws, regulations and accounting standards (which
would need to be converted to a consistent set of
standards for group accounts);
Language and cultural differences;
Emerging markets considerations (e.g., evolving
laws and regulations, corporate governance
practices, potentially higher business risks, etc.);
Site visits of the company’s locations by the lead
auditor around the world;
Additional procedures to support timely, accurate
two-way communications between the lead auditor
and component auditors; and
Review of the audit procedures performed by the
component auditor(s).