In the Assurance and Business Advisory department of Foo Kon Tan Grant Thornton LLP(FKTGT), two services are rendered, namely, statutory & regulatory audit and capital market services. The service most commonly rendered would of course be the statutory audit since the law in Singapore requires all the financial statements of listed companies to be audited. FKTGT has a wide clientele base and some clients include Roxy-Pacific Holdings Limited and Heng Long International Limited, just to name a few. The current staff strength of FKTGT Singapore is in excess of 300. Up-to-date, there are 10 partners and 230 external audit staff. The career path of FKTGT is as illustrated in the Appendix 1 and is similar to the Big4 Firms. Names inserted in the brackets are the names of my team members.
The software currently being used is Voyager, which was implemented close to the last quarter of 2009, 24 August. Previously the company was using Grant Thornton Explorer and auditCARE. Grant Thornton Explorer allows us to modify our audit procedures and concentrate on the areas that pose greatest financial and operational risk for your company. Information about the firm is captured and enhances our knowledge of how the business functions. Such information is important as it may significantly change the way in which we organise and perform the audit (Grant Thornton UK LLP, 2011). Thus, it increases the focus and our insight. On the other hand, for auditCARE software, it helps us to understand, document, evaluate and test the firm's internal controls especially in this era of heightened scrutiny on corporate governance. In addition, the software has a wide array of applications from dealing with a full Sarbanes-Oxley internal control audit to being used for just explicit areas of a financial statement audit in small companies (Grant Thornton UK LLP, 2011).
With the implementation of the software, Voyager, it has an embedded functionality to enforce compliance and improve documentation quality of audit. Voyager allows the integration of Grant Thornton Explorer and auditCARE softwares as a single application. Using Voyager, financial statement risks are amplified and link them to the processes and internal controls that we have established to address those risks. The consistent application of audit methodology leads to a logical flow and efficient approach to audit process. As a result, it facilitates manager and partner review of audit working papers.
2.0 Key challenges facing the industry
In the recent years, there is a constant revision of company acts, standards and regulations. External auditing is no longer regarded as a typical checking of the books of a company but an important part of the governance practice of the companies. The voluminous amount of transactions, modern technology and the constant revision of regulations and standards has all made a significant impact on the auditing profession. The demise of Arthur Andersen and the numerous past scandals like Enron, have given rise to many onerous new laws and regulations that govern financial reporting. Various corporate organizations flopped were due to fraudulent financial reporting and these were regarded as audit failures. The auditing profession's ability to self-regulate was put to question and resulted in the introduction of new laws. Therefore, the two apparent key challenges facing the auditing industry are the increase of audit fieldwork due to the introduction of new legislation and having to maintain or charge lower audit fees.
Many new statutory regulations were introduced to aid in enhancing auditor's level of independence and refine the calibre of their work. Some examples are the Sarbanes-Oxley Act in the USA, Corporate Laws Amendment Act and Companies Amendment Act in South Africa. In South Africa, after the introduction of the new Auditing Profession Act from 1 April 2006, the Independent Regulatory Board for Auditors (IRBA) gathered 885 reportable irregularities during the eight months from 1 April 2006 to 22 November 2006, as compared to 88 for the previous 15-month period ending 31 March 2006. The reason for the sharp upsurge of cases is due to the requirement of stringent and regular review of audit firms. For Singapore, the recent fraud case discovered in the public sector has caused a shift in the focus of audit area. The article is further elaborated in section 3.0.
The constant modification audit procedures and accounting standards, drastic inflation of staff remuneration & rising technology costs have made it difficult to maintain or charge lower audit fees. The introduction of new laws requires time to understand and this impede the audit fieldwork process. The increment of audit fees is inevitable due to the rigorous audit methodology. At FKTGT, apart from the audit fieldwork, we also do a Business Issues Report of how the client should improve and enhance their accounting and operational functions in order to preserve their assets and exploit available business opportunities(Grant Thornton Singapore,2010). This is our strategy to retain our client.
3.0 Recent Developments in Sector
In the light of the latest alleged fraud cases discovered at the Singapore Land Authority(SLA) and the Intellectual Property Office of Singapore(IPOS) in appendix 2, Singapore's Auditor General Office has now re-prioritized the areas being selected for audit and pay greater attention to IT services and procurements. Finance Minister, Tharman Shanmugaratnam, commented in the parliament that the fraud did not occurred solely due to gaps in the public sector rules and guidelines. The case involved two seconded officers who allegedly conspired to call quotations for ficititious IT maintenance services and equipment and to award the quotations to bogus companies. The total amount involved was about $11.8 million. The Ministry of Law has acted to rectify the deficiency in supervision and audit.
3.1 Implications and lessons learnt
The integrity of any procurement system relies on the honesty of the officers involved, along with proper management supervision and a rigorous system of audit (Lim Biow Chuan, 2010). Some measures taken by SLA and IPOS include enhancing internal audit, centralising the procurement process under one department, requiring a different personnel to verify the request to call a quotation, and reducing the limit for approval of financial transactions. As compared to the past, checks are made more thorough now. Most importantly, the best lesson that we could learnt out of this whole episode, is to have guarded people supervising and not to be slipshod in their work responsibilities. Apart from continual vigilance, more channels of whistle-blowing should be made available because it had a role in uncovering fraud as well. However, there is a need to strike a balance between adding more layers of checks and resultant reduction in operational efficiency.
3.2 Relation to Internship
I was able to relate the above-mentioned article to my internship experience during my audit engagement at Republic Polytechnic. My seniors and I requested from the client for all their procurement contracts and then gathered them to conduct reasonableness tests to make sure they do not make unreasonably irregular payments to third parties. Then, during the later part of my internship when I was transferred to the Internal Audit Department, I was tasked together with another colleague to conduct audit solely on IT procurement and services. An advisory note on procurement processes was sent out by the Ministry of Finance, with reference to appendix 3. We set up an excel spreadsheet containing of all the IT contracts, the number of quotations obtained and took down the Approved Procurement Value(APV). This is to make sure that the amount procured is within the APV. Most importantly, I learnt from my colleagues that the person who approves the quotation and the one approves the invoice should be done by a different officer.
4.1 Foo Kon Tan Grant Thornton LLP
When I first entered the firm for my internship, there was no formal training provided. We would only be briefed by the manager on the daily tasks. Frankly speaking, I feel that I was not being efficient and effective as my day would start only when my seniors got settled down with their work. On the first few days of my internship, I had virtually nothing to do and work came in only during the late afternoon when I started to feel a little restless. There were a few occasions that my manager wanted my help but because I was not given any proper training, I didn't know how to do it. Apart from that, it is important for employees to derive certain degree of job satisfaction. If employees look at their job as a burden, then they can never attain professional satisfaction and happiness. Attaining job satisfaction is vital as it affects your efficiency and productivity (Nolan, 2009). Someone who is contented with the job will have a higher productivity as compared to the other who works for the sake of putting a bowl of rice on the table(Nolan, 2009). Reason being, job satisfaction gives a person with inner motivation and self encouragement to do his or her best. Speaking of which, I recalled a module called Business Management during my year one. The diagram as illustrated in appendix 4 is known as the Maslow Hierarchy of Needs. Its theory of motivation is that human beings are motivated by unsatisfied needs, and the needs at the base of the pyramid must first be met before higher needs can be addressed. This is especially essential since the employee turnover rate is considerably high in the industry. For optimum workplace motivation to take place, audit seniors should give Vocational Trainees (VTs) an opportunity to handle a small section of an audit area after sufficient guidance is rendered. Therefore, I suggest that training should be given to VTs, like the interns in Big4 firms. The training could be given a few days before the internship commenced. This would not only help to speed up the audit fieldwork, but allowed the VTs to feel an immense sense of satisfaction. As a result, it would play a part in staff retention and most importantly, they would have been trained. Thus, extra time and cost put to hiring new employees, are not incurred.
Secondly, during my course of internship, I realised that audit seniors and managers were using the latest version of Microsoft 2010 whereas audit assistants, with the older version of Microsoft 2003. When audit seniors and managers want to pass certain documents in softcopy via thumbdrive, audit assistants would encounter a compatibility issue window alert. Then, when the file is finally opened, the data contained in it became distorted or even went missing. As a result, audit assistants were unable to give a helping hand to their respective managers due to such technological issues. In addition, team spirit maybe somehow be impaired as seniors and managers are frustrated with their workload whereas audit assistants may feel a tinge of helplessness as they are unable to assist their seniors. However, if laptops of the audit assistants were upgraded to the latest version as their seniors, high-quality work can be delivered with minimal errors and this can help save the company a lot of human hours spent correcting and re-doing. Instead, audit assistants could chip in, contribute their share of effort and help to relieve the workload of their seniors. Ultimately, team spirit and cohesiveness is strengthened. After all, audit is about team work and when there is team work, employees would be instilled a sense of belonging. As a result, the high turnover rate could be minimised.
4.2 School of Business and Accountancy
Perhaps the School of Business & Accountancy could consider setting an interactive blog or a forum, where students could upload pictures and write about their day at work. This forum would be shared among the interns under the same Liaison Officer, especially if each intern is in a different field of work. Such forum could a form of avenue to understand the type of job assigned to us during the day. For instance, when I was initially posted to the External Audit department for my internship, I was curious what my other peers in Internal Audit department were doing. Later, when I was presented the opportunity to get transferred over to the Internal Audit department, I discovered the fine line of difference between both audit departments. Implementation of such forums could break away from the traditional periodic report writing and students would definitely be able to interact more with their respective Liaison Officers as well. Further, fellow interns could comment and ask queries regarding that particular post written by the other students. To encourage enthusiastic participation, these forums could be incorporated into as a series of periodic assessments and students would have access to them everyday instead of within a stipulated hour. Think of it this way, having forums are to allow students to post their thoughts of their work or about certain particular issues. With the assistance of IT personnel located within the school, I am certain these forums could be set up easily and the school would not be required to incur any additional costs.
Finally, internship program should be placed at the very last semester instead of the first semester of the final year. In my personal conversations with my audit team, they told me that they preferred the second batch of Ngee Ann interns. They felt that the second batch of Ngee Ann interns could pick up things faster and understood most audit cycles. I jumped at the chance to help clear the air, that the first batch of interns had yet cleared all the academic modules for the course of accountancy and thus only understood the audit cycles that were covered in Auditing 1 module. I understand that the school maybe adopting such a system because of insufficient resources. Alternatively, I am suggesting that the school could conduct a week's long of lecture to give the gist of the modules. Since students are going into different fields of work, different lectures could be conducted simultaneously based on the students' allocated field of work. I believe that this arrangement would be helpful and also eased the students' learning when they finally start their internship.
5.0 Internship Experience
5.1 Key learning experience
The one learning experience which I perceived as the most significant was the need to work independently during my stay in the Accounts Department. With assistance from the head of Accounts Department, Molly, I was tasked to set up the vendors' database and recurring payables. However, she was seldom at her desk and during the process when I needed help, she could not be reached. As a result, I had to tackle the problems and source for solutions on my own. With little guidance rendered, I became disorientated in my thoughts and felt a tad incompetent. Eventually, the negative mindset made me dread going to work everyday, at the time of interium report. As this went on for the next few days and with the deadline drawing near, I told myself that the negative mindset should be discontinued and not wait for miracles to happen. Thus, I garnered all my courage and the very next day, I decided to speak to Molly regarding my difficulties.
When I manage to get hold of her the next morning, I quickly scrambled to my feet and went into her room. As I began to fill her in with all my worries and difficulties, my mind was actually in a whirlwind. I knew I had to be very frank with her and yet, I felt inferior as I was afraid she would perceive me as an incompetent employee.
However, after the submission of interium report, I realised that all my worries were unfounded and in fact, things improved. After sharing my thoughts with her, Molly apologised to me. At that moment, euphoria filled my heart. She felt apologetic as I was not given sufficient guidance as I should had been given. She concluded the session by dissolving most of my worries and instructed one of the permanent staff, sikin, to look after me. In future should I encounter any problem, I can go to her for help. Given such assurance from Molly, I readjusted my attitude and prepared myself mentally to brace through the difficulties that were laid ahead.
5.2 Personal Achievement
This incident was most significant to me as I saw how my set-up of the database facilitated the work of the other employees in the department. Especially when they thanked me profusely and praised me for my work, I felt my effort had paid off. Most importantly, I realised how a change of attitude could change things. This was something I would never learn out of textbooks.
Despite the long working hours and the initial mundane administrative work, I still enjoyed my internship. I do not deny that as a Vocational Trainee(VT) in the firm, I had the privilege of making mistakes and asking questions. Throughout these 6 months, I constantly reminded myself that I must be a responsible working adult who takes charge of one's work and not repeat the same mistakes. I had learnt not only how to perform, but most importantly, to stand up again after each fall.
The internship programme has taught me the importance of being meticulous during work, especially since I was in Audit where fraud is prevalent. For instance, the SLA fraud case has shown me the significance of continual vigilance. Now, reading the papers becomes imperative as it is vital for us to be up-to-date with the business world.
6.2 Significance and value of experience gained
I am glad that I was posted to a second-tier audit firm like FKTGT as I was exposed to many learning opportunities. Internship in FKTGT served a great stepping stone to my working life. In my 6months internship with FKTGT, I had been to 3 departments, namely the Accounts, External Audit and Internal Audit Departments. I saw how each department operated daily and helped me to discover which field of work I am interested in. I am certain that in future, I would like to go into internal audit, where I could assist the firm to achieve optimal operational efficiency and effectiveness.
Apart from the technical knowledge and people skills attained, I treasured the friendships forged during the course of my internship and the people who lent a helping hand to me. I had witnessed the different personalities of people as I went from one client to another and mastered the various methods of approaching them in future should I meet one again.