Being an auditor working with an audit firm for over 3 years now, I couldn’t help but notice how the client’s employees and managers have somewhat of an inherent fear of the engagement team. After giving it a thought and imagining myself in their position, here’s an answer to why auditors dread managers.
Why do Managers Fear Auditors?
The relationship between a company’s manager and an auditor is not complicated at all. The manager’s duty is to plan and oversee operations throughout the year keeping in mind the bigger corporate goal and working towards the maximization of wealth. These duties of managers are known as fiduciary duties.
On the other hand, an auditor’s role is to check whether everything has been done in the best interest of the company, and only then, good review; “In our opinion, the financial statements are free from material misstatements” is given. If the auditor succeeds to detect a material misstatement or fraud, the responsible manager gets in trouble, depending on the nature and intensity of the fraud. Simple as that.
That being said, managers are afraid of auditors because they could get in trouble if the auditor succeeds to detect their fraud and manipulation of the financial statement, and as a result, the manager could lose his job or get his professional membership revoked.
Considering these dire consequences, it is pretty natural for managers to fear auditors. The more responsibilities a manager has, the more he will be worried as he will also be liable to cover up for employees working under his supervision.
What Type of Managers are Afraid of Auditors?
Managers who have prioritized their own interests instead of the company and those who were involved in fraudulent activities during the year will be scared of the audit engagement team, and they will try their level best to keep their deeds unexposed.
That being said, besides the inherent investigative fear of audit, managers who failed to fulfill their professional ethical responsibilities like presenting the true and fair view of the entity will be pretty much scared of auditors. It also means that managers who have done everything in the best interest of the company and have taken care of ethical issues do not fear the audit team and will be more confident during the audit.
Are Auditors Dangerous?
When an auditor is on engagement, you will mostly find him an extremely unpleasant person. Well, there is a reason.
In order to do the engagement in the best way, the audit needs to follow professional skepticism (an investigative approach) and they will most likely question everything that a client says. That is the sole reason why auditors are considered unpleasant and boring.
To answer the question, yes, auditors can be dangerous if the client refuses to provide the records and information that they need in which case, the auditor provides a qualified audit report meaning that the client is restricting the scope of their work.
Also, things like interference in the auditor’s work could trigger the auditor and that’s when the client or the responsible manager gets in trouble.
If the client has taken care of these, there is no reason the managers or employees should be worried, and things should go smoothly!
