Auditor and Chief Kim

Auditor in “Chief Kim”

It’s pretty rare to find a drama about finance world, more specifically about accounting. Chief Kim was a drama that let us see the dark side of accounting practices. It is called accounting fraud. You hear it very often throughout the run.

I’m currently marathon-ing the drama now and I stumbled upon a very familiar subject and profession in episode 15 and 16. Audit and auditor. As an auditor myself, I think it’d be nice to talk about these 2 episodes and what auditors actually do.

Chief Kim (played by Namgoong Min) explained to Gwang Sook (played by Lim Hwa Young) briefly but excellently about what auditing activity actually is. Quoted from the drama,

“Okay, here. What is an auditing? Let’s say you and your friend made an investment. But you can’t know if that company is legitimate. Yes. It’s not like I can inspect them every day. Yes, exactly. So instead of the investors, someone else comes to check their books.  That someone is accountants in an accounting firm. And this entire process is called auditing. It’s telling them the financial status of the company. Of course, it’s not a problem for small companies, but huge companies are obliged to do this.” – Chief Kim.

Sometimes I can’t even explain the auditors’ job purpose to someone who’s completely doesn’t know about this field. So I really appreciate Chief Kim to be able to summarize what our job is in a very easy way to understand. People who don’t know what auditing is really have no idea the purpose of our job. Even my friends who are not auditors (but still work in finance industry) don’t know what an auditor and auditing mean. The fact baffles me every single time. They see us as people who visit their office every year, have tons of requests, and only give them headache.

Even a client asked me why my team came every year and why did they need audit. They finished the financial statement themselves. They did all the work. But some strangers came and asked many questions about the things and accounts they did daily. What was our purpose? I don’t know. Ask your boss why you needed an audit report.

“Accountants in an accounting firm” are auditors. External professionals who have no connection whatsoever with the Client. Their job is to check and assess the Client’s financial status, therefore audit.

Not all huge companies are obligated to be audited. If the Company -let’s take example from above explanation- can secure an investment just fine without an audit opinion, why would they hire auditors? Only to add their expense and decrease their profit of the year. The better reputation their auditor has, the more expensive the fee is. Don’t forget the audit period is stressful to both parties; the auditor and the client. But Listed (Publicly Traded/company that sells its share to public) Company is required to have its financial statement audited.

Chief Kim said in episode 16 that auditors and the Company’s people shouldn’t meet up. In this case they had dinner together.  The audit manager blatantly asked the Accounting Division members what he and his team must be aware of. He also teamed up with the Accounting Division to polish the report. This, straight up breaching his independence. Both independence in appearance and independence in mind.

Independence in appearance. Meaning, for example, what third parties see us. If we have connection or relationship that’s/looks more than auditor-client relationship with people who work at our Client’s office, third parties could think that we’re not independent in conducting our job. Seen having lunch/dinner/other activities can lead to this too. Of course not the case every time. I mean Clients treat us to dinner too.

Meanwhile independence in mind is when you favor your Client ignoring what you should do as an external person. When you have plan or think to make a pretty audit report and or to help cover the Client’s fraud or similar like that. When you have that thought even for a second that’s breaching your independence in mind.

This scene actually embarrassed me. Having a title as “auditor” is actually heavy. You have many policies and principals to obey. The auditors in this drama just breached them all. People might think auditors are just like regular accountant who can turn an ugly financial statement into a pretty financial statement. Meanwhile it’s not. It costs us our whole career.

In episode 15 and 16 we saw pileeeeesssssss of paper on the auditor’s desk. I guess they were listings? Because… let’s see below caps.

Also, throughout the show they printed out the details of their every account. Like, they printed out so many documents. Maybe Companies that only provide hardcopy listings to their auditor still exist in this world with advance technology. 1.8 years being an auditor I’ve always gotten the listings in electronic form. Except when I have specific items from the listing that I want to check further. I check it to its original documents. Most times it’s in hardcopy form. But many of the Clients also have softcopy version of it.

Next! The auditing process is not that easy, simple, and fast. In drama the audit period was from 15 March to 22 March. It’s exactly 8 days. 6 days if we take out the weekend. That’s crazy. It’s only doable when the Company is small. But TQ Group is a giant company. It had many subsidiaries. Even though the audit team was made up of 6 people it’s impossible to finish an audit for a conglomerate company in just 8 days. Unless they work 24 hours for 8 days straight. But even, it’s still impossible.

6 working days only?!!

Let’s say that 6 days were their fieldwork only. But watching the timeline I’m pretty sure the writer intended to conclude the audit process in those 8 days.

After the hectic audit period, we can conclude the Company’s financial standing. We have our audit report.  The main item in our audit report is our opinion. Read more about the opinion on google. Audit report is not that simple to finish. Especially for a giant company like TQ Group.

In episode 16, General Manager Choo said Chief Kim’s new position as undercover investigator (internal auditor) was extremely good. Internal auditors do have higher and stronger power over the management compared to external auditors. True that they can -even- dismiss an executive. But I don’t think they can take part in external auditors audit job. We do get internal auditors report though. If I’m not mistaken. I do not have Client that has its own internal auditor team.

That’s all the things I want to share about auditor and audit activity. These are only the basic things about this job but hopefully can give you better understanding about this job. And if some of you want to apply as one, think about it carefully. But it’s a great jumping stone for your career 🙂

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