I’m Stef Jacobs – 24 years old – born in the East-Brabant village Boxmeer. I moved to Tilburg for my Bachelor Business Economics and my Master Accountancy. Currently I’m studying the Post Master Accountancy and I’m an Assistant Accountant at BDO. I would like to share my first experiences in the auditteam of BDO. How did I come in contact with BDO While studying I was an active member at the student association Asset | Accounting & Finance. During this period I became more aware about a future career and I wanted to gain some practical experience, next to the theory we get in the lectures. The conversations I had with employees of BDO made me instantly feel that BDO is a professional organization with a pleasant work atmosphere. That’s why I decided to apply for job opening for a work student at BDO. As a work student I worked three days a week at the Audit & Assurance unit in addition to the lectures at the university. This way, I already had a look behind the scenes at BDO, I became acquainted with the work of Accountancy and I had been to different clients. I really liked it there, so I decided I wanted to write my Master’s thesis at BDO, which I did last year. As of September I am working as an Assistant Accountant at BDO. My first weeks The first two or three weeks were marked by introductions, presentations and training. Together with all new colleagues of BDO the Netherlands, we went to Lunteren for several days, where we followed several training courses. Obviously, this was alternated with other activities to get to know each other better. After the introduction weeks the interim period began. During this period, we went to the customer to identify the administrative organization of the customer and describe the controls and evaluated them. Customer Portfolio BDO has a very diverse clientele. Of course, many profit organizations are included to our customers, but in addition, BDO is also very active in other sectors such as healthcare, municipalities and housing associations. My clientele is a mix of different industries. I personally find that quite interesting. This makes the work very diverse and challenging and definitely a lot of fun. You will draw a clear picture of the differences between different branches and you can experience what industry you really like. Ultimately, this also offers opportunities to specialize in a specific industry. I don’t know yet if I want to specialize let alone what industry. First, I want to orient myself broadly by working with all kinds of customers. What I find important in an employer I think trust and responsibility are very important. An employer must have faith in me and let me have my own responsibilities. I’ve experienced that trust during my time as a work student. I went to customers and was handed control related activities during this period. I also find it very important that there are possibilities to develop yourself and that people are professionally critical. My more experienced colleagues review my work and give me tips for improvement. This helps me tremendously in my personal development. Other aspects that I consider important are a pleasant working atmosphere with friendly colleagues and pleasure in your work. “Look for things that challenge you.” My ambitions In terms of education I want to be a chartered accountant. I also want to continue developing within BDO by picking up new and challenging work. In the coming years I want to see as many different branches and customers as possible, so I know what really suits me. Maybe than I know if I want to specialize in the future. Also it seems like fun to guide new colleagues at one point. I’ve not yet decided whether or not I would like to become a partner at BDO in the future. I feel that I can learn a lot at BDO and the company suits me. Tips I would recommend anyone to think about what you would like to do in the future, in time. Look for things that challenge you. Because I was an active member of a student association, I came into contact with fellow students and several companies. It has increased my network and given me a lot of insight and motivation. I would therefore always suggest students to do more than just attending lectures, so you will find out what’s right for you.
The use of advanced data analytics within the current auditing standards
In a recent publication ‘Exploring the growing use of technology in the audit, with a focus on data analytics’, The International Auditing and Assurance Standards Board (IAASB) describes the opportunities and challenges regarding the use of data analysis in the audit of the annual reports. With their publication, it seems like the IAASB wants to trigger the discussion about data-analytics in connection with the current auditing standards. This is crucial, since the possibilities for the use of data-analysis might be very promising, but it is still a question how well they fit into the current auditing standards. The motivation for writing this column is the increased attention towards advanced data analytics in academic literature and in the accounting profession. Data analysis is not discussed as such in the “Nadere Voorschriften Controle en Overige Standaarden” (hereafter: ‘NV COS’), the Dutch Standards on Auditing. The NV COS seems to be outdated in her expression about electronic data (Snoei and Van Amerongen, 2015). However, the current auditing standards provide space for collecting sufficient and appropriate control-information using data analysis (Eimers and Van Leeuwen, 2015). In this column, we explain how data analysis fits in the current auditing standards. The additional integration of data analysis in the domain of the NV COS can be considered as a digitalized form of substantive analytical procedures in combination with test of details (NV COS 520). Substantive analytical procedures combined with a test of detail is considered as a substantive audit procedure to detect deviations on the level of assertions. The applications of data analysis as input for risk assessments will not be covered in this column. NV COS 520 about Analytical procedures From this assumption, we can apply the principles according to NV COS 520 in the context of substantive analytical procedures related to advanced data analytics. The substantive analytical procedures consists of four phases (standard 520.15): 1.The pre-development of an expectation; 2.The pre-determination of a threshold for deviations; 3.The comparison of the expectations and the reality; and 4.The evaluation of the explanations for potential deviations through source documentation detail control, keeping the materiality concept in mind. An important aspect of the substantive digits is the determination of the appropriate aggregation level of the analysis. In other words, the analysis which gives the best insight to detect material deviations. “Merely gathering information will not provide sufficient audit information to ensure that no material deviations exist.” The application of analytical analysis in the context of substantive analytical procedures offers important support for an audit, where the client database which contains all the transactions of the organization, is used as much as possible. Although applying the data analysis in the audit of the annual report provides great insights in the business processes, an isolated application without follow-up does not provide sufficient audit evidence (NV COS 500). In other words, merely gathering information will not provide sufficient audit information to ensure that no material deviations exist. NV COS 530 about Sampling Since merely gathering information from management is not sufficient as audit evidence, we have to perform additional substantive procedures. The NV COS 530 provides some information on sampling that we can apply to the deviations concerned. Note that NV COS is talking about ‘stratifying’ here: dividing the population into subpopulations. The NV COS 520 requires the auditor to determine a threshold for the deviations, before he draws the sample. To determine the deviations the auditor can use hypotheses to define what type of deviations should be applied to the identified deviations and determine what type of audit information excludes the hypotheses. The sample size has to be determined after the possible deviations are identified. The formula that is used for audit risk has endured some critique, since it is not a real formula, but it gives an indication how large the sample should be. The formula: ACR = IR x ICR x CR x SR, where SR is sampling risk. Assuming that we want to reduce the audit risk to 5% and we already know the inherent risk (IR), the internal control risk (ICR) and the analytical analysis risk (indicated with CR) for the subpopulation, we can calculate how large the sample risk is allowed to be and use this as a basis to determine the size of the sample. The NV COS states that with an audit on the subpopulation, only an opinion about this subpopulation can be formed and that it is not allowed to make a judgement about the general population. Composing a sample of the subpopulation allows us to form a statement about mistakes in the subpopulation, but it cannot be used to form an opinion about the complete population. Very important to mention is that we can never claim that the untested subpopulation does not contain mistakes. An option for us to create an acceptable level of audit control risk (ACR) for the population is to adjust the analytical analysis risk (CR) to a lower amount and combine this with the inherent risk and the internal control risk for the (still) untested subpopulation. However, maybe we need to execute another sample, of which the size will be a lot smaller than for the subpopulation, because of the stratified deviations. Professional Skepticism However, the professional skepticism of the auditor still remains the most important aspect to verify and document the data in a trustworthy manner. The NV COS 500 requires us to establish the reliability (completeness and accuracy) of our data before we use this information in our audit by focusing on the quality of the internal control. We have to determine the reliability based on detail control when the internal control is not sufficient to guarantee the reliability of the obtained information. Arnold Westgeest and Marc Buijs are one of the pioneers in the use of data analysis in the audits control. From our practice, there is a wide range of appealing examples of completed audits, where data analysis techniques have been used successfully. About the authors Arnold Westgeest finished his post
Accountants, are they just boring cowards?
On August 26, ‘Financieel Dagblad’ published a front-page article titled: “Accountants became cowards”. When many people already had the idea that accountants are boring. The profession is presented boring, while it really is a versatile and dynamic trade. For the article in the ‘FD’ a number of acknowledged CFO’s from for example Jumbo, Vebego and Molecaten are interviewed. One of their messages is that accountants keep showing less additional value to their customers because they are too busy with implementing the rules. After my study Business Economics in Tilburg, in 1993, I started as an assistant-accountant at Deloitte. During my postdoctoral study to become a register accountant we spoke a lot about the gap of expectations between the accountants and the society. After all those years it seems that our profession still has not been able to close this gap. In fact, sometimes I think that the gap is even growing, even more after reading the article. “After all those years it seems that our profession still has not been able to close this gap. In fact, sometimes I think that the gap is even growing…” We have to explain to our clients and the society better why we do certain tasks, why we don’t do other tasks and what our responsibilities are by doing these tasks. Besides, these tasks are often suggested by the law. We still do not explain enough; because of that sometimes there isn’t a lot of understanding. What stays special, is that we fulfill tasks for the social intercourse, but that our customers have to pay the bills. It’s impossible to avoid tensions like this. I think it goes too far to qualify accountants as cowards, just because we comply with the rules. However, I can understand the article. When accountants are talking about quality these days, most of the time they mean staying with the law. In contrast, our customers think of a more broad definition of quality. Indeed, they want more added value for the bills they’re paying, like soundboards and brainstorming on a strategic level. I think one aspect doesn’t have to exclude the other. Accountants have to look for a new balance, together with customers and the society. By doing that, we can finally close an important part of the gap of expectations. People who think that accountants only check boxes, are missing an important part of the trade. Still I would like to return to the boring image of accountants. People who think that accountants only check boxes, are missing an important part of the trade. I certainly don’t see myself as a boring accountant. Give me one more trade, where you can look into the deepest roots of an organization? And not just at one organization, but more! An accountant has to be good in communication skills, he or she needs to have a professional and critical attitude, has to be good at working in a group and has to be good at analyzing. An accountant has to go into the business model of the customer with great depth to check whether the income flows are complete or not. An accountant has to converse with management teams and supervisory boards about risk management on a strategic level. These are only a few examples, which illustrate that an accountant has a lot of challenges. Herewith, I encourage you to get a better knowledge about the different elements of the trade. Despite the publicity, which is often negative, I can’t imagine a trade more beautiful than this. I still get a lot of energy from my work, my customers, but also from receiving new starters in our company. It is nice to witness their vision on the work we’re doing. The fact that accountants are in the media on an almost daily basis, shows that we apparently are relevant. Otherwise we wouldn’t see that many people worrying about the job we’re doing. I think I gave you enough argumentation to show that accountants aren’t cowards and absolutely aren’t boring. In any case, I hope to keep enjoying my job for many years and I hope that I can educate some of you to become an accountant at Deloitte!
Irrationality in the supermarket
The supermarket seems to be a center of irrationality. On average, every Dutch pays about three times a week a visit to such an environment in which consumers are seduced to irrational behaviour. About 87% of the Dutch report to take account of sales offers in their purchasing behaviour. One would expect purely rational behaviour from the Dutch consumers, who are known to like discounts. However, in practice a different result emerges. Supermarkets are full of deceptions that unnoticeably influence one’s behaviour. The supermarkets of Albert Heijn even sell ‘loss packages’ (the opposite of economy packs). It implies that consumers show some irrational behaviour in the supermarket. In economics, consumer behaviour is interpreted by means of the “homo economicus”. This concept portrays humans as purely rational and self-interested in their own benefit. However, this does not correspond to the numerous studies into irrational human behaviour. It seems that people would rather avoid equal losses than have equal gains (loss aversion), and we attach relatively more importance to something when it is already in our possession (endowment effect). Behavioural economics, which is a combination of economics and psychology, relates this bounded rationality to economics and is playing an increasing role in contemporary economic science. ‘’However, it may be the case that this economy pack turns out the be a ‘loss’ pack.’’ The economy packages of Albert Heijn show such a deviation from the “homo economicus”. These packages bundle products and are sold at a lower price, i.e. a lower price per kilo or per litre. However, it may be the case that this economy pack turns out the be a ‘loss’ pack. Take for example the apple juice packs of Appelsientje. When buying a single pack you pay € 1.17 a litre, while a litre in the economy package is 2 eurocents more expensive. It also appears that other products are (or have been) subject to this phenomenon, e.g. wipes of Zwitsel or Lipton Ice Tea. Despite the financial loss to the consumer, these ‘loss’ packs are being sold. It clearly demonstrates that the consumer is not fully rational. There is actually a flip side of the coin: the supermarket also exploits the consumer by using these misleading economy packs. As about 40% to 60% of total spending is defined as impulsive buying, supermarkets try in many other ways to encourage consumers to irrational purchases. Placing the fruit and vegetable department at the beginning of the store has several effects: the supermarket shows that it has fresh products available, the bright colours of the fruit provide consumers a good feeling, and after buying healthy products consumers will feel less guilty when buying unhealthy products. Furthermore, research has shown that people who enter a grocery store from the right (and counter clockwise walk through the store) spend on average about $2 more. Most people are right-handed and will therefore be more inclined to buy. Finally, the placement of the product is of great importance. Shelves at eye level, and at the beginning of an aisle draw great attention. Supermarkets place regular products in the middle of the aisle so that consumers have to walk past other less well-known products. Buying loss packages is a striking example of irrational consumer behaviour. By purchasing multiple similar products, the consumer expects to be saving money, but in some cases the opposite is true. Due to the many indirect ways in which supermarkets try to influence consumers, it seems almost impossible to limit oneself to simply rational purchases in supermarkets. Supermarkets have become centres of irrationality. Be aware of these indirect and misleading ways that may influence you as this awareness will keep you from buying ‘loss’ packs. Max Pepels is a blogger at econooMax. Do you want to read more of Max? Visit the website of econooMax!
Lessons from a board year
Looking back at my chairmanship at Asset | Accounting & Finance The editorial board has asked me to write an article about last year, in which I was chairman of Asset | Accounting & Finance. Let me start with emphasizing that this article is not meant as a sales pitch for doing a board year, nor is my goal to attract new board members. As a student, you will have heard enough already. Besides, it has never been a problem to attract new board members for Asset | Accounting & Finance (unlike many other student associations). I think because many people know that a board year at A&F is a valuable asset. Such a year is taken seriously, and is more than just ‘a year of fun’. You may have noticed I find it hard to talk about it without sounding like I am doing some sort of sales pitch. This is probably because my board year was amazing. “A board year is just a wasted year in which you spend most of the time in bars” In 2013, I became vice-chairmen of the Investment Night committee. Together with four other committee members I had eight months to organize a symposium on investing in the stock market. Even though I really liked the work, I did not attend that many activities organized by the association. I barely knew the board members and I had no idea what they were doing in their offices all day. The only time I saw them was at the few drinks I attended. This led me to believe a board year was just a wasted year in which you would spend most of the time in bars. During the evaluation conversations that are held with all active members individually, the board asked me if I would be interested in a doing a board year (all members are asked this question). I convincingly replied ‘no’. However, about one year later, after the strike of the gavel, I was appointed Chairman by the General Members Meeting of Asset | Accounting & Finance and was giving a presentation about the policies for the upcoming year on which we had worked in the three preceding months. “I actually had no clue what was awaiting me” When I look back now, I can say I actually had no clue that I had just set foot in a 22nd century rollercoaster, waiting to be launched. Two weeks after the general members meeting for example I was unexpectedly having lunch with the President and Rector Magnificus of Tilburg University, together with another board member. We spoke about the new policies of the university and the role which our student association should fulfill. In addition, they shared some lessons from their board experience and we were told that is was inappropriate that we were not wearing ties (which we had torn off just before they entered the building because we could see from the window that they were not wearing ties either). Two weeks later, I gave a presentation to all Master Accounting and Finance students, explaining them the opportunities we could offer them and why it is so important to seize them. Shortly after that, I organized and chaired a meeting where I welcomed the general directors of the Accountancy department of Tilburg University and the Big Four Accounting firms (EY, KPMG, PwC and Deloitte) at one of the most beautiful conference halls of the university. We discussed the future of the accountant’s profession and the university’s role in it. We also discussed the quality of students that got their degree at Tilburg University, and we compared it to students of other universities. The meeting went perfect, and as the icing on the cake, the Big Four stressed that there is a big difference in the quality of students who had been active at Asset | Accounting & Finance, and students that hadn’t. “We are comparable to a company with 110 employees” Next to these highlights there was also the daily course of business. When I have to explain to people what I actually did on an average day, I like to compare the student association with a company. A company that acts as an intermediary between students and the business arena. A&F has about 110 ‘employees’ (committee members) and a (sometimes double) fulltime board consisting of six people. Like in most companies, the board decides on the policy and sees to it that it is properly executed. To get a broad idea of what this policy covers: it is a booklet containing about 50 pages and includes everything the association does: an overview of the activities portfolio, working out strategies for acquisitions (new partners), budgeting, social media, long-term vision, active member’s policy, and so on. Besides that, the board coordinates the committees which consist of four to seven people (it is like leading a team or taskforce). Every committee has one specific task, such as organizing a study trip to Rio de Janeiro, delivering content for our blog, or organizing a symposium about accountancy. And where a company relies on its employees, we rely on our amazing committee members. That is why we try to make it as fun and valuable as possible for our active members by organizing (in)formal activities, trainings and drinks. “The decisions you make can amount to tens of thousands of Euros “ It took a while for me to really realize how big the budgets were. Sometimes the decisions you make can amount to tens of thousands of Euros. This was for example the case when we had to decide whether to launch a new website that would contain a native CRM system that would simultaneously administer all 6000 members, or when we had to negotiate with Studystore about a new contract for our students to buy books at a discount. Overall, big decisions, with big consequences. That made me realize why recruiters value a board year so much. It may sound cliché, but I
Just Graduated: Anne de Smit
My name is Anne de Smit, 23 years old and I graduated for my master Accountancy last July. Since the end of August I am working for EY. From student to the working life At the end of August, a new adventure started. I said goodbye to the student life and entered the real working life. A couple of months later I can really say my life has changed. I replaced my bike by a new car, my sneakers by high heels and having a good night sleep is only possible in the weekend now. Especially in the beginning it took some time getting used to the working life. In my student life, I had few contact hours at the University and did many extracurricular activities besides my study. I was treasurer at T.S.A.V. Parcival, editor in chief of Faces-Online at Asset | A&F and I was an active member at student association I*ESN. I loved to sport and being busy with different things. Therefore, I decided to do my master in two years instead of one. In my extra year I did an internship at the intern audit department at Rabobank. The purpose of this was to gain knowledge and experience as it was not entirely clear for me what an accountant exactly does. Through the internship at Rabobank I got a better view about what an accountant actually does and I knew since that internship that accountancy was certainly something for me. After my internship I completed some deficiency courses for my Post-Master Accountancy and have been very active for Faces-Online. During this period, I interviewed multiple CFO’s and a CEO of big companies. This experience definitely helped me to give me more courage in contact with clients and I have had quite some interesting conversations with leaders of companies. Currently, I am still busy doing a lot different things, but now at the office or at the clients instead of at the University. The knowledge I have gained during my student life certainly is of great value for me today. My extracurricular activities, my bachelor Business Administration and my Master in Accountancy help me in all practical issues at the office today. Besides, I learn a lot of my fellow colleagues. That is one of the best parts of the job: “You get to know a lot of new people who want to help you with your development by working together on different cases.” That is one of the key things I found out at my employer. Before I decided to work for EY I have broadly oriented myself. By participating in in-house days and accountancy days organized by A&F, I connected with a lot of different employers to get a clear view about the differences between these employers. That is one of the reasons why I did my graduate internship at an office of the famous ‘Big Four’. At the end I got the opportunity to start at EY and I am sure this was the right decision. Post-Master Accountancy Besides my work I started my Post-Master Accountancy which means I am still a student for one day in the week. The Post-Master takes a lot of my spare time. Every week I have to hand in a case which usually takes at least a couple of hours to complete. A solid planning is needed considering I still want to work out and do fun things with my friends in my spare time. The famous student expression ‘starting on time’ certainly is applicable to this situation. Even more when you do not want to work until midnight. The working life took some time to getting used to, but I am slowly getting used to it. During the week I am working hard with my team and I learn a lot of things every day. In the evening there is still some time to go to the gym or do something for my study. At the moment of writing, I am looking forward to my journey to United States of America next week. A chance which I am aware of not everybody gets. I am very pleased to get this opportunity and therefore it is time to seize it!
