Why you should always be truthful to your financial auditors

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Financial auditors conduct interviews as part of the job, to learn about a company's processes and policies so that they can better test them. Here are three reasons why you should always tell them the truth, the whole truth and nothing but the truth.


A few years ago, I met a young professional at a networking session whose company had recently undergone their annual financial audit.

"The auditors are so stupid", she exclaimed, "when they interviewed me, they believed everything I said!"

"I even made things up to see if they'd catch on, but they never did."

Unfortunately for this young lady, there are three real reasons why you should be truthful to your auditors.

1) They document everything you say

Auditors maintain working papers, which are used to document what they audit and the evidence they obtain. These include who they interviewed, when they were interviewed, along with what they said.

In the event of a conflict or court case, the working papers will immediately come into scrutiny. If it is clear that information given during the interview is false, the interviewee may get into some very hot water.

2) They'll likely find out

When auditors do their job, they will reconcile several sources of data. They will look at process documentation, and hard numbers, in addition to conducting interviews. If something doesn't quite line up, they will continue to dig.

Since it's their heads on the line if they get it wrong, coupled with the collapse of Arthur Anderson, WorldCom and Enron still fresh in everyone's mind, there is incentive to dig deep.

3) They have a direct line to the boss

Remember that auditors have a direct line to the C-suite. If an interview continually provides false information, they may choose to inform the CEO.

In addition, audit fees are calculated based on an hourly rate. If a member of staff causes the auditors to go on a wild goose chase and test the wrong thing, then they may also go back to the CEO for cost overruns along with an explanation of why. When bosses find out who was responsible for an extra bill on his desk, they're usually not happy.



Photo credit: Matt Hurst

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Karn G. Bulsuk: Full Speed Ahead: Why you should always be truthful to your financial auditors
Why you should always be truthful to your financial auditors
Financial auditors conduct interviews as part of the job, to learn about a company's processes and policies so that they can better test them. Here are three reasons why you should always tell them the truth, the whole truth and nothing but the truth.
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Karn G. Bulsuk: Full Speed Ahead
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