Summary of The Auditor free essay sample

The Auditor by James K. Loebbecke tells a story about the life and career of an auditor named Jack Butler. The book shows Jack’s career from his education all the way to his promotion to partner. Loebbecke designed this story about Jack as a teaching tool to give students an understanding about the life of an auditor. The story begins with Jack’s promotion to partner and how it was bittersweet for him. Jack is excited for the promotion, but is also nervous about the extra responsibility partners have and the stress it can bring on family life. He is also upset because his friend Don was considered for the promotion too, but was turned down. In these chapters, Loebbecke shows the good and the bad that comes with partnership. There are financial rewards and prestige, but also potential strain on friendships and family. For the rest of the book, the author unfolds the events that take Jack closer to his partnership with The Firm. After Jacks promotion, the story goes back in time and shows all the events that led to the promotion. It begins with Jack’s education and then to recruitment at The Firm. During Jack’s college years he gets advice from his father and Wally Garner, a faculty member. At that time Jack takes an interest in accounting and Wally takes Jack underneath his wing and gives Jack advice in planning a career in accounting. Wally gives Jack great advice on the differences between MBA versus MPrA and the differences between the types of accounting careers as Jack prepares for graduate school. With Wally’s assistance, Jack decides to pursue a MBA and attends graduate school. There he participates in Firm night where he meets several potential employers and sets up interviews with several firms. This is when Jack meets Quentin â€Å"Bear† Barnes an important character in the book and Jack’s future boss at The Firm. Jack interviews with Barnes and after some consideration between different firms he decides to work for Barnes. In these chapters, the author shows how it is beneficial for a student to build relationships with faculty who can help guide them as they prepare for a career. Also, he shows the importance of attending firm night to begin networking with potential employers to increase chances of employment. As the story continues with Jack’s early days with The Firm, he learns the ropes of public accounting and the life of being an auditor. Also, â€Å"Bearisms† are introduced in the book. â€Å"Bearisms† are a series of thoughts and advice of Quentin Barnes which he gives throughout the book to guide Jack and new recruits in their new career. Jack attends a training school in Michigan with other new recruits to learn auditing procedures. Once he is finished with the training school, Jack is assigned to his first auditing job with a cement company, Rineholt. At Rineholt, Jack learns a lot, but is overwhelmed. Jack is reassured by Bear through one of his â€Å"Bearisms†, â€Å"If you don’t feel that you’re in over your head, you aren’t making sufficient progress. † Jack also faces his first ethical dilemma at Rineholt. He discovers the petty cash custodian, who is a single mother, has been borrowing money from the fund to help pay her bills. Jack feels empathy for the mother and doesn’t want to feel guilty if she gets terminated, but knows he must do the right thing and report it to the company. Also at Rineholt, Jack gets his first real test of professional skepticism. He is observing cement inventory stored in silos with an employee named Walt. Jack gives a measurement to Walt in order to calculate the volume of cement in the silos. After the measurement, Jack notices that Walt writes down a different number. When Jack asks Walt about it, Walt tells Jack about â€Å"dead-fill allowance factor. † Jack was unsure about the explanation, so he talks with management. Jack finds out that Walt was changing the measurements. The author uses these scenarios to demonstrate some of the difficult aspects of the auditing professional. Auditors must be steadfast in their duty to the client. They cannot be afraid to be skeptical of the practices of their client or be afraid to deliver bad news if necessary. The author puts Jack into some situations to show examples of how auditors may encounter difficult situations with clients and personnel that will require much consideration. The first example of a difficult situation for Jack is when he works underneath Stan Wright on the Ardmore audit. Stan had a reputation for demanding a lot from his subordinates and being unreasonable regarding working conditions. Stan was working Jack and several other auditors very hard to the brink of exhaustion. Barney, Jack’s coworker, was having a nervous breakdown from exhaustion and from his wife threatening to leave him because of work. Jack understands the situation and tells Barney only to work forty hours per week despite Stan’s orders. In the end, the partner in charge sides with Jack decision, he then gives Jack a favorable review, and fires Stan for his abusive managing style. Another example of a difficult situation for Jack is when he seniors a construction audit under the tax partner, Roy Shantz. Jack was reviewing the company’s project completion projections and finds that the company needs to book some loses. He brings the matter to Shantz’s attention. Shantz tells Jack that he will have a meeting with the owner, but Jack is not allowed to attend. After the meeting, Shantz tells Jack to use his numbers which show a profit and not a loss. Jack has a bad feeling about this, but reluctantly does what he is told because a partner told him to do it. Eventually, the company is sold and goes under. The Texas company that made the purchase brought a suit against The Firm because of the bad numbers from the audit, but it was settled. This could have been a bad situation for Jack if the suit had not been settled. Jack learned from his mistake for not sticking to his decision and for what was right. Another common situation where experienced auditors can find themselves is when they are approached by an outside company trying to recruit them. Jack finds himself in this situation after working with The Firm for a few years. The CFO of the cement division of Rineholt offers Jack a position that will give him a higher salary and more benefits. Jacks confides with Bear to try to figure out what is best for Jack. Bear asks Jack several critical questions that cause Jack to think hard about this decision. In the end, Jack decides to stay with The Firm because he feels public accounting is more fulfilling to him than an industry job. Not long after Jack turns down the offer from Rineholt, Jack is promoted to manager. Jack is told that he needs to start thinking like a partner in order to move to the next level. Jack understands that part of the partner’s job is to acquire and maintain clients. Jack gets advice from his dad and Bear. A piece of advice he is gets it to maintain a network in order to get new business. Jack updates his contacts list and contacts some alumni. Jack gets a referral from one of his alumni contacts about a company named FFI who is ready to make an IPO. Jack and Bear make a proposal and get the client. Unfortunately, many problems arise in the audit and Jack realizes this maybe his toughest audit and suspects possible fraud. He feels they will need to do more work and will not be able to finish the audit before the proposed IPO date. CFO and owner explain everything is fine and Bear and Jack need to finish up the audit. Bear refuses and tells them he is not willing to take the chance of being sued. The owner makes a roundabout threat of changing auditors because of Bear’s refusal to go along. Bear then tells Jack another one of his â€Å"Bearisms†, â€Å"It’s better to lose a client than to make a decision that you worry may be wrong. † Jack learns a lot from this audit because of the difficulty and new problems he encountered. He admits that the â€Å"real learning† come from messy audits like this one. The author uses this example of a messy audit to show two points. The first one is to embrace a difficult audit as it is a great learning experience. New problems create new ways of problem solving. Second, never let a client compromise your integrity even if it means that you lose the client. As the story comes to the end, the office is shaken up when everyone get the news that Bear had a heart attack. Because of the heart attack, Bear decides to retire within several months. In the meantime, Bear wants to start grooming Jack to become the partner in charge at the office. Bear even inquires about Don possibly becoming a partner in a year. Jack contacts Don and tells him about the situation at the office. Don informs Jack that he will be taking a job with the SEC in Washington, D. C. Jack is sad that Don is leaving, but he is also happy for him at the same time. The story ends as Jack lays in bed thinking about what the future will bring at The Firm.