My Senior Keeps Changing Her Mind

Junior Auditor Series: #01

The Message That Confused Her

Mandy was in her second year of audit and had recently been assigned to audit a software company. Her senior told her to test 15 contracts for appropriate revenue recognition in line with IFRS 15. Mandy completed the testing, documented her results, and moved on to the next section.

Three days later, her senior called her while she was at the client's office.

Senior: Hi Mandy, we need you to test 40 contracts instead of the planned 15.

Mandy: Sure, I can do that. Can I ask why the number went up so much?

Senior: Robin found out from the client that some of the terms in certain contracts with customers were revised, so let's just play it safe and cover more ground this time. Remember to scrutinise the terms for the delivery of the software and all other services that come with it.

Mandy: Oh, okay. I'll get started.

Mandy had tried asking, but she hadn't really got an answer. 'Play it safe' and 'cover more ground' told her little about why 15 contracts had suddenly jumped to 40. She didn't push further. She didn't want to look incompetent, or annoy her senior. So she got started.

Senior: Hey Mandy, how's the additional testing going?

Mandy: Good news. Almost done. I've put in about 16 extra hours on it so far.

Senior: 16 hours? That's too much, Mandy. You should have told me, I would have brought the number down to 30.

Mandy wasn't sure what to say. She was confused. Two days earlier, 40 contracts had seemed like a simple instruction. Now, apparently, 30 would have been sufficient, and 16 hours was deemed too many. If 30 contracts would have worked, why had she been asked to test 40 in the first place? And if the hours mattered this much, why had nobody mentioned that before she started?

What Mandy Didn't Know

A few days earlier, Robin, the audit manager, learnt from the client's sales manager that certain software contracts had been revised during the year. The changes affected how the performance obligations were identified, which could change the timing and amount of revenue recognised under IFRS 15. Robin therefore asked the audit senior to extend the scope of testing of the software contracts to detect any premature recognition of revenue. However, Robin didn't specify how much the testing should be extended, so the audit senior assumed it meant a substantial increase in the number of contracts.

The audit senior asked Mandy to test 40 contracts without estimating how much additional time the extra testing would require. Neither Mandy nor her senior had discussed, in advance, what a reasonable amount of extra time looked like, so they didn't have an agreed number to measure against.

Why This Feels So Personal

Audits change because risk assessments change, and that is normal. The deeper problem is that the reason for the change was not properly explained, and the expected hours to complete the work were not agreed upfront either. Feeling confused twice in one week was not a sign Mandy was bad at her job. It was a sign that nobody had explained to her why the number changed, and nobody had told her what counted as too many hours either.

What This Costs You If You Miss It

When the real reason for a change in work scope isn't explained, and the expected hours aren't agreed upfront, two problems usually follow. The first is unnecessary time spent performing more work than was actually needed. The second is the hit to Mandy's confidence in her work. Mandy may start doubting her own competence, and think twice before reporting her hours honestly next time to avoid negative comments from her senior. This is exactly the kind of moment that quietly causes a junior to under-report hours.

What Mandy Can Do Differently Next Time

Mandy can do four things in the future.

The first is to clarify 'let's just play it safe' with the senior. That phrase is vague, and Mandy is entitled to clarify, tactfully, as a learning question rather than a challenge: 'The scope extension makes sense, I just want to understand the rationale behind the number of contracts to test. Was there something specific behind 40 rather than, say, 25?'

The second is to agree the expected hours upfront with her senior: 'Roughly how much extra time do you think this will take, so I know if I'm on track?' And once Mandy has a number, even a rough one, she has something to measure her own progress against.

And the third is to alert her senior to any potential budget overrun as she performs the additional work: 'I'm already about 10 hours into the extra testing, just wanted to flag it in case the scope keeps expanding.'

And the fourth: if Mandy has already incurred the hours, the wiser approach is to work with her senior on a practical solution. When her senior said, '16 hours is too much, you should have told me,' Mandy's instinct was to go quiet. A better response doesn't argue and doesn't apologise. It simply presents the fact and invites the senior to work out a solution together: 'I have already incurred 16 hours for the additional testing, can we agree on how many hours I can charge to the job and what I should do with the remaining hours that cannot be charged?'

The lesson for Mandy is to understand the purpose behind additional work, agree on the expected hours upfront whenever the scope changes, and alert her senior early if the work is likely to exceed budget.

 

If moments like this feel familiar, Is It Them? (Part 1): Working With Your Audit Senior walks through more real situations just like this one, and what you can do differently next time.

 

Your Audit Mentor