How can we improve our skills for analyzing financials and budget? Are these skills necessary for an auditor?

Auditors need to be alert to and question every change that is happening around you. So analytical skills is obviously necessary. As far as analyzing financials is concerned, external auditor needs to be competent in that. For internal auditors, it depends if the management expect you to be proficient in financials and assist them in understanding financials then yes one need to have that skills. However I believe every auditor shall have basic understanding of financials and analyzing the changes in financials over period and years

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It is the basic quality of an auditor. The auditor must have a complete and thorough knowledge of the accountancy. To understand the accounting details he can apply his or her knowledge and skill. It is only possible if he or she has a sound background in  accountancy and budgeting and professionally competent. The auditor should be at home in all the management accounting , cost accounting and general accounting. The auditor must understand how the organisation prepares the budget otherwise he will not be able to audit the various heads of the budget.

So we can improve our skills by reading the necessary literature relating to financial and budgeting and more so this important for the auditor.

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Financial Analysts do not need to wait for a lot of long-term formal training in order to improve their efficiency, effectiveness, and contribution to the organization, all that is required is taking the time to have a curious mind and ask lots of question, learn the tools of the trade, understand the organizational environment, communicate with business partners and develop technology familiarity.

Regular exercise of following areas can improve our analysing skill:

- Critical Thinking - It is important in life. It helps you to think creatively – 'outside the box'. It keeps you from becoming narrow. Critical thinking is expected of you in higher education. It can lead to developing your judgement, evaluation and problem solving abilities. Using logic and reasoning to identify the strengths and weaknesses of alternative solutions, conclusions or approaches to problems.

- Complex Problem Solving - Identifying complex problems and reviewing related information to develop and evaluate options and implement solutions.

- Systems Analysis - Determining how a system should work and how changes in conditions, operations, and the environment will affect outcomes. New developments in professional standards and regulatory and legal requirements, and how they are reflected in the firm’s policies and procedures where appropriate.

- Systems Evaluation - Identifying measures or indicators of system performance and the actions needed to improve or correct performance, relative to the goals of the system.

- Learning Strategies - Continuing professional development, selecting and using training/instructional methods and procedures appropriate for the situation when learning or teaching new things.

- Judgment and Decision Making - Considering the relative costs and benefits of potential actions to choose the most appropriate one.

- Mathematics - Using mathematics to solve problems.

- Active Learning - Understanding the implications of new information for both current and future problem-solving and decision-making.

- Monitoring - Monitoring/Assessing performance of yourself, other individuals, or organizations to make improvements or take corrective action.

- Reading Comprehension - Understanding written sentences and paragraphs in work related documents.

- Writing - Communicating effectively in writing as appropriate for the needs of the audience.

- Speaking - Talking to others to convey information effectively.

- Active Listening - Giving full attention to what other people are saying, taking time to understand the points being made, asking questions as appropriate, and not interrupting at inappropriate times.

These areas of improvement are also required for an auditor for better understanding and analysing of financials and budget because auditing is also closely related with other functional fields of business such as finance, production, marketing, personnel and other general areas of business management. The auditor’s choice of analytical procedures, methods and level of application is a matter of professional judgement. With the overgrowing field of auditing, the financial services sector occupies a dominant place in our system. While in general terms, the auditor is expected to have knowledge about various financial techniques such as working capital management, funds flow, ratio analysis, capital budgeting etc. The auditor is also expected to have a fair knowledge of the institutions that comprise the market place. The knowledge of various institutions and Government activities that influence the operations of the financial market are also required to be understood by an auditor.

I AGREE WITH THE Answer added by: frank mwansa   ACCOUNTING LECTURER 30 days ago

The characteristics of a good auditor start with the basics of sound technical ability and solid ethical foundation. A good auditor considers those as baseline and work to grow beyond the “rules and regulations” mindset of our profession. Attaining and maintaining the characteristics mentioned in this article require a personal commitment but are crucial to the auditor’s long term success. 

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I agree with the answer Ms. Amyna Hassan

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