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The art of seeing what isn't there
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Hi <<First Name>>,

It's almost exactly twenty years since I first walked in through the doors as a graduate trainee with a 'big four' audit and consultancy firm. And it's almost exactly ten years since I walked out through those doors for the last time.

I learned a lot during that decade. Some of it useful. And, if I'm being frank, quite a lot of it somewhat less so.

But one thing that has stuck with me, and which I'm genuinely glad I've managed to retain in my grey matter, is (and please bear with me here) the audit assertion of completeness.

It's one of six assertions that help auditors to assess the reliability of a given figure in a set of financial statements. (The others, in case you're wondering, are existence, accuracy, valuation, ownership and presentation.)

The completeness assertion is about seeing what should be there, but isn't.

Imagine, for example, that I have a list of a company's bank accounts and the year-end balances in each one. I can check with the relevant banks that the accounts exist and that the balances are accurate. But this won't tell me whether my list of bank accounts is complete. There could easily be another bank account somewhere, potentially with a massive overdraft or an outstanding loan.

So while mere mortals content themselves with looking at what they're given and then going happily on their way, auditors learn to find ways to think beyond what's in front of them.

To determine whether the information they've been given is complete.

To see what isn't there.

Obviously, this isn't just an auditing thing. Whenever we read an article, peruse a report or examine a set of data, it's just as important to think about what's not there as it is to critique what is.

(As a graduate trainee, I very quickly twigged that more senior members of staff would invariably scrawl over everything I wrote with their red pen, crossing out adjectives and mucking around with the bullet points. But they never, ever asked me to include something that I hadn't.)

To help to see what isn't there, auditors have devised a couple of helpful techniques.

The first is to figure out what you expect to see before you actually see it. What do you already know about the subject? What angles would you expect to see covered? What salient issues would you expect to be addressed? If you know what you're looking for, you're more likely to notice if it's missing.

So for my bank statement example, I could look at what bank accounts, investments and outstanding loans the company disclosed last year, so that I know roughly what I expect to see again this year.

The second is to seek out alternative sources of information that might give you a complete picture. You can then compare whatever you have in front of you with these alternative sources and see if what you have looks complete.

An alternative source of information for my bank account example would be the banks themselves. And so I could write to banks with which the company has a relationship, or has previously had a relationship, and ask them what accounts the company has with them.

These techniques can be applied, with some obvious modifications, to pretty much anything. None of this is rocket science. We just need to take a step back and realise when we need to do it.

But it's surprising how frequently we focus so intently on what is there, that we forget to think about what isn't.

Perhaps something to reflect on before you reach for your red pen.

Stay safe,
Simon Perks
Director, Sockmonkey Consulting
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