Interview of Ford Rhodes Sidat Hyder

[harounkhan]

Paradigm, I am not sure how that is a deferred tax question. Maybe someone with a better knowledge like idiotboy and aimaad can explain us. When a company is facing losses, isn't trying to reduce costs and expenses the right way to minimize losses? The way he was asking us questions, I got the feeling whether I am applying for a professional auditor's job or a trainee's job. And you know what? He was only asking these difficult questions to those who had referrences. The guy who had an interview just before me was in the office for barely 5 minutes. And he said that he wasn't asked even one technical question. Just normal conversation, and he was given a contract. I don't think that I'll get a call, because he rejected me outright. If you weren't rejected by him, then you may get a call. Did he tell you anything about the test results? Maybe you cleared the test and that might give you some hope. I didn't clear the test and I think it was a problem. For all you guys out there, if you don't have a referrence, chances are you will get the articleship. If you have a referrence, then I am telling you, you'd be lucky one.

[paradigm]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by harounkhan</i>
<br />Paradigm, I am not sure how that is a deferred tax question. Maybe someone with a better knowledge like idiotboy and aimaad can explain us. When a company is facing losses, isn't trying to reduce costs and expenses the right way to minimize losses? The way he was asking us questions, I got the feeling whether I am applying for a professional auditor's job or a trainee's job. And you know what? He was only asking these difficult questions to those who had referrences. The guy who had an interview just before me was in the office for barely 5 minutes. And he said that he wasn't asked even one technical question. Just normal conversation, and he was given a contract. I don't think that I'll get a call, because he rejected me outright. If you weren't rejected by him, then you may get a call. Did he tell you anything about the test results? Maybe you cleared the test and that might give you some hope. I didn't clear the test and I think it was a problem. For all you guys out there, if you don't have a referrence, chances are you will get the articleship. If you have a referrence, then I am telling you, you'd be lucky one.
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exactly what i m saying, how did that question have anything to do with deferred tax. He did tell me about the test, i had only cleared accounting, reporting and IQ.

[aimaad22]

Wow, Ive got an interview tomorrow and your experiences are absolutely scaring the light out of me!! Though its a first interview and someone other than a partner will probably take it. I'd like to mention one thing though, its quite normal for partners do be rude and aggressive in interviews, they want to check your temperament and confidence. So it could be that person was doing something along those lines.

The question about deferred tax is indeed confusing. The one thing I can think of is that it affects unused tax losses. According to IAS- 12, deferred tax may only be realised if the entity can be reasonably sure of making taxable profits in the future. The losses shown in the financial statements could put this assumption in doubt and thus affect deferred tax. Im not a 100% sure though.

[faizicapri]

@paradigm and harounkhan
As per my knowledge deferred tax can be used to minimize losses because when the company incurred losses the deferred tax asset is created because of unused tax losses, as a result of which loss after tax is minimized.
i am very surprised by the behavior u faced by the partners of EY.
in AFF the behavior of partner was rude but not insulting.....
Best of luck for ur future and lets hope they might call u ..

[rakeshkumar]

I totaly agree with Aimaad that these would b partner's pressure techniques. but it sounds very sad n worrying that Haroun was outrightly rejected by the partner at the interview...
well i hav also heard that he's not asking any technical Qs from affiliates. on the other hand being rude with n pressurising the non affiliates.

@ Aimaad22 dear plz do share ur expereince of interview with us.

[rakeshkumar]

@ Harounkhan dear it was bad to read ur expereince.... n dear himmat mat harna.
better luck next time dear!!! n say AAL IZ WELL.

@ Paradigm wish u best of luck dear!!

[harounkhan]

@ faizicapri, thanks for the information. Creating deferred tax asset maybe one way to minimize losses, but it's not the only way, is it? What was wrong with my answer, that reducing costs and expenses could help minimize losses? The thing is that I did manage to answer all questions the partner asked me and the answers were not too far away from what he was telling me. The only difference is that his answers were more professional, with he mentioning all the relevant standards, and I was explaining my answers in my own words. But the main idea was there. I am not expecting any call, because I was rejected outright. But Paradigm could get one. I assume he is on the waiting list. They are inducting 35 trainees. If they don't find 35 suitable ones, then Paradigm might get the call. And there is another thing I'd like to ask you, the partner told me that I don't have enough knowledge and if he sends me to the client then I won't be able to carry out the audit properly. My question is that do these firms send out trainees to carry out the audit? I mean isn't that too risky? Because trainees, no matter how knowledgable they are, in the end of the day are trainees. They are not professionals. They are still learning the trade. Don't these firms send a professional auditor to the client and some trainees with him so those trainees can see how the auditor is carrying out the audit and learn from him? Because I believe that's how you learn, by working with the professional and closely observing him. I asked the same thing to the partner, and he didn't answer me. He just shrugged it off, and said that he is not impressed with my knowledge and he can't hire me.

@ RakeshKumar, do prepare the questions I have mentioned. Chances are that he'll ask you same questions, if he asks any. If you don't have a referrence and you cleared the test, you are in. The partner will not ask you any technical questions. Just normal conversation and he'll give you the contract. But if you do have a referrence, then what you need to do is downplay it when the partner mentions about it. Confidently, just tell him that you wrote the details of the referrence on the application form just for the sake of it, and the referrence wasn't much helpful. Try to downplay the influence of it. Good Luck !!!!

[mdanishraza]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by harounkhan</i>
<br />@ faizicapri, thanks for the information. Creating deferred tax asset maybe one way to minimize losses, but it's not the only way, is it? What was wrong with my answer, that reducing costs and expenses could help minimize losses? The thing is that I did manage to answer all questions the partner asked me and the answers were not too far away from what he was telling me. The only difference is that his answers were more professional, with he mentioning all the relevant standards, and I was explaining my answers in my own words. But the main idea was there. I am not expecting any call, because I was rejected outright. But Paradigm could get one. I assume he is on the waiting list. They are inducting 35 trainees. If they don't find 35 suitable ones, then Paradigm might get the call. And there is another thing I'd like to ask you, the partner told me that I don't have enough knowledge and if he sends me to the client then I won't be able to carry out the audit properly. My question is that do these firms send out trainees to carry out the audit? I mean isn't that too risky? Because trainees, no matter how knowledgable they are, in the end of the day are trainees. They are not professionals. They are still learning the trade. Don't these firms send a professional auditor to the client and some trainees with him so those trainees can see how the auditor is carrying out the audit and learn from him? Because I believe that's how you learn, by working with the professional and closely observing him. I asked the same thing to the partner, and he didn't answer me. He just shrugged it off, and said that he is not impressed with my knowledge and he can't hire me.

@ RakeshKumar, do prepare the questions I have mentioned. Chances are that he'll ask you same questions, if he asks any. If you don't have a referrence and you cleared the test, you are in. The partner will not ask you any technical questions. Just normal conversation and he'll give you the contract. But if you do have a referrence, then what you need to do is downplay it when the partner mentions about it. Confidently, just tell him that you wrote the details of the referrence on the application form just for the sake of it, and the referrence wasn't much helpful. Try to downplay the influence of it. Good Luck !!!!
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@haroon same thing happened with me...the partner was very rude..

[paradigm]

@mdanishraza, so u were rejected too or did he say they will call ?

[kamranACA]

Dears

Well, I will not comment on whatever is going on in the interviews, yet the question on Deferred Tax does not appeal in the way it has been asked. However, every one carries different perception, understanding and opinion and might that buddy be knowing something out of the box.

An entity has to recognize the deffered tax at every cost (since it is required by an IFRS) if the IFRS's (IAS-12) requirments for recognizing such ASSET and INCOME are technically met. There is nothing like ADVISING aclient for reduction of losses on this issue. If deferred tax asset arises and requirements are met it HAS TO BE recognized. If entity does not recognize it, auditor has to qualify his report; and where it cannot be recognized and the entity recognizes it, again audit report has to be qualified. (Materiality may count in taking decision).

Mind it, deferred tax income is not an operational item and it will never in essence will ensure continuety of generation of income flow from operations by any means. If there are no future expectations as to TAXABLE profits and if the deferred tax asset is technically found to be impaired on the grounds provided by IAS-12, deferred tax asset cannot be recognized or will be sliced down to the acceptable limit.

I may be ignoring something but so far I am wondering what an "ADVICE" has to do with deferred tax issue. You have to follow IFRS and if you are not doing it, auditor has to modify his opinion. Simple. Even if recognition of deferred tax asset will reduce accumulated loss yet it has nothing to do with ADVICE. It looks weird.

This is just like saying that if an entity is earning good profits and wishes to reduce reported profitability you should ADVISE them to charge depreciation. What the hell depreciation has to do with advice?

Anyway there may be a case of misunderstanding the question at all and that buddy might have asked altogether a different thing.

As far as reduction of losses is concerned, there could be 101 advices but before that the due insight of the entity and reason of its losses is inevitable.

Regards,

[mdanishraza]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by paradigm</i>
<br />@mdanishraza, so u were rejected too or did he say they will call ?
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rejected...and there is no waiting list..only rejection list (

[A.A]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by kamranACA</i>
<br />Dears

Well, I will not comment on whatever is going on in the interviews, yet the question on Deferred Tax does not appeal in the way it has been asked. However, every one carries different perception, understanding and opinion and might that buddy be knowing something out of the box.

An entity has to recognize the deffered tax at every cost (since it is required by an IFRS) if the IFRS's (IAS-12) requirments for recognizing such ASSET and INCOME are technically met. There is nothing like ADVISING aclient for reduction of losses on this issue. If deferred tax asset arises and requirements are met it HAS TO BE recognized. If entity does not recognize it, auditor has to qualify his report; and where it cannot be recognized and the entity recognizes it, again audit report has to be qualified. (Materiality may count in taking decision).

Mind it, deferred tax income is not an operational item and it will never in essence will ensure continuety of generation of income flow from operations by any means. If there are no future expectations as to TAXABLE profits and if the deferred tax asset is technically found to be impaired on the grounds provided by IAS-12, deferred tax asset cannot be recognized or will be sliced down to the acceptable limit.

I may be ignoring something but so far I am wondering what an "ADVICE" has to do with deferred tax issue. You have to follow IFRS and if you are not doing it, auditor has to modify his opinion. Simple. Even if recognition of deferred tax asset will reduce accumulated loss yet it has nothing to do with ADVICE. It looks weird.

This is just like saying that if an entity is earning good profits and wishes to reduce reported profitability you should ADVISE them to charge depreciation. What the hell depreciation has to do with advice?

Anyway there may be a case of misunderstanding the question at all and that buddy might have asked altogether a different thing.

As far as reduction of losses is concerned, there could be 101 advices but before that the due insight of the entity and reason of its losses is inevitable.

Regards,


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Isn't the job of the auditor to make sure that the financial statements are reasonably free from material misstatement whether due to fraud or error?If the business is incurring losses due to some weaknesses in internal control,the auditor points those out routinely in the Letter of Weakness.Why would the auditor advise the business of ways of minimizing general losses in the first place?It's not part of the audit engagement.I am confused.Please clarify.

[kamranACA]

CA firms are not only the Auditors every where. These can also be the consultants or tax advisors some where.

As far as audit is concerned, the auditor cannot do any management function at all and cannot derive the management decisions as well, yet, in the concept of value added services put in the important issues with recommendations in his Board letter or Management Letter, if the issue do not have a bearing to his report.

Regards,

[idiot.boy]

@ 1st of All , we should focus on what the question was !! Partner asked " if the business is experiencing losses then how would you recommed the company to minimize losses "

For sure this is not the job of Auditor to RECOMMEND the business how to minimize losses, so either he was asking in syntax of Consultancy or Being part of management itself !!

Where as Deffered Tax is concerned regarding minizing the losses, the concept of deffered tax ASSETS come in role play.. They generally arise where tax relief is provided after an expense is deducted for accounting purposes, eg a company may incur tax losses and be able to "carry forward" losses to reduce taxable income in future years .. a deferred tax asset should be recognised if and only if the management considered that there will be sufficient future taxable profit otherwise the value of tax asset has been IMPAIRED !!

So the answer to question was Deffered TAX ASSET !! It's not a problem presuming that the company will be making profits to use up the losses, but it does mean that from an accounting point of view (not from a cash viewpoint or anything 'real') the numbers are already taking into account the future benefits of the tax losses.

According to the Standard IAS 12 , it says that TAX ASSET is recognized for deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised...

To conclude , i would say , PARTNER QUESTION WAS " OUT OF CONTEXT " !! [xx(]

[A.A]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by kamranACA</i>
<br />CA firms are not only the Auditors every where. These can also be the consultants or tax advisors some where.

As far as audit is concerned, the auditor cannot do any management function at all and cannot derive the management decisions as well, yet, in the concept of value added services put in the important issues with recommendations in his Board letter or Management Letter, if the issue do not have a bearing to his report.

Regards,

<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Thank you for your reply Sir!I asked the above question because the partner at the start of the interview mentioned that he would ask auditing questions so I assumed(perhaps wrongly) that the question put to the candidate in the interview was in the context of an audit engagement and therefore,the reply should have been on the lines that it was not the auditor's duty to advise at all.