My experience as a junior audit consultant at KPMG

In this article, Pierre-Alain THIAM (ESSEC Business School, Global Bachelor of Business Administration, 2019-2023) shares his experience as a junior audit consultant in the Audit & Consulting department at KPMG.

About KPMG

When we mention professional services networks, everyone is instantly thinking about the “Big Four”. During the last summer from May to July 2021, I had the opportunity to work in one of these companies, KPMG, as a Junior intern in Audit & Consulting.

KPMG’s letters are the sheer remnants of the company’s history. In March 1917, Piet Klijnveld and Jaap Kraayenhof created an accounting firm in Amsterdam called Klynveld Kraayenhof & Co. Then multiples mergers occurred and in 1979, Klynveld Kraayenhof & Co., McLintock Main LaFrentz from the United States and Deutsche Treuhandgesellschaft from Germany, formed Klynveld Main Goerdeler known as KMG. In 1987, KMG and Peat Marwick merged and had one of the biggest mergers at the time. Two of the biggest accounting firms of the 20th century chose to unify and ultimately formed KPMG as we know it today.

Nowadays, KPMG provides multiple finance services including mainly Audit, Management Consulting and Tax Consulting.

Source: KPMG

What I did during my internship

During my internship, I evolved in a global system. I tried to understand the rules and even complex expectations of a work organization. My goals were to adopt an action or work plan coherent with the challenges and success of the requested mission and work effectively in a multicultural and interdisciplinary team while communicating in a dynamic national and international environment. I had to focus on producing clear and well-organized working documents on various subjects (test on revenues, process of a system, bank reconciliation of two pension fund regimes for examples), that the highest graded employees like managers or even partners would review for the mission.

I was mainly involved in audit assignments. The activity entrusted to it was essentially the understanding of target companies: organization, processes, and risks. Then, the understanding of audit objectives and performing substantive controls to identify accounting anomalies, including fraud of all types. And last but not least, I had to understand and perform internal control assessment work. I did a total of four missions over three months, with a range from a national agricultural organization to an insurance and a pension fund.

What I learned during my internship

Throughout my time at KPMG, I learned that technical skills are not the most important skills needed to work in the audit sector. Of course, you need to master hard skills like knowing the basics of financial accounting, being able to find the equilibrium of a balance sheet or having solid foundations on Excel. Nonetheless, there is a big “relational” aspect of the job. Since you are almost always with new people and colleagues, soft skills are definitely required. If you find a way to show your ability to communicate with other people, it always results with a better quality of work for you and the people involved in your mission.

When working in the audit sector, I think there are three principal aspects you need to focus on: logic, flexibility, and tenacity.

Logic

That may sound surprising, but logic is the most important quality you will need. When we talk about audit, people instantly think about big formulas, accounting and working on numbers all the time. This vision is quite wrong, I know for a fact that audit is mostly a process. A process is the description and assessment of the procedures for granting aid to customers: monitoring of their activities, the respect of accounting procedures and the identification of the various risks and controls implemented. You need to ask yourself a lot of questions related to the activities of the company you are working with. The aim is to identify the risks, assess them, define control measures, and simulate different scenarios of incidents to be analyzed: basically, it is called risk management. For example, if you work with Orange on their mobile services, you will first ask them how they make money from this activity. If they tell you each call is counted as a transaction, we will try to know how they make sure a call is counted. Then if Orange answers us that they have antenna A that conveys information to antenna B, KPMG will then investigate the risks of this method and how it can be the cause of a loss of money for the client company. This example is very specific to a certain type of firm, and it directly leads us to the second quality you need to succeed: flexibility.

Flexibility

At KPMG you can work in every field you can imagine and in any country in the world. My first mission was in a pension fund for employees of a bank group, my fourth week I worked in an insurance company and the week just after I worked in a logistics company. Lastly, my final mission was in a company for the support of the rural development of a country.

As you can see, we jump from one subject to another pretty quickly. Versatility is key because you never know what you are going to work on and where you are going to work at. If you don’t like to disrupt your habits, the rhythm of a consulting firm will promptly become fiendish for you. The bright side of this atmosphere is that it constantly stimulates you intellectually and you are always learning. Working in this type of company is extremely formative, but it comes with its advantages and disadvantages, metaphorically it is a double-edged sword, and you will either love it or hurt yourself if you find the correct way to handle it or not. And this is precisely why tenacity is essential to stay on the course.

Tenacity

Sometimes the work can be hard, and you have to try a lot of ideas until you find a solution. This can be even more difficult when there is tension with the management of your client company. Some people are really tough to work with and they just don’t want you to succeed because it will be at their detriment. Therefore, you need to have good communication skills while standing strong in your positions and not letting people walk over you.

The threat cannot only come from the clients but from your own colleagues. Most of the people are benevolent, but it is a dog-eat-dog world and not everyone can get to the top.

Useful resources

KPMG

About the author

The article was written in November 2021 by Pierre-Alain THIAM (ESSEC Business School, Global Bachelor of Business Administration, 2019-2023).

What I learned from my time on the stock market

In this article, Joshua WAN (ESSEC Business School, Global Bachelor of Business Administration, Exchange Student from Stockholm University, Fall 2021) shares what he has learnt in the stock market.

I’m sure many who have chosen the Sim Trade course are active on the stock market and probably have been for some time. But maybe some of you have not yet ventured out on the world’s equity markets and maybe some of you are taking the SimTrade course in order to prepare yourself for trading with your own hard-earned money.

My story

I was 16 years old when I first decided that I wanted to start investing my spare money and saving it for the future. I had started my first year of Business Administration in upper secondary school and a friend told me that you could open an account on Avanza (Sweden’s largest brokerage firm) with your parents’ permission. After handing in all the required paperwork I transferred about €500 that I had left over from my summer job and was ready to do my first trade.

Back then €500 was a lot of money for me but in the context of the stock market it is just peanuts. What I realize now in hindsight is that this relatively small amount of money allowed me to learn valuable lessons about investing and financial markets without having any larger future consequences. I lost a large percentage of this money, but I did learn a lot from my mistakes. I wanted to share what I learned and maybe someone that wants to start investing can use these lessons to avoid making the rookie mistakes that I made.

Do your own research

One of the first things I learned was that you should always try to understand why you are investing in a specific stock and not just go off other people’s advice. I remember one of my friends telling me to invest in a certain company and he showed me the return that he made on the stock. I didn’t know much about the company, its market, and the future challenges. I did not know why I was investing in this company, so it is no surprise that this investment did not turn out very well. Now I’m not saying that you need to do a full fundamental or technical analysis, but you should understand the company you are investing in and why you are investing in it. You can read different recommendations and try to form your own opinion but don’t invest in something just because someone else tells you to.

Don’t be too impulsive and emotional

The aforementioned investment did not go very well, and I quickly found myself in the red. After about 5 months my position had gone down by circa 40%. At this point I decided to sell the stock in what was more of an impulsive emotional decision than a rational one. I did not sell because the company had no upside, I sold because I did not want to see -40% every time I opened the app.

Warren Buffet once said, “The most important quality for an investor is temperament, not intellect” (Sarwa, 2021). He meant that you need to have discipline, patience and that you need to understand that the market will fluctuate. He also goes on to say that humans are irrational and are tempted to make trades when they feel like the market is working against them. Of course, you should not stay onboard a sinking ship but if you have invested in a good company then patience will often pay off.

If I would have kept my position in this firm until today, I would have had a return of over 500% and if I would have sold it at the all-time high, I could have had a return of 1,500%. This does however bring me to my next point.

The figure below shows the price evolution of PowerCell Sweden stocks over the period 2015-2021 (the stock investment that I am talking above).

Figure. Stock chart of PowerCell Sweden

Source: First North Stockholm

Learn from your mistakes but don’t beat yourself up

Even if you do your research and have patience, you will still have some investments that don’t turn out well and some big opportunities that you will miss. It’s very easy to get hung up on these mistakes but instead of just seeing the negatives you can use this opportunity to try and understand why you made the mistake. By understanding your mistakes, you can lay a foundation for better future decisions. From the investment I previously mentioned I learned the importance of patience and knowledge. I realize now that it would have been a perfect opportunity to buy more shares instead of selling. But even if it doesn’t feel very nice that I missed out on a huge return you can’t beat yourself up over it because there will always be something you could have done better.

Have a strategy

Before you start trading/investing you need to have a strategy. You should know if you are investing long term or short term, low-risk low-return or high-risk high-return or if you are targeting value or growth firms. Of course, you can mix all these strategies and use different ones for different investments, but you need to be aware of what you are doing and why you are doing it. It can also be useful to know how much money you are willing to lose and how much profit you are willing to walk away with so you can manage your position using stop-loss orders and take-profit orders.

Diversification

For many of you this is nothing new, but diversification is one of the most important things to think about when building an investment portfolio. By investing in different industries and different geographical markets, you can minimize the risk that is specific to each firm. Of course, you cannot diversify all risk, after a certain point the diversification effect is marginally decreasing and there is a systematic risk that you cannot diversify away. When I first started, I only owned 2 stocks and I was very heavily weighted in one of them so when this stock went down my whole portfolio also went down. Of course, it was hard to achieve significant diversification with such a small amount of capital, but I have since then learned the importance of diversification. Even on the worst days there is usually one or two stocks in my portfolio that are not in the red.

Some final thoughts

I’m sure most of this is old news to you but I wanted to share what I’ve learned from my early mistakes in case anyone here wants to but has not yet taken the step on to the financial markets. Even if you don’t want to be an active trader and just want to invest in mutual funds and ETFs, these lessons and principles can still be useful.

Useful resources

Sarwa (7th October 2021) Top 20 Warren Buffett Quotes To Inspire Your Investment Goals.

About the author

The article was written in November 2021 by Joshua WAN (ESSEC Business School, Global Bachelor of Business Administration, Exchange student from Stockholm University, Fall 2021).