Have you ever wondered what a financial auditor does? These accounting professionals protect businesses, their employees and their investors by reviewing a company’s inner workings for accuracy, efficiency and integrity.
What is an Audit?
An audit is a review of a business’ financial records, processes, systems, employees, services and products. Auditors evaluate the accuracy and reliability of a business’ organizational information and the process through which that information is gathered and assessed to ensure management and investors are receiving a true picture of the entity’s assets and liabilities. They verify that proper financial controls are in place, that appropriate internal controls are in place to manage risk effectively, and that the business is in compliance with any applicable financial regulations and laws. Since actually reviewing every detail is impossible in all but the tiniest of companies, auditors use statistical sampling to select records to review.
How are Internal Auditors Different from External Auditors?
Auditing professionals are often divided into two camps: internal auditors and external auditors. What is the difference? Simply put, it is a matter of employment, responsibility and goals. Either as employees of the company they are auditing or consultants brought in to function as employees, internal auditors report to senior management. Their general goal is to evaluate the company’s risk management policies, ensure that these policies are being executed effectively, and offer advice for any needed improvements. External auditors are responsible to the company’s owners rather than its management. They are consultants or employees of an outside auditing firm who are brought in to conduct audits related to an organization’s financial state and its management of any risks related to its finances. Their job is largely to determine whether a company’s financial records paint an accurate picture of its situation. External audits are normally performed annually.
What Educational Background Does an Auditor Need?
The majority of auditors have at least a bachelor’s degree in business, accounting, economics or finance; many also hold master’s degrees. There are several professional certifications available for auditors as well. Many auditors, particularly those who work for respected auditing firms, are certified public accountants. Others choose to pursue the certified internal auditor, the certified information systems auditor or the certified fraud examiner credential. These credentials are not exclusive; some professionals hold multiple designations.
What Qualities Does a Successful Auditor Need?
According to Investopedia, auditors need a healthy sense of skepticism. Much like a cyber security expert must think like a hacker in order to identify weaknesses and prevent potential computer attacks, auditors need to be able to assess how someone intent on defrauding or manipulating a business’ controls would go about doing it. This allows them to do a better job of identifying potential weaknesses and spotting evidence of trouble. Auditors also need good communication and interpersonal skills so that they can present information requests clearly and effectively, cope diplomatically with any resistance they encounter, build relationships with both coworkers and clients, and present their findings efficiently. Strong ethical convictions are also important to help auditors resist the urge to sweep poor performance or problematic findings under the rug rather than deal with them and the conflicts that exposing them may trigger.
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More than a million professionals worked as auditors and accountants in 2012, according to the U.S. Bureau of Labor Statistics. With a predicted job growth rate of 13 percent, experts expect the field to add an additional 165,000 jobs in the decade before 2022. Tasked with ensuring the management and owners of businesses have a fair and accurate assessment of their organization’s financial state, auditors play a vital role in the business economy. A business’ ability to make decisions based on reliable information is often dependent on what a financial auditor does.
