Guide to an Auditor Job: Ensuring Financial Transparency
You might personally know someone who has an auditor job, or maybe you’ve heard of this unique financial career, but what do auditors really do?
In 2021 there were 1,449,000 auditors globally and this number is expected to increase by 6% in 2030 (1). That’s a good sign for anyone interested in this career.
Can any individual with an interest in numbers and analysis become an auditor? What role do they play in an organization and what are the challenges they face during audits today?
In this article, we’ll look into an auditor’s job specifications, opportunities, and struggles. We’ll also delve into our most recommended solution to help businesses ace audit engagements and give auditors an easy-sailing audit review. Let’s begin!
What is the job of an auditor?
An auditor is an individual who examines and verifies financial statements, reports, records, and other relevant information and processes to check if an entity follows accounting principles, internal controls, and proper risk management.
Usually, an auditor’s role revolves around tasks that are relevant to the organization where they are working. Their responsibilities may include interviewing employees, looking at current policies and financial documents, identifying possible financial threats to internal controls system, and recommending immediate solutions and long term strategies.
Their keen eye for detail, analytic thinking, and objectivity make them essential when it comes to compliance with professional financial regulations, accounting procedures, and overall ethical standards covering the government agency, firm, or organization.
Types of auditors
According to the Occupational Outlook Handbook, an auditor has several duties depending on their specialization and expertise. (2) Here are some of the general types of auditors:
- Internal auditor
Internal auditors are employed personnel of an organization who ensures that the company is observing the accepted accounting procedures. To do that, they conduct in-house evaluations of financial documents through an internal audit.
Internal auditors report the company’s standing to senior management or business managers. They also suggest improvement techniques when it comes to corporate governance and business operations.
- External auditor
An external auditor is a professional hired independently to look into an organization’s financial statements in relation to local regulations. External auditors who conduct the assessment are from public accounting firms.
External auditors are tasked to check the internal auditors’ report, accounting records, and financial operations in relation to generally accepted auditing standards (GAAS). They also evaluate if the organization’s financial position speaks for its audit objectives and best practices.
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- Government auditor
A government auditor maintains internal control systems of government agencies. Their responsibilities include examining the financial records of federal, state, and local departments and if there are corresponding to the effectivity of their operations.
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Government auditors also take a look at individuals performing activities under government policies and taxation and verify if these individuals are efficiently utilizing government resources.
- Information Systems auditor
An information systems auditor assesses the security of an organization’s information systems including its computer networks, databases, software, and security. They ensure the effectiveness of data risk management policies, identify its weaknesses, and conduct safety controls of the company’s IT systems.
- Forensic auditor
Forensic auditors are used by law enforcement offices against financial crimes and tax violations. They also examine financial records in relation to data collection to gather audit evidence. It helps them to detect fraud, extortion, and embezzlement committed by an individual or organization.
How do you become an auditor?
In order to become an auditor, individuals are often required to take at least an Associate’s Degree or a Bachelor’s degree in accounting or any related field like business administration, economics, and finance.
A Bachelor’s degree in auditing is already offered in several universities. Some educational institutions even offer specialized programs like forensic auditing, information systems auditing, and tax accounting studies for both undergraduate and master’s degree.
For non-accounting degree holders, experience in a relevant field or additional certification and qualifications may be required by their employers for advancement in their auditor position. This will not only solidify their understanding of the foundation in accounting principles but also learn the critical skills necessary to apply this knowledge.
Aside from graduating with a degree or pursuing a relevant master’s program, being certified in globally recognized certifications awarded by governing bodies in the field of audit and accountancy can help you take on advanced employment opportunities.
Certified Internal Auditor (CIA)
In order to become a Certified Internal Auditor, you must first need to pass an exam and obtain a license from the Institute of Internal Auditors CIA program certification. This certification is open for both degree and non-degree holders.
Individuals need relevant professional experience in the field in order to qualify. For degree holders, they need at least 5 years of internal audit experience in order to begin the program. Before receiving their certification, Master’s degree holders need at least one year of experience while bachelor’s degree graduates need at least one year of relevant experience.
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Certified public accountant (CPA)
One of the most in-demand certifications in the public accounting field. This certification is awarded by the American Institute of Certified Public Accountants after obtaining a passing score in a CPA Examination. In the UK, you have to be a member of the Certified Public Accountants Association either as an associate or a fellow.
Individuals who will undergo the CPA program must consent to a background check, present proof of education, and present proof of relevant professional experience in order to qualify.
Other audit certifications
For advancement in information systems audit, the Information Systems Audit and Control Association offers a Certified Information Systems Auditor (CISA) program for IS auditors. The program requires five years in IS/IT audit, registration, and exam appointment, and going to the PSI testing location for administration of exams.
If you are working in quality auditing, the National Commission for Certifying Agencies is offering a Certified Quality Auditor (CQA) program. Individuals must meet a combination of educational and professional experiences before being qualified to take and passing the certification exam.
Employers may differ in their demands when it comes to the auditor they needed. They may select candidates depending on the complexity of the job role, length of experience and exposure to the field of expertise, and even level of management handling other people in the team.
In general, here are the basic auditor technical and people skills they will require:
- Advanced computer skills
- Proven knowledge in their field (tax preparation, relevant laws, GAAP, etc)
- Demonstrate critical thinking skills
- Excellent analytical skills to identify potential risks
- Ability to work in a collaborative environment
- Strong interpersonal skills and communication skills
- Time management skills
- Work-life balance
In addition, keeping your skills and knowledge up-to-date is essential to show professionalism and commitment. By attending professional events, studying and obtaining a new qualification, and tapping online resources, you can distinguish yourself from the rest of the applicants.
Roles and responsibilities
Although there are several areas of focus an auditor’s role may entail, an auditor’s job description may include:
- Conducting audits on-site or off-site an organization through audit tests
- Detecting and giving audit recommendations on possible financial risks
- Developing detailed reports discussing financial plans and audit programs
- Ensuring compliance of financial reports with widely accepted auditing standards
- Analyzing the ability and capacity of internal controls and their functions in a regulatory environment
It is essential for an auditor to exercise objectivity in all their tasks because all the audit reports that they submit and accomplish are viewed as facts by authorities and organizations. Any biased or negative opinion given may be taken wrongly by a governing body, the management, and investors as well.
Objectivity and independence will ensure their work is done with quality and their mental attitude did not compromise the fair and balanced standards of their performance. (3)
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Auditor job opportunities
The salary range for auditors may be unique in terms of their expertise and duties. For 2022, their median pay is around $ 78,000 annually or $38 per hour. The lowest 10% earned less than $48,500 while the top 10% earned more than $ 132,700.
Although the auditors’ compensation belongs to the higher percentile, they are expected to work full-time. Just like accountants, auditors may also be required to work longer hours during busy seasons like quarterly audits and the closing of a fiscal year.
Additionally, an auditor’s role is also flexible when it comes to the place of work that they prefer depending on their specialized areas. Some auditors even work independently or are self-employed. Most auditors work in teams in offices or traveling to their clients, but some work alone or at home.
Aside from accounting firms, they can also perform their duties in the field of insurance and finance, private companies like management and enterprises, government and other public sectors, and in the accounting, taxation, bookkeeping and payroll departments.
Common challenges an auditor may encounter
No matter how much experience a successful auditor may have, they still face difficulties during their audit engagements. Here are some of the challenges an auditor may encounter on the job:
Failure to gather sufficient audit data
Auditors often mention this as one of the major deficiencies when conducting audit in organizations. Whether small businesses or large enterprises, there may be times that the financial records they are looking for are not easily available for auditors. Failure to provide audit data needed that will serve as evidence for an individual or agency’s compliance may impact the overall review negatively.
Obtaining efficient workflow control procedures
An organization’s accounting workflow is an essential part of an audit review. It enables financial transparency and shows how effectively a leader manages their accounting team.
When the processes are not overseen properly, staff capacity and productivity is not maximized and managers may have lesser control over their data, procedures, people, and time. Internal or external auditors may see these as lack of accountability and wastage of an organization’s resources.
Recognizing misidentification of financial records
Auditors are challenged to cite the misidentification of financial records either unintentional or on purpose to fabricate profit and manipulate other data in the financial statements. They may rely on inquiry as a method of reviewing commensurate data and may result in subjective opinions instead of practicing their objectivity.
In some instances, records are available but are misfiled and are only detected during audit inspection. Misrepresentation of an organization’s information may affect its risk management and overall financial position.
Non-availability of information
When the data needed is not available and cannot be found in other records, auditors are incapable of performing their responsibilities well. As part of accountability and internal controls preparation and management, proper record-keeping of necessary financial records is needed to exercise their evaluation and analysis in a well-informed and confident manner.
Accounting solutions for a better auditing experience
To ace an audit review and build collaborative relationships with the auditor, it is important to use the aid of technology. Pre-accounting tools are used in preparing proper documentation in advance, complying during, and managing post-audit reports.
Having a reliable and all-in-one app like Envoice can help encourage team members to engage, exercise accountability, and develop their software know-how in their everyday tasks.
Where does Envoice come in? Here are other advantages why Envoice is the solution for a better audit experience:
FOR ACCOUNTANTS AND BOOKKEEPERS
To prevent misidentification and loss of vital information, keeping financial records are a necessity to provide better service for customers and work with auditors when they need to ensure compliance.
Manage accountant and bookkeeper workload and delegate them properly with Envoice’ invoicing solutions so you have control over your AR team. Not only do you get rid of worries about lost receipts and bills with the paperless approach, but also secure peace of mind that the extracted data is efficient and secured in one place.
With Envoice, you also get to build connections with your clients, eliminating the need to throw emails back and forth or switch to and from other platforms. Envoice makes it easier for all parties – accountants and bookkeepers, clients, and auditors – to analyze internal financial information and improve risk assessment with everything they need stored in one place.
Whether you are a small organization, a scaling company, or a big business, Envoice helps you get ready and secure a positive overall audit performance. An automated workflow gives you more time to focus on the overall growth rather than manually encoding expenses. It minimizes the chances of human error and eliminates misidentification of financial data, which are two of the major deficiencies cited in audit findings.
Keep your payments and accounting systems in sync with updates on both incoming and outgoing payments. Your accounting software can be integrated with Envoice, allowing business owners to supervise expenses in just a few clicks without the need to transfer everything.
For additional control, your admin function can customize who can see what by limiting or granting access to sensitive financial information and preventing fraud risks. The archive and collection also provide storage for all your documents so they are all made available during audit reviews.
An auditor’s job is in demand because they are tasked with a wide range of responsibilities to verify and examine financial statements and an organization’s accounting activities. Their job may be demanding and there may be challenges along the way, but with the help of accounting tools like Envoice, they can work hand in hand with businesses to improve processes, minimize risks, and develop effective fraud-detection techniques.
Are you ready to keep track of your business’s financial performance?
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