Check the auditor’s career

If you are interested in analyzing almost all aspects of the company’s internal operations, the profession of an auditor may be right for you. From careful study of financial statements and expense reports to ensuring compliance with government regulations, auditing offers a variety of potential career opportunities. Read on to see if you have the requirements to succeed in this hot career. (To learn more about how individuals handle audits, please read Avoid audit and Survived the IRS audit.)

What are the duties of an auditor?
Auditing is a complex profession, involving many different job responsibilities:

  • Audit involves the review, analysis and evaluation of processes, products, services, systems, organizations and employees.
  • The auditor evaluates the accuracy, validity, reliability, verifiability, and timeliness of the organization’s information, as well as the source and process of generating this information. This is an important role because management and external parties have thus obtained an accurate assessment of the organization under their management.
  • The auditor also examines the organization’s internal controls and the extent to which these controls manage the organization’s risk exposure. Internal controls help prevent the theft of company assets and, if properly designed and implemented, can prevent employees from manipulating data.
  • Auditors ensure that inspections are in place to help improve the effectiveness of financial and operational reports. They also ensure that controls are in place to protect the assets of the organization.

Resource constraints (it can be expensive to hire internal or external auditors) require that audits only provide reasonable assurance to ensure that there are no major errors in the statements. Because of the high cost of auditing and the fact that it is impossible for the auditor to verify every transaction that has occurred, the auditor uses statistical sampling and (with management) to identify areas of focus. An audit does not guarantee that the financial statements can perfectly reflect the organization’s situation, but only reasonably guarantees that there are no major misstatements in the statements. (To learn what to look for when analyzing your financial statements, please read Evaluate your personal financial statements.)

Useful personality traits For auditors, there are some very important personal traits:

  • Auditors should have a strong ethical framework and report when they encounter problems (or expected problems). Since further investigations may require more work or reveal embarrassing processes, performance, and/or fraud, there is a temptation to “let go”.
  • Good communication skills enable auditors to maintain harmonious relationships with various employees, managers, directors and external parties. However, since auditors have established good relationships with different people, they should keep in mind the objectives of the audit (for example, the reliability, verifiability, accuracy, and timeliness of information) because they often tend not to report problems. .
  • Strong interpersonal skills are important because various requests for information from various sources are required-and these requests are often resisted. Strong and/or ambitious types may try to discourage auditors from revealing embarrassing findings.
  • Auditors need to have team spirit. Since the scope of the audit can be quite large, it is useful to assist in other areas of the audit when resources are limited.
  • Finally, “professional skepticism” is an important feature, especially when reviewing a company’s internal control. People need to evaluate how fraudsters break through the company’s control measures, and auditors need to design and implement a system that can effectively protect the assets of the organization.
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Educational requirements Internal and external auditors usually have a university or master’s degree in business-related majors such as accounting, finance, and economics. Larger accounting firms and internal audit departments usually expect their auditors to have certifications, such as certified public accountants (CPA), registered internal auditors (CIA), registered information system auditors (CISA), and registered government auditors (CGAP) Or Registered Fraud Examiner (CFE), etc. Among them, certified public accountants are considered the most credible because auditors have connections with employees, managers, executives, board members, and external parties. (To learn more about the CPA designation, see CPA, CFA or CFP®-choose abbreviations carefully and Accounting is no longer just a nerd.)

What audits the auditors do for the company can be performed against the IT financial reporting mechanism, and the auditors evaluate whether the numbers processed and reported by IT/accounting software are reliable, accurate, and timely. Sometimes a walkthrough test is performed. This is a procedure used to measure the reliability of an entity’s accounting system during an audit. For example, if the accounting system reports delays or errors in the delivery of products or receipt of raw materials, the income statement or balance sheet may be severely distorted (if the transaction volume is large). Severe distortions mean that management may not be able to run the company correctly, or investors may incorrectly evaluate the organization.

In another case, the auditor may determine the company’s inventory management system and current inventory quantities. Obsolete inventory (essentially worthless) may still be on the books as regular finished goods inventory, which exaggerates the company’s assets on the balance sheet and provides a misleading picture for management and investors. Auditors need to understand the root cause of overstatement and recommend periodic inventory accounts and/or safety measures (depending on the cause) to management through the audit report. For example, a supervisor may have to sign a junior staff inventory count on a regular basis and apply a “common sense” test (ie, is this inventory accurate and reasonable?). (Read more about inventory accounting Investor’s inventory valuation: first in first out and last in first out.)

In another case, department managers may often pay customers large refunds (for a variety of reasons, such as bulk discount programs, cargo damage claims, goodwill gestures, aggressive quarterly revenue management, etc.). When identifying improper risks, the auditor may suggest that the system automatically ask the financial manager to approve transfers of more than $50,000, for example, a monthly review of a department exceeding $100,000 (the company may be a multi-billion-dollar multinational company). Income, and it may not be worthwhile for managers to spend time reviewing transfers for amounts below these thresholds).

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Internal auditors are employees who are dedicated to assessing the company’s internal controls. They can serve as full-time employees or temporary employees, dedicated to improving the efficiency and effectiveness of the process, detecting fraud and providing regular evaluation reports to management and the board of directors. Small organizations may not be able to afford the cost of staffing internal auditors throughout the year, and may choose to outsource some (or all) of their audit requirements to external auditors. External auditors evaluate their clients’ operating systems and financial statements based on the agreed project scope and hiring costs. (For further reading on the responsibilities of internal auditors, please read Internal Auditor’s Internal Observation.)

Which aspects of the company are audited? Almost any part of the organization can be audited. Managers, boards of directors, and/or external parties can help determine priority areas based on the unique circumstances of their organization. A useful way to determine what is the priority is to determine the number of impacts and recurrences due to process failures. Managers should usually first identify such areas with greater impact.

As a sample of areas that can be audited, consider the following:

  • financial report
  • information Technology
  • supply chain
  • Inventory management
  • Transfer payment process
  • Administrative Procurement
  • Expense account
  • Revenue management
  • Employee performance
  • Environmental impact
  • Recruitment practice
  • Internal Control
  • Taxation and government compliance

Because there is a large amount of information and processes in the organization, and the human resources to check and evaluate these information and processes at any given time are limited, auditors usually only consider specific key areas as part of the scope of the audit. In other words, materials and important data are usually processed, while less important areas are put on hold. Auditors often use statistical sampling to help identify priority areas and evaluate the process based on testing. For example, the software system can be tested to check the control on the IT system designed to prevent unauthorized access to the petty cash balance in the bank account. (To learn more about the role of the audit department within the company, please read Evaluation Board.)

Stricter regulations create new jobs. Companies listed in the United States follow the rules set by the Public Company Accounting Oversight Board (PCAOB), which was established under the Sarbanes-Oxley Act of 2002. The Act is a set of particularly relevant, thorough, and costly regulations that managers and decision makers of listed companies must comply with. Specifically, Section 404 of the Act requires:

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  • Reports by management and external auditors on the adequacy of internal controls for financial reporting
  • Management report on the effectiveness of the company’s financial reporting internal control

The documentation and testing required by Section 404 throughout the organization requires tremendous effort from employees, management, and auditors. Sarbanes-Oxley is considered a controversial requirement because it places a burden on public organizations and is costly in terms of money and time. However, if properly followed, the company can also enjoy better processes, controls, risk management, and financial and operational assurance. (Read more about the pros and cons of becoming a U.S. public company Why are listed companies going private.)

The more stringent accounting and auditing regulations in the United States have brought strong growth prospects for the auditing field. According to the US Bureau of Labor Statistics, employment related to accounting and auditing is expected to grow by 18% between 2006 and 2016, which is higher than the average growth rate relative to all other occupations. This 18% increase means more than 226,000 new job opportunities in the accounting and auditing fields.

Conclusion Due to stricter government regulations, auditing is an evolving field that provides a surprising variety of job responsibilities for those who tend to deal with the details of company operations. If liaising with company management and overseeing various business and financial processes appeals to you, consider a popular career as an auditor.

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