If you have always been interested in the finances and inner functioning of a company, pursuing a career as an auditor is the right choice for you. Auditors are the professionals that prepare and examine financial records. They ensure that the financial records of a company are accurate and that taxes are paid properly and on time. They also assess financial operations and work to help ensure that companies run efficiently.
Auditors have to look after multiple roles from examining financial statements to comply with laws and regulations, computer taxes, and preparing tax returns to maintain financial records. These are just a few tasks that you, as an auditor, would have to take care of. It is an intensively complex career path and involves multiple job responsibilities.
Sometimes the specialization of an auditor totally depends upon the type of organization they work for. Some of the auditors specialize in assurance services, risk management, while others specialize in more specific industries like education, healthcare.
Some of the major duties of an Auditor are as follows:
- They examine the financial statements of an organization to ensure that they are accurate and comply with the laws and regulations of the country.
- To prepare tax returns and ensure that the companies taxes are paid on time and in full.
- Organize, maintain and update the financial records of the company/organization from time to time
- Assess financial operations and offer financial practices recommendations to management
- Suggest ways to reduce costs, enhance revenues, and improve the profits of an organization
Type of Audits:
Financial Auditing: Financial auditing is the process of examining an organization’s (or individual’s) financial records to determine if they are accurate and in accordance with any applicable rules (including accepted accounting standards), regulations, and laws.
External Auditing: External Audit is defined as the audit of the financial records of the company in which independent auditors come in from outside the organization to perform the task of examining validity of financial records of the company carefully in order to find out if there is any misstatement in the records due to fraud, error or embezzlement and then reporting the same to the stakeholders of the company. Law of many countries requires that all public companies have their financial statements externally audited.
Internal Auditing: Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. Internal auditors work for the organization as internal employees. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, operations, Internal control, and governance processes.
Businesses also recognize the need for other types of auditing that look beyond ledgers and balance sheets with respect to legal compliance, IT security, environmental, operational and performance oversight objectives:
Compliance Auditing: Compliance Audits are used to evaluate an organization’s compliance with applicable laws, regulations, policies and procedures. Legal and policy requirements may be created by governments. An organization’s management or board of directors can also create compliance requirements internally.
IT Audit: Information Technology Audits evaluate information management systems and computer databases to ensure that confidential customer information and proprietary intellectual property is secure. Information technology audits ensure that only authorized users are able to gain access to privileged information and that the information itself is accurate.
Note: Quality assurance auditing not explained in this chapter
- Bachelor’s degree in Accounting
- Preferred relevant master’s degree in accounting or an MBA.
- Candidates can also take up a course in computer accounting and data analytics software such as Tally, ACL, Idea etc. or other related diplomas.
- Chartered Accountant (CA) from Institute of Chartered Accountants of India, the national professional accounting body of India. Candidates can pursue CA after completing XIIth.
- ACCA from Association of Chartered Certified Accountants UK can pursue after completing XIIth
- Global certifications are CIA & CRMA from the Institute of Internal Auditors USA, CPA from Certified Public Accountant USA, CFE from Association of Certified Fraud Examiners All can pursue a bachelor degree with accounting specialization.
- IT Audit related certifications CISA & CISM from ISACA USA can pursue after a bachelor degree with accounting specialization.
Required Skills and Aptitude
- A keen interest in the financial system.
- A strong aptitude for maths.
- Ability to divide your time between work and study.
- Ability to work to deadlines, under pressure.
- Critical thinking and strong acumen
- Emotional Intelligence
- Excellent problem-solving skills.
- Gain the confidence of auditees and Understanding the process from start to finish
- Knowledge in working on computers (MS, Analytical application, accounting systems, etc.)
- Meticulous attention to detail.
- People and interpersonal skills
- Professional Skepticism
- Self-motivation, determination and confidence.
- Strong Communication Skill
- Audit Executive
- Budget Analyst
- Chief Audit Executive
- Compliance Officer
- Financial Analyst
- Financial Manager
- Fraud Examiner
- IT Auditor
- Junior Auditor
- Management Analyst
- Personal Financial Advisor
- Risk Manager
- Senior Auditor
Auditors are required in all the major sectors. Both government and private firms require an auditor to manage their finances.
As far as Internal Audit is concerned, every company beyond a certain size will have its own internal audit department. Especially, it is mandatory for all public/listed companies to have their own internal audit.
All consultancy companies (like the big 4 audit Deloitte, PwC, Ernst & Young, and KPMG) provide internal audit services to clients and are among the major recruiters. In addition to that there are many other local audit consultancy companies also provide audit services.
Also, CISA qualified Auditors have been recognized in India as qualified to conduct Systems Audit by Reserve Bank of India (RBI), Ministry of Information Technology (MIT), National Stock Exchange, Comptroller and Auditor General of India (C&AG).
Questions & Answers
Q) What is the CPA certification?
A) A certified public accountant (CPA) is a designation given by the American Institute of Certified Public Accountants (AICPA) to individuals that pass the Uniform CPA Examination and meet the education and experience requirements. The CPA designation helps enforce professional standards in the accounting industry.
Q) Is CPA more difficult than CA?
A) Indian CA exam requires a lot of hard work. You can pass the CPA exam in 6 – 12 months whereas it takes 3 – 4 years to pass CA. You have to be a graduate to take the CPA exam, whereas undergraduates can take CA exams. CPA is recognized all over the world and CA is slowly and steadily gaining recognition globally.
Q) How can I be an IT auditor?
A) IT auditors typically possess a bachelor’s degree in computer information systems or information technology and strong communication and analytical skills, as well as two to five years’ work experience and voluntary professional certification such as Certified Information Systems Auditor (CISA).
Q) What is the role of an IT auditor?
A) The role of an IT auditor involves developing, implementing, testing and evaluating audit review procedures. … The audit process can extend to networks, software, programs, communication systems, security systems and any other services that rely on the company’s technological infrastructure
Q) What’s the difference between an internal auditor and an external auditor?
A) Internal auditors are company employees, while external auditors work for an outside audit firm. Internal auditors are hired by the company, while external auditors are appointed by a shareholder.
Q) What is the mission of Internal Audit Function in a company?
A) To provide quality audit and consulting services within the framework of the International Standards for the Professional Practices of Internal Auditing by optimizing the use of our valued resources and promoting good business practices.
Q) What is the purpose and objective of the internal audit function?
A) The purpose of the internal audit function is to assess and evaluate the operational and financial activities of the organization as a service to management, by measuring and evaluating the effectiveness of the internal control structure established and installed by management, with an objective to furnish management with recommendations and appraisals concerning the activities reviewed.
Q) What is independence and objectivity for internal auditors?
A) Independence is an integral element of the internal audit practice. The internal auditors of our organization should be independent in fact and in appearance. Independence requires the highest degree of detachments, integrity, and objectivity and permits internal auditors to render impartial and unbiased judgments essential to the proper conduct of audit assignments. Independence also means that internal audit professionals should be fully distinct from, and have no authority to, or responsibility for, the operational and financial activities they are assigned to audit, such as: drafting procedures, designing or installing operating systems, implementing control systems, or taking significant operational decisions. Internal auditors should carry out their work freely and objectively without compromising the audit objectives, results and conclusions, so that to report matters as they occur, but not as executive or line management want to see them, and should not permit auditees to influence their audits. Internal audit professionals should always be free from bias and conflict of interest.
Objectivity is an independent mental attitude that internal auditors should maintain in performing audit assignments. Internal auditors are not to subordinate their judgment on audit matters to that of others.
Independence and objectivity are achieved through a proper organizational status. All internal audit professionals will sign an Independence Declaration upon employment, and, at the beginning of each financial year.
Q) What is the authority of internal auditors in an organization?
A) In carrying out their duties and responsibilities, internal auditors will have full, free and unrestricted access to all the organization’s functions, operations, activities, records, property and personnel, at all times. This authority is given to all professionals of the internal audit function, in view of the nature of their work and responsibilities assumed. Under no circumstances, there should be any unwarranted restriction on the internal audit staffing, authority or access to all the organization’s activities, records, property and personnel. Any such cases will be reported immediately to an appropriate authority for immediate action.
Q) What Is the Relationship of Internal Audit Function with The Audit Committee?
A) The nature of the relationship between the internal audit function and the audit committee of the organization is typically a reporting relationship. Thus, the audit committee generally share the administrative responsibility of the internal audit function, with the shareholders’ committee, in terms of previewing the annual audit plan, other specific work plans, recruitment and staffing plan and the overall budget of the internal audit function, as well as reviewing the overall performance of the internal audit function with the shareholders’ committee. As the internal audit function and the audit committee have common goals, the ability of the audit committee and the internal audit function to work well together, depends highly on how effectively each party can fulfill its responsibilities.
Q) How can auditors help in fraud investigation?
A) Fraud management becomes part of enterprise-wide risk management. The audit team draws from experienced investigators, forensic accountants, corporate intelligence specialists, forensic computer experts and certified fraud examiners detect and investigate a variety of situations, including:
- Asset misappropriation
- Bribery and corruption.
- Conflicts of interest
- Corporate irregularities
- Financial reporting fraud
- Improper business relationships
- Patent and copyright infringement
- Regulatory violations
- Suspicious transactions
- Whistleblower allegations
Q) What are the Books & Study Material to Become Auditor available in India?
A) Reading books is always one of the best ways to learn new information and enhance your knowledge. If you’re considering getting a degree to become an auditor, these can help you understand more about the field and increase your expertise. Some of the most popular books for an aspiring auditor are listed below:
- Auditing for Dummies by Maire Loughran
- Report Writing for Internal Auditors by Angela J. Maniak
- The Internal Auditing Handbook
- The Internal Auditing Pocket Guide: Preparing, Performing, Reporting and Follow-Up by J.P. Rusell
Q) What are the pros of becoming an Auditor?
A) If you’re an auditor it is all about crunching numbers and analyzing costs that employers need. This gives you a much clearer career path as compared to others.
The job prospects for an auditor are to expand in the coming years. As long as people need help with taxes and as long as businesses exist, there will be a need for auditors.
Once an auditor has adequate experience and is a part of company’s decision making they enjoy very high salary packages and other perks.
You get an opportunity to move from client to client and from office to office applying your skills and knowledge to a new set of circumstances which helps you build experience and expertise.
You are always close to Top Management in the organization as most of the time you report to senior most in the organization.
Q) What are the cons of becoming an Auditor?
A) Unlike other industries, the learning doesn’t stop for an auditor. To progress in their career, the auditor will be required to upgrade skills and certifications from time to time.
The work can be dull sometimes as it involves a lot of math and calculation which can be very boring sometimes.
When you are responsible for an organization’s finances, there is bound to be some pressure which can lead to stress.