Working in finance and accountancy, you may choose to follow a career path in audit. But what exactly is audit? And what does an auditor do? GAAPweb have created this post to help you understand the role of an auditor and the common requirements of an audit professional, plus the primary differences between internal and external audit.
Overview: what do auditors do?
The role of an auditor involves the examination of a company’s accounts to assess the accuracy, efficiency and compliancy of their financial records and processes. They will check that an organisation is paying their taxes and ensure that no fraudulent activity is being undertaken. Auditors explain their findings to their client or employer, suggesting improvements for financial efficiency.
What is an audit?
An audit is an independent and objective assessment of a company’s financial records and processes. Audit is carried out with the aim to provide an opinion to shareholders or senior management on whether the company’s financial statements represent a true and fair view.
What are the duties and responsibilities of an auditor?
- Undertaking thorough assessment of an organisation’s financial records and processes to identify any mistakes, attempts at fraud and areas for process improvement.
- Determining whether an organisation’s financial statements represent a fair and truthful view of reality.
- Ensuring an organisation’s financial records and processes are fully compliant with both the law and generally accepted accounting principles.
- Organising the financial records of a company so they are easily accessible for future audit.
- Confirming that taxes have been paid accurately, timely and legally. Working out taxes owed and preparing tax returns.
- Explaining audit findings to employers or clients and suggesting changes to financial processes to improve efficiency and accuracy.
- Suggesting business improvements to save money and increase profits.
External audit vs. internal audit
An external audit is carried out, usually once a year, by an unbiased, independent party who examines financial records to determine whether they are a fair and true representation of reality. Internal audits are focused on risk identification and best practice, executed throughout the year by an employee of the company.
Usually, auditor job adverts will specify whether the role is external or internal. Despite sharing similar core duties, internal and external roles have several significant differences that should be considered when applying for audit jobs.
What does an external auditor do?
- Independent of the business they are auditing, external auditors are responsible to the owners of the business. This may be shareholders, government bodies or the public.
- External auditors are appointed by the shareholders of an organisation and sourced from an audit firm or accountancy practice.
- The objectives of an external auditor are set by law. They have the freedom, and the duty, to examine all processes and reports in order to conclude that an organisation’s financial statements represent a true and fair view.
- The format of an external audit report is defined by law. These reports are often made available in the public domain.
What does an internal auditor do?
- Usually an employee of the company they are auditing, internal auditors report to the senior management or board of a business.
- The objectives of an internal auditor are defined within their Audit Charter. Management will steer an internal auditor’s goals and highlight specific areas, processes or reports that they would like to be examined. Internal audit responsibilities relate to the organisation and efficiency of governance, risk management and internal control systems.
- There is no set or legally defined reporting format that internal auditors must adhere to and internal audit reports are not usually made publicly available unless requested by regulatory bodies.
Search and apply for the latest internal audit jobs today on GAAPweb.
Auditor qualifications and experience
To become an external auditor, one must be a Responsible Individual. This entails attaining an audit qualification and practising certificate from ICAS, ICAI, ICAEW or ACCA.
While no requirement exists for internal auditors to be members of any professional accounting body, many will be certified practising auditors or chartered accountants. If you are not qualified, a strong degree in accounting, mathematics, economics or a similar discipline may go a long way in securing an audit role.
Depending on the seniority level of the job for which you are applying, employers will ask for a certain number of years of experience within an audit or accounting role.
What skills do you need to be an auditor?
- High computer literacy – advanced Excel skills and sound knowledge of Sage 50 Accounting software or similar.
- Sound understanding of UK GAAP.
- Strong interpersonal and communication skills for engaging and influencing stakeholders or senior management.
- Commercial acumen and understanding of business development.
- Solid relationship building skills.
- Attention to detail.
- Project management experience.
- Excellent data analysis skills and experience.
The role of an auditor varies significantly between internal and external positions and differs also for each unique role and employer. While this post gives the general overview of what an auditor does and what you’ll need to succeed, it is best practice to read the full job description of each job you apply for. Search and apply for the latest audit jobs across the UK today on GAAPweb.