What is an Auditor?

An auditor is someone who prepares and examines financial records. They ensure that financial
records are accurate and that taxes are paid properly and on time. They assess financial operations
and work to help ensure that organizations run efficiently.

In addition to examining and preparing financial documentation and written reports, auditors must
explain their findings. This includes face-to-face meetings with organization managers and individual
clients.

An auditor typically does the following:

Examines financial statements to be sure that they are accurate and comply with laws and
regulations

Computes taxes owed, prepares tax returns, and ensures that taxes are paid properly and on time

Inspects account books and accounting systems for efficiency and use of accepted accounting
procedures

Organizes and maintains financial records

Assesses financial operations and makes best-practices recommendations to management

Suggests ways to reduce costs, enhance revenues, and improve profits

Auditors assess financial operations and work to help ensure that organizations run efficiently.

Many auditors specialize, depending on the particular organization that they work for. Some
specialize in assurance services (improving the quality or context of information for decision makers)
or risk management (determining the probability of a misstatement on financial documentation).
Other auditors specialize in specific industries, such as healthcare. Some workers with a background
in accounting and auditing teach in colleges and universities.

The four main types of auditors are:

Public auditors -

do a broad range of accounting, auditing, tax, and consulting tasks. Their clients include
corporations, governments, and individuals. They work with financial documents that clients are
required by law to disclose. These include tax forms and balance sheet statements that corporations
must provide potential investors. For example, some public auditors concentrate on tax matters,
advising corporations about the tax advantages of certain business decisions or preparing individual
income tax returns. They review clients' financial statements and inform investors and authorities
that the statements have been correctly prepared and reported. Some public auditors specialize in
forensic accounting or investigating financial crimes, such as securities fraud and embezzlement,
bankruptcies and contract disputes, and other complex and possibly criminal financial transactions.
Forensic auditors -

combine their knowledge of accounting and finance with law and investigative techniques to
determine if an activity is illegal. Many forensic auditors work closely with law enforcement
personnel and lawyers during investigations and often appear as expert witnesses during trials.
Government auditors maintain and examine the records of government agencies and audit private
businesses and individuals whose activities are subject to government regulations or taxation.
Auditors employed by federal, state, and local governments ensure that revenues are received and
spent in accordance with laws and regulations.

Internal auditors -

check for mismanagement of an organization’s funds. They identify ways to improve the processes
for finding and eliminating waste and fraud.

External auditors -

are independent auditors that do not work for the company they are auditing. Investors,
government agencies and general public companies rely on this type of auditor to present an
unbiased and independent report.

Information technology auditors -

are internal auditors who review controls for their organization's computer systems, to ensure that
the financial data comes from a reliable source.

Are you suited to be an auditor?

Auditors have distinct personalities. They tend to be conventional individuals, which means they’re
conscientious and conservative. They are logical, efficient, orderly, and organized. Some of them are
also enterprising, meaning they’re adventurous, ambitious, assertive, extroverted, energetic,
enthusiastic, confident, and optimistic.

What is the difference between an accountant and an auditor?

While both an accountant and an auditor are responsible for the accounting processes of a
company, there are some differences between the two professions. An auditor is responsible for
reviewing the work of the accountant on a quarterly or annual basis, and is often hired from an
outside firm to do so. An accountant, on the other hand, is usually an employee of the company for
which they work, and the work done by an accountant is done on a daily basis. An accountant will
create the financial statements for the company, and the auditor will look the financial statements
over to make sure they are accurate.

Auditors perform (internal) financial and risk management audits and independent statutory
(external) financial audits of commercial and public sector organisations.

Auditors assess local and central government departments with the aim of improving efficiency and
effectiveness.

What does an auditor do? Typical employers | Qualifications and training | Key skills
Auditors are specialists who review the accounts of companies and organisations to ensure the
validity and legality of their financial records. They can also act in an advisory role to recommend
possible risk aversion measures and cost savings that could be made.

Auditors work in the accounting departments of a huge range of firms and with independent
chartered and certified firms, examining the money going in and out of organisations and making
sure it is recorded and processed correctly.

Key activities include:

collating, checking and analysing spreadsheet data

examining company accounts and financial control systems

gauging levels of financial risk within organisations

checking that financial reports and records are accurate and reliable

ensuring that assets are safeguarded

identifying if and where processes are not working as they should and advising on changes to be
made

preparing reports, commentaries and financial statements

liaising with managerial staff and presenting findings and recommendations

ensuring procedures, policies, legislation and regulations are correctly followed and complied with

undertaking reviews of wages.

Auditors work typical office hours from 9.00 am to 5.00 pm, Monday to Friday. They may need to
work extra hours or during the weekend to meet deadlines, particularly during tax audits.

Auditors sometimes travel to meet clients and visit factory or warehouse locations in order to make
stock and equipment checks.

Typical employers of auditors

Auditors can be either internal or external.

Internal auditors:

work for professional firms outsourced by client companies

work in-house as part of an organisation’s accounting team

work for large private companies, organisations and charities.

Internal auditors work largely in the private sector to improve the efficiency of businesses and
identify where processes are not working as they should. As well as reviewing financial accounts,
they also look at aspects of the company such as ethics, environmental sustainability, reputation and
growth.

External auditors:

work with private firms of accountants, or in the public sector for the National Audit Office

carry out obligatory audits of the public sector and governmental bodies

may be called to examine the finances of private businesses, especially those working in association
with governmental bodies.

External auditors play a vital role in ensuring that money raised by taxes is used effectively and
efficiently.

Qualifications and training required

There are routes into a career in audit for both university graduates and school leavers, though
routes differ depending on whether you are aiming for internal or external audit.

External auditors must first qualify as chartered accountants with a professional accounting body.
For more information about how to qualify, see our accountant job description.

Alternatively, you can gain a qualification with the Chartered Institute of Public Finance and
Accountancy (CIPFA) to work as an auditor in the public sector. For more information on this route
into audit, see our public finance accountant job description.

It is also possible for graduates to gain a professional accounting qualification while working for the
National Audit Office, which offers a three-year graduate scheme

Achieving qualifications can take three to five years but you will work while studying. Employers
often provide financial help with exams and allow time for study leave.

Internal auditors do not have to qualify as accountants, though it could be helpful. Graduates can
have a degree in any discipline but subjects such as accountancy, economics and IT are particularly
beneficial. School leavers can enter the profession by starting as a trainee auditor and completing
on-the-job training in order to progress.

For more information about school leavers routes into audit, see the finance sector of
TARGETcareers, our website aimed at school leavers.

Key skills for auditors

Self-motivation, determination and confidence

Ability to divide your time between work and study

Meticulous attention to detail

A strong aptitude for maths

Excellent problem-solving skills

A keen interest in the financial system

Ability to work to deadlines, under pressure

Ability to work on your own initiative and as part of a team

Strong IT skills

Excellent interpersonal and communication skills, including good presentation and report writing
skills

Next: search graduate jobs and internships

View our graduate accountancy and financial management vacancies and internships

Related job descriptions

Financial manager: job description

Tax inspector: job description

Accountant: job description

Corporate treasurer: job description

Accounting technician: job description

What an Auditor Does and Doesn’t Do

In the past, companies often relied on accountants from their audit firms to assist in reconciling
accounts, preparing the adjusting journal entries and writing financial statements.

Small companies, in particular, often lacked the level of accounting sophistication necessary to carry
out these tasks. Relying on the audit firm often made sense from the perspective of efficiency and
cost containment.

But an increased focus on auditor independence has come about during the last decade in new
requirements by the American Institute of CPAs and a host of related regulatory guidance issued by
the Securities and Exchange Commission, the General Accounting Office and the U.S. Department of
Labor.

The standards generally restrict the nonattest services – such as tax or consulting services – that
auditors may perform and the circumstances under which those services may be allowed. The
increased regulations serve to muddy an already often-misunderstood set of expectations.

What auditors do

The outside, independent auditor is engaged to render an opinion on whether a company’s financial
statements are presented fairly, in all material respects, in accordance with financial reporting
framework. The audit provides users such as lenders and investors with an enhanced degree of
confidence in the financial statements. An audit conducted in accordance with GAASand relevant
ethical requirements enables the auditor to form that opinion.

To form the opinion, the auditor gathers appropriate and sufficient evidence and observes, tests,
compares and confirms until gaining reasonable assurance. The auditor then forms an opinion of
whether the financial statements are free of material misstatement, whether due to fraud or error.

Some of the more important auditing procedures include:

✎ Inquiring of management and others to gain an understanding of the organization itself, its
operations, financial reporting, and known fraud or error

✎ Evaluating and understanding the internal control system

✎ Performing analytical procedures on expected or unexpected variances in account balances or

classes of transactions

✎ Testing documentation supporting account balances or classes of transactions

✎ Observing the physical inventory count

✎ Confirming accounts receivable and other accounts with a third party

At the completion of the audit, the auditor may also offer objective advice for improving financial
reporting and internal controls to maximize a company’s performance and efficiency.

What auditors don’t do

For a clear picture of the role of external auditors, it helps to understand what you should not expect
auditors to do. The emphasis is on “independent.”

First and foremost, auditors do not take responsibility for the financial statements on which they
form an opinion. The responsibility for financial statement presentation lies squarely in the hands of
the company being audited.

Auditors are not a part of management, which means the auditor will not:

✎ Authorize, execute or consummate transactions on behalf of a client

✎ Prepare or make changes to source documents

✎ Assume custody of client assets, including maintenance of bank accounts

✎ Establish or maintain internal controls, including the performance of ongoing monitoring

activities for a client

✎ Supervise client employees performing normal recurring activities

✎ Report to the board of directors on behalf of management

✎ Serve as a client’s stock or escrow agent or general counsel

✎ Sign payroll tax returns on behalf of a client

✎ Approve vendor invoices for payment

✎ Design a client’s financial management system or make modifications to source code underlying
that system

✎ Hire or terminate employees

This list is not all-inclusive. But, in short, the auditor may not assume the role and duties of
management.

In practical terms, there are a number of tasks you should not expect your auditor to perform.

✎ Analyze or reconcile accounts

✎ “Close the books”

✎ Locate invoices, etc., for testing

✎ Prepare confirmations for mailing

✎ Select accounting policies or procedures

✎ Prepare financial statements or footnote disclosures

✎ Determine estimates included in financial statements

✎ Determine restrictions of assets

✎ Establish value of assets and liabilities

✎ Maintain client permanent records, including loan documents, leases, contracts and other legal
documents

✎ Prepare or maintain minutes of board of directors meetings

✎ Establish account coding or classifications

✎ Determine retirement plan contributions

✎ Implement corrective action plans

✎ Prepare an entity for audit

Your external auditor may perform some of these duties under guidelines of the American Institute
of CPAs, Department of Labor, Government Accountability Office, Securities and Exchange
Commission or Public Company Accounting Oversight Board. However, these same guidelines may
preclude the auditor from performing some of these functions.

Management’s responsibilities in an audit

The words, “The financial statements are the responsibility of management,” appear prominently in
an auditor’s communications, including the audit report.

Management’s responsibility is the underlying foundation on which audits are conducted. Simply
put, without management having responsibility for the financial statements, the demarcation line
that determines the auditor’s independence and objectivity regarding the client and the audit
engagement would not be as clear.
It is important for a company’s management to understand exactly what an audit is – and what an
audit does and does not do. The auditor’s responsibility is to express an independent, objective
opinion on the financial statements of a company. This opinion is given in accordance with auditing
standards that require the auditors to plan certain procedures and report on the results of the audit,
while considering the representations, assertions and responsibility of management for the financial
statements.

As one of their required procedures, auditors ask management to communicate management’s

responsibility for the financial statements to the auditor in a representation letter. The auditor
concludes the engagement by using those same words regarding management’s responsibility in the
first paragraph of the auditor’s report.

Auditors cannot require management to do anything or to make any representation. However, to

conclude the audit with the hope of a “clean” unqualified opinion issued by the auditor,
management has to assume the responsibility for the financial statements.

Auditing standards are very clear that management has the following responsibilities fundamental to
the conduct of an audit:

1. To prepare and present the financial statements in accordance with an applicable financial
reporting framework, including the design, implementation and maintenance of internal controls
relevant to the preparation and presentation of financial statements that are free from material
misstatements, whether from error or fraud

2. To provide the auditor with the following information:

✎ All records, documentation and other matters relevant to the preparation and presentation of
the fin

he role of a Risk Manager is to communicate risk policies and processes for an organisation. They
provide hands-on development of risk models involving market, credit and operational risk, assure
controls are operating effectively, and provide research and analytical support. Risk Managers must
have excellent quantitative and analytical skills, along with the ability to apply those skills across a
variety of business processes.

Risk Management duties and responsibilities of the job

The duties under a Risk Management job description include the following:

 Designing and implementing an overall risk management process for the organisation, which
includes an analysis of the financial impact on the company when risks occur

 Performing a risk assessment: Analysing current risks and identifying potential risks that are
affecting the company

 Performing a risk evaluation: Evaluating the company’s previous handling of risks, and
comparing potential risks with criteria set out by the company such as costs and legal
requirements

 Establishing the level of risk the company are willing to take

 Preparing risk management and insurance budgets

  Risk reporting tailored to the relevant audience. (Educating the board of directors about the
most significant risks to the business; ensuring business heads understand the risks that
might affect their departments; ensuring individuals understand their own accountability for
individual risks)

 Explaining the external risk posed by corporate governance to stakeholders

 Creating business continuity plans to limit risks

 Implementing health and safety measures, and purchasing insurance

 Conducting policy and compliance audits, which will include liaising with internal and
external auditors

 Maintaining records of insurance policies and claims

 Reviewing any new major contracts or internal business proposals

 Building risk awareness amongst staff by providing support and training within the company

Risk Management job qualifications and requirements

A degree in the following subjects is not vital but can be included in a job description:

 Risk Management

 Management or Business Studies

 Finance or Economics

 Science

 Statistics

 Engineering

 Law

Postgraduate degrees are not mandatory, but may also be beneficial.

If a candidate does not have a degree, a career in risk management is certainly still possible, but
would mean working up the career path, likely starting at an administrative level.

When compiling a Risk Management job description, it’s important to also display the following
skills:

 Analytical skills and an eye for detail

 Commercial awareness

 Numerical skills

 Planning and organisational skills

 Ability to understand broader business issues

 Communication and presentation skills

Are you looking for a Risk Management role? View our latest Risk Ma