How many times have you heard someone say about their job, “No one understands what I do?” Or have you ever heard someone say about their job, “I have no idea what I’m doing!” That can be a scary thought. Imagine a doctor, lawyer, or mental health worker saying that. Thankfully, positions like a Certified Internal Auditor (CIA) can escape this mystery. With a clearly defined job description and a clearly defined function, an auditor can avoid all that confusion.
Primary Function of an Auditor
Knowing the primary function of an auditor helps us understand all the other auditor’s duties and responsibilities that revolve around it. To put it simply, an auditor protects a company’s assets by ensuring they comply with all internal procedures and legal regulations. A company gains revenue through providing goods and services. An auditor ensures that the revenue gained matches the goods and services provided. If you work as an auditor for a non-profit, then one way the company gains revenue is by billing a client for service provided (such as a counseling appointment). An auditor would make sure that the billings were legitimate, the services were provided, and the paperwork reflects this.
With all that in mind, you can think of an auditor as having a fundamentally protective role in the company. The auditor protects the company and its assets because if the revenue, services, and paperwork don’t match up, the company (or someone in it) may be guilty of fraud. And this is where we see the primary difference between an accountant and an auditor. Although the role may be rolled into one, an accountant often needs to make projections about future revenue streams and potentialities. However, an auditor protects against fraud and other discrepancies. You can find out more about the differences between an accountant and an auditor here.
Auditor Duties and Responsibilities
What does the primary function of an auditor look like in action? How do they accomplish this function? We find the answer to this in an auditor’s duties and responsibilities. These can include:
- Safeguarding abidance to all necessary procedures and protocols by examining financial records in all departments, operating practices of each department, and documentation from them.
- Completing audit reports and documenting findings. Depending on the size of the department/company, audit reports are typically between 10-30 pages long. But they can also go over 100 pages if serious offenses have been committed.
- Corroborating the assets and liabilities you’ve found from the information you’ve gathered and compare them to official documentation and paperwork from each department.
- Assessing effectiveness of procedures and protocols by completing audit questionnaires/inventories. If necessary, the department head will have to complete one.
- Maintaining the aforementioned procedures and protocols by updating audit questionnaires so that they’re always relevant and recommending new policies and procedures to the leadership of the company, either the department heads or even the Board of Directors.
- Preparing special audit and control reports by collecting, analyzing, and summarizing trends you notice within the company. This might include noting how certain practices within the company make it vulnerable to committing fraud.
- After this, you’ll then publish your findings through a final report, and possibly lead a presentation on these findings with the department heads and/or Board of Directors.
- Complying with federal, state, and local legal requirements by studying new and existing auditing legislation, and then enforcing obedience to these requirements, sometimes by providing advice to management on needed actions to guarantee this compliance takes place.
- Staying current on the latest literature, education, and networks relevant to the field. This includes keeping updated with any changes to the Generally Accepted Auditing Standards (GAAS).
By fulfilling these auditor duties and responsibilities, the auditor can protect the company against fraud, as well as protect consumers from becoming victims of fraud.
Generally Accepted Auditing Standards (GAAS) set by the Auditing Standards Board will allow the auditor to adhere to regulations and conduct an audit.
Role of an Auditor in a Company
What is the role of an auditor in a company? The primary function of an auditor is to prevent fraud, all the auditor’s duties and responsibilities serve that end, but how does this work in a for-profit company? In other words, how do they contribute to the culture of a business?
- They ask questions. If you look again at the auditor’s duties and responsibilities, getting to the bottom of things comes with the territory. If they find a discrepancy, they’ll need to know how to ask clear, targeted questions to get to the truth.
- They err on the side of caution. This isn’t to say that an auditor cannot trust anyone or his/her own work. However, they need to be meticulous in their record keeping. As the old saying goes, “If you didn’t write it down, it didn’t happen.”
- They work in teams. Large companies might have a team of auditors and accountants managing their assets. Others may hire an independent firm. Either way, you can expect the role of an auditor in a company includes teamwork.
- They value procedure. An auditor cannot do their job well if they’re not “by the book.” Bending the rules makes them uncomfortable. Instead, they have strong convictions about integrity and possess a high ethical IQ. This leads them to follow the law to the letter.
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