If you’ve done a little bit of research about auditing, you’ve likely come to realize that though the job title is often used interchangeably with accountant, there are some significant differences between the two careers. Though their educational tracks will likely look similar, the day-to-day tasks and responsibilities of an auditor are notably different than those of an accountant.
What is an Auditor?
Though an auditor is a type of accountant, not all accountants are auditors. A financial auditor is responsible for ensuring that a company, individual, or organization’s financial statements are appropriate, accurate, and compliant with generally accepted accounting principles (GAAP). This work involves recognizing or discovering fraud and/or errors in the searched documents. When done appropriately, the work of an auditor is intended to protect the financial assets of a client.
Audit accounting is a branch of accounting that an accountant can choose to work in. Should an account choose a different track and work in a different branch of a firm, their title would not be auditor. Many times, an accountant is an employee of the company they are working for, whereas an auditor is often hired externally to make quarterly or annual reviews.
Types of Auditor
There are 4 different paths an auditor can choose: public auditing, forensic auditing, internal auditing, external auditing and information technology auditing.
Public auditing: These auditors often do a range of accounting, auditing, tax, and consulting tasks for corporations, governments, and individuals.
Forensic auditing: These auditors combine their financial prowess with the law and investigative responsibilities to determine the presence of any illegal activities.
Internal auditing: Internal auditors are responsible for determining any mismanagement of organizational funds.
External auditing: External auditors are independent and don’t work for whoever they are auditing. They are often employed by government agencies or public companies to ensure objectivity.
Information technology auditing: This type of auditing is concerned with the accuracy and control of organizational computer systems, to ensure that the source of all financial data is secure and reliable.
Tasks and Responsibilities of an Auditor
An auditor has a variety of duties and job responsibilities. These tasks require business knowledge, organizational awareness, communication skills, and excellent accounting knowledge. Auditors must also be able to present their information, both on paper and verbally, in a way that is understandable and approachable to a variety of different audiences.
Data Collection and Analysis
Typically, the number one task for an auditor is the review of a company’s financial documents, statements, data and accounting entries. This review is meant to ensure that a client is compliant with all GAAP (or whatever financial framework the client is obligated to uphold).
Information may be gathered from a large variety of sources, including income statements, account statements, balance sheets, tax returns, and financial reporting systems. Auditors must be able to accurately and objectively review this data, note any errors, discrepancies, or fraudulent behaviors, compare findings to the necessary documentation, and confirm that their findings are true and appropriate.
The tasks and responsibilities of an auditor are going to be dependent on the type of auditing being performed (one of the five types discussed above) as well as the client. Some specific day-to-day tasks may include:
- Examination of financial statements
- Computation of taxes and tax preparation
- Assurance of the use of GAAP in accounting books and accounting systems
- Organization and maintenance of financial records
- Assessment of financial operations; may include direct interviews
- Recommendations for best practice
- Suggestions for cost reduction, revenue enhancement, or profit improvement
Leadership Inquiries
Auditors often collect information through personal interviews, which require strong interpersonal skills and communication skills. Typically, these interviews are performed with upper level management. These interviews help establish what organizational practices are (or should be taking) place, deepening understanding of the organization itself.
Communication of Data
Auditors must be able to report on and communicate their findings in clear and concise ways. Their reports must be legible and understandable for multiple departments and levels of personnel. Both low and high level management, as well as accounting, finance, and c-suite personnel, will (likely) all be reviewing their reports.
An auditor’s reports and information are often used to suggest recommendations or specific action items. These suggestions often lead to the development and implementation of new policies and procedures to maximize company performance and efficiency.
Audit Questionnaires
Audit questionnaires or checklists are documents auditors use to efficiently move through their auditing tasks. These checklists are extremely important in identifying which procedures or areas need to be further inspected. They also are quick references that are useful to auditors before finalizing their report(s). If there is an area on the checklist or questionnaire that is not addressed in the final report or is not being appropriately handled, the auditor can then address that.
Different types of checklists or questionnaires auditors use may include: financial statement checklist, compliance checklists or a quality review checklist.
Knowledge Maintenance
Like most industries, knowledge maintenance is an important part of career responsibility. Auditors have the opportunity to take the Certified Internal Auditor (CIA), Certified Government Auditing Professional (CGAP) or Certified Financial Services Auditor (CFSA) exams. Each of these exams has different requirements before examination, as well as different requirements for continuing professional education (CPE) requirements.
To Audit or Not to Audit?
The choice of whether or not to pursue auditing as a career may feel like an easy one to you. However, if you are still struggling to decide, be sure to compare the job described here to the tasks and responsibilities of an accountant. While there are many similarities among the two careers, there are a variety of different paths you can take in each direction (like subspecialties and specializations), each of which will yield different day-to-day work tasks. Do your research about all of these paths and hopefully, you will find one that is a great fit for you, your skills, and your passions.
DQ Staff
February 2020
More Articles of Interest: