Auditor

Loading the player...

What is an 'Auditor'

An auditor is an official whose job it is to carefully check the accuracy of business records. An auditor might be either an internal auditor, external auditor or independent auditor for accounting firms in the public or private sector. Auditors can also work for many different entities, such as the IRS or a state government.

BREAKING DOWN 'Auditor'

Auditors assess financial operations and ensure organizations run efficiently. Their job is to follow cash flow from beginning to end and ensure an organization’s funds are accounted for properly.

Auditor Education and Certification

Auditors typically have a bachelor’s degree in finance, accounting or business administration. Many earn graduate degrees in finance or accounting. Professional designations such as certified public accountant (CPA), certified internal auditor (CIA), certified government auditing professional (CGAP), certified financial services auditor (CFSA) or certification in control self-assessment (CCSA) increase job prospects and income.

Types of Auditors

Public auditors perform accounting, tax and consulting work for corporations, governments and individuals. These auditors work with tax forms and balance sheet statements that companies provide to potential investors. For example, some public accountants advise corporations on tax advantages of certain business decisions, or prepare individual income tax returns. Many public auditors are CPAs who work for public accounting firms or own their own businesses.

Private auditors record and analyze financial information of the organization for which they work. Private auditors work on budgeting and performance evaluation, help plan the cost of doing business, and select financial investments for their companies.

Government auditors maintain and examine records of government agencies and of private businesses or individuals performing activities subject to government regulations or taxation. Auditors employed through the government ensure revenues are received and spent according to laws and regulations. Government auditors detect embezzlement and fraud, analyze agency accounting controls, and evaluate risk management.

Internal auditors work with government departments or private businesses, checking for mismanagement of funds and finding ways to eliminate waste and fraud. Typical goals include reducing accounts receivable, improving payroll processes, and setting up more frequent sweeps of funds into interest-bearing accounts. Internal auditors observe industry trends, track revenues and expenditures, and make efficiency recommendations to upper management.

External auditors are independent contractors who focus on the fairness of an organization’s financial statement, ensuring it accurately reflects the company's financial situation. External auditors assert whether financial statements are free of material misstatement due to error or fraud. Some external auditors provide tax and consulting services for individuals, small businesses, corporations, government bodies or nonprofit organizations.

RELATED TERMS
  1. Independent Auditor

    A certified public accountant who examines the financial records ...
  2. Auditor's Report

    Recorded in the annual report, the auditor's report tests to ...
  3. Audit Cycle

    The accounting process that auditors employ in the review of ...
  4. Institute Of Internal Auditors ...

    A leader in certification, education and research for professionals ...
  5. Certified Internal Auditor - CIA

    A certification offered to accountants who conduct internal audits. ...
  6. Positive Confirmation

    An auditing inquiry that requires the customer to respond to ...
Related Articles
  1. Investing

    What Does an Auditor Do?

    An auditor ensures that organizations maintain accurate and honest financial records.
  2. Managing Wealth

    Financial Auditor: Job Description & Average Salary

    Discover what it means to hold a financial auditor position, including typical job duties, education and training, required skills and expected salary.
  3. Managing Wealth

    Financial Auditor: Career Path & Qualifications

    Learn more about what it takes to become an internal or external financial auditor, and determine whether the profession is right for you.
  4. Managing Wealth

    Internal Auditor: Job Description & Average Salary

    Learn about what the job of internal auditor entails, as well as the median salary, education and certifications required and future career path.
  5. Professionals

    Internal Auditor: Career Path & Qualifications

    Find out what kind of work internal auditors do in large organizations, and learn more about how to get started working in the field.
  6. Managing Wealth

    Career Advice: Accounting Vs. Auditing

    Understand the subtle distinctions between accounting and auditing, and learn what each offers a new graduate in terms of salary, job security and daily life.
  7. Investing

    Finding The Right Accounting Certification

    An accounting certification may be the boost your career needs. Find out how to get the most bang for your buck.
  8. Managing Wealth

    Common Interview Questions for Financial Auditors

    Identify questions commonly asked at financial auditor job interviews, and learn to formulate winning responses that give your candidacy a boost.
  9. Markets

    What Does Going Concern Mean?

    Going concern is a concept used in business and accounting to describe the fiscal health of a company.
  10. Investing

    Finding The Right Accounting Certification

    The right accounting certification can open the doors of opportunity.
RELATED FAQS
  1. How important are contingent liabilities in an audit?

    Read about the importance of contingent liabilities during an audit, why audits are necessary and how contingent liabilities ... Read Answer >>
  2. What are some examples of inherent risk?

    Read about the nature of inherent risk in preparing and executing financial audits, including some common situations that ... Read Answer >>
  3. How is inherent risk assessed by an auditor?

    Learn how CPA auditors assess the levels of inherent risk of different audit areas that they use to design the procedures ... Read Answer >>
  4. Are money market funds considered cash?

    Learn the difference between how analysts and auditors treat money market funds and why not knowing the difference can hurt ... Read Answer >>
  5. What are the benefits of financial sampling?

    Learn more about how financial sampling is used to determine whether or not inaccurate or fraudulent information exists in ... Read Answer >>
  6. Are IRS audits random?

    Learn about how the U.S. Internal Revenue Service (IRS) conducts its tax audits based on random selection, document matching ... Read Answer >>
Hot Definitions
  1. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  3. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  4. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  5. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  6. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
Trading Center