Internal auditing is not a high-profile position, but it is a vital part of a company's infrastructure to help ensure smooth operations and compliance with laws and regulations.
As of 2020 (the most recent figures available from PayScale), the job market for internal auditors continues to flourish with healthy demand for the profession, making internal auditing an attractive career choice for those with a natural inclination toward math.
What Does an Internal Auditor Do?
The role of the internal auditor is that of an impartial watchdog, continuously making sure the company is in compliance with laws and regulations, as well as working to ensure that departments and employees follow proper procedures. An internal auditor audits fiscal statements, expense reports, inventory, and pretty much anything else that needs to be impeccable in case of an external audit by the Securities and Exchange Commission (SEC) or any other governmental regulatory body.
Another key aspect of the job is asset protection through risk management. These risks can range from fraud and legal exposure to internal policy lapses and mismanagement. Internal auditors create risk assessments for each department, using a master plan with a set schedule down to the most minuscule details to ensure nothing falls by the wayside.
They build checklists and supervise audit work schedules. It also falls on the internal auditor to continuously check the internal accounting procedures and operating systems. An internal auditor is not personally engaged in any department and is, thus, expected to approach each area impartially and objectively.
In publicly-traded companies, the CEO is legally required to have an internal auditor reporting directly to him.
What Salary Do Internal Auditors Make?
The 2020 national average salary is $58,844 according to PayScale. Internal auditors report receiving bonuses that reach $3,023 on average and profit-sharing programs paying $1,986 annually on average.
The salary for internal auditors varies greatly depending on location and experience. The coastal areas such as New York City, Los Angeles, Seattle, Boston, and Houston have significantly higher average salaries across the board, while inland locations generally trend lower.
For example, salaries in Pittsburgh are reportedly 12% below the national average. The average nationwide starting salary for entry-level auditors with zero to five years of experience is $54,609 and increases fairly rapidly with experience.
- Experience internal auditors have many career path options.
- Many internal auditor jobs pay nearly $60,000 a year, as a starting salary.
- Internal auditors must be able to protect a company's assets via risk management skills and tools.
What Type of Education Is Most Common?
A bachelor's degree in accounting or finance is the most common job requirement. In rare cases, people with lower education have earned the position by starting in a junior accounting position and growing into the role through experience.
These people are unable to earn Certified Public Accountant (CPA) or similar accreditations, usually making the role of internal auditor as high as they get in the corporate hierarchy.
Master's and doctorate degrees are mostly found among those who are aiming to move into management. Business- and math-related fields dominate this type of degree.
What Certifications Are Required?
Many internal auditors find that achieving CPA status significantly helps their careers and salary prospects. It is also a requirement to file reports with the SEC. The CPA requirements vary by state, but the common minimum requirement is a bachelor's degree, at least one year of experience working under the guidance of a CPA and passing the grueling CPA exam.
The Certified Internal Auditor (CIA) designation is granted by the Institute of Internal Auditors (IIA) after passing a four-part test. The CIA also requires a bachelor's degree and two years of working experience as an internal auditor.
The IIA also offers the following specialized accreditations: Certified in Control Self-Assessment (CCSA), Certified Government Auditing Professional (CGAP), and Certified Financial Services Auditor (CFSA). These industry-specific certifications can greatly improve employability in these fields.
For those who wish to specialize in auditing software, they can pursue the Certified Information Systems Auditor (CISA) accreditation offered by the organization ISACA, a nonprofit, independent association that advocates for professionals involved in information security, assurance, risk management, and governance.
The Certified Management Accountant (CMA) designation is conferred by the Institute of Management Accountants (IMA) and focuses on financial statement analysis, valuation, and capital structure.
What Skills Does an Internal Auditor Need?
The most important quality of the internal auditor is great attention to detail. A significant part of the job is meticulously following detailed checklists and spending hours upon hours scanning numbers to catch anything that stands out. Being naturally proficient in math is an obvious advantage in this task.
Integrity is another must for the job, as the company and its owners rely on the auditor to catch everything suspicious or amiss. The auditor's primary allegiance is to hard facts and numbers rather than a manager.
Sound judgment and common sense are of great importance, as it is the auditor's job to find a healthy balance between risk and flexibility. The ability to understand the underlying business processes makes the control of policies a fluid part of the workflow rather than a bottleneck.
The ability to effectively communicate is also important. Despite the job being largely centered on numbers, the auditor also needs to communicate the findings and conclusions so it can be easily understood. Certain diplomacy and people skills come in handy when implementing new business controls and procedures. A good grasp of generally accepted accounting principles (GAAP) and Sarbanes-Oxley (SOX) is also a preferable skill.
What Is a Typical Career Path?
After some years as an internal auditor, the natural, and most common, the next step is to become a senior internal auditor. This position has an average salary of $78,749 and shifts the focus more onto policy creation rather than policy enforcement.
The next step in the job level is an internal audit manager with a salary of $99,820. This job focuses on managing the audit team and to act as a liaison with external auditors. Larger firms also offer the position of senior auditing manager, at an average salary of $122,455, or internal audit director, at an average salary of $130,753. The final step is either a partner or a chief financial officer.
Another path from the job of an internal auditor is to first make a largely lateral move to senior accountant, at a salary of $67,904, and then go for the position of financial controller, at a salary of $83,466, followed by the CFO position. Even at later stages in a person's career, the field has a fairly-even gender balance with a slight majority of women working at the entry-level.
The Bottom Line
A job in internal auditing offers many opportunities to those interested in compliance and oversight, and with a background in mathematics. As the need for internal auditors continues to grow, there are a plethora of opportunities for job advancement in this field.
(All figures quoted in the article are from Payscale for 2019)