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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.

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