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What is 'Auditor'

An auditor is a person authorized to review and verify the accuracy of business records and ensure compliance with tax laws. Auditors work in various capacities within different industries (e.g. internal auditors with the IRS or external auditors hired by accounting firms).  

BREAKING DOWN 'Auditor'

Auditors assess financial operations and ensure organizations run efficiently. They are tasked with tracking cash flow from beginning to end and verifying that an organization’s funds are properly accounted for.

How to Become an Auditor

Often, auditors begin their careers with a bachelor's degree in accounting or finance.  Many later earn graduate degrees in the same fields or in more aligned fields, such as internal auditing.  Becoming professionally certified enhances visibility and signifies a desired level of competency sought after by many employers.  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 independently or for public accounting firms.

Private auditors record and analyze their employer's financial information. 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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