Certified Internal Auditor (CIA): Meaning and History

What Is a Certified Internal Auditor (CIA)?

A Certified Internal Auditor (CIA) is a certification offered to accountants who conduct internal audits. The Certified Internal Auditor designation is conferred by the Institute of Internal Auditors (IIA) and is the only such credential that is accepted worldwide.

CIAs usually work in the audit department of government agencies, financial institutions, or corporations. They review financial records to look for deficiencies in internal controls.

Key Takeaways

  • A Certified Internal Auditor (CIA) is a certification provided to accountants that conduct internal audits.
  • The CIA is awarded to individuals by the Institute of Internal Auditors (IIA) after passing the required exams.
  • The audit departments of government agencies, financial institutions, and corporations are where CIAs are typically employed.
  • CIAs are similar to certified public accountants (CPAs), however, CPAs are mostly only recognized in the U.S., whereas CIAs are recognized globally.

Understanding a Certified Internal Auditor (CIA)

Certified public accountants (CPAs) are also trained in auditing and can perform many of the same functions as a CIA; however, the professional with a CIA designation will have a more micro-focused skill set.

One important difference is that the CPA credential is often recognized only within the United States, whereas the CIA is an internationally recognized designation. While CPAs can be employed directly by a company in an auditor role, it is far more common for them to come into a company from the outside (external) to perform auditing functions. CIAs are thus more likely to be employed directly by a company. Although it is not very common, an accountant can pursue and hold both a CPA and CIA designation.

Internal auditors are typically subject to a code of ethics. An example of internal auditors not adhering to that code is the Lehman Brothers scandal in 2008. Executives received high salaries despite the financial challenges the company experienced. In addition, inadequate internal controls allowed the accounting system to be manipulated by the reporting of fabricated numbers in the balance sheets. The actions were illegal, unethical, biased, unprofessional, and violated the CIA code of ethics.

How to Become a Certified Internal Auditor (CIA)

Accountants seeking the CIA certification are required to get a bachelor’s degree and have no less than two years of work experience in a field related to internal auditing, such as internal control, compliance, and quality assurance. Other requirements include a character reference and proof of identification. If you become a CIA, you will also have to meet continuing education (CE) requirements of 40 hours per year to maintain certification.

CIAs have a wide range of career options. A CIA can move into an executive position, such as vice president, chief audit executive, or director. A CIA can specialize as an internal auditor, an audit manager, and a compliance auditor, or in investigation auditing and information technology auditing. CPAs tend to earn slightly higher salaries than CIAs, but it will depend on the individual CIA’s job title and role.

History and Government Requirement of Internal Auditors

The IIA launched in 1941 and solidified the internal audit practice as a profession. In 1950, Congress required that each executive agency include internal audits in the agency's system of internal controls. Internal auditing emerged as a separate accounting function in the middle of the 20th century.

In 1977, the Foreign Corrupt Practices Act completely overhauled the internal auditing industry. The act prevented companies from hiding funds and conducting bribery. The act required companies to keep adequate systems of internal control and keep complete and correct financial records, increasing the demand for internal auditors.

The first CIA exam was conducted in 1974 and as of the end of 2021, there are over 178,000 CIAs.

Outlook for Certified Internal Auditors (CIA)

The hiring of auditors is projected to increase. Due to changes in legislation regarding financial reporting, corporate taxes, and mergers and acquisitions, an increase in the demand for auditors, and a need for increased accountability to protect organizations and their stakeholders, is certain. The role of auditors continues to change, which is going to drive job growth in the industry. In addition, succession planning, retirement, and employee turnover will produce new job openings in the industry.

Companies and government agencies will continue to hire internal auditors to strengthen internal controls. Because accounting scandals and financial improprieties are still a real problem that investors and analysts must be made aware of, CIAs' roles will remain important for the foreseeable future.

Article Sources
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  1. Harvard Law School. "The Wages of Failure: Executive Compensation at Bear Stearns and Lehman 2000-2008," Pages 2-3.

  2. Yale School of Management. "The Lehman Brothers Bankruptcy A: Overview," Pages 46-47.

  3. The Institute of Internal Auditors. "Eligibility Requirements."

  4. The Institute of Internal Auditors. "Continuing Professional Education Policy: Requirements for Certification & Qualification Programs," Page 3.

  5. U.S. Government Accountability Office. "The Budget and Accounting Act," Pages 18-23.

  6. The Institute of Internal Auditors. "History of the IIA."

  7. Congressional Research Service. "The Foreign Corrupt Practices Act (FCPA): An Overview."

  8. The Institute of Internal Auditors. "CIA Fact Sheet."

  9. U.S. Bureau of Labor Statistics. "Accountants and Auditors: Job Outlook."