Menu
Role, Qualifications & experience of Auditors required for Comprehensive Auditing
Home / Role, qualifications, and Importance of Auditor
Recent Blog
Subscribe to Newsletter
Table of Contents
An auditor is an individual entrusted with the responsibility of reviewing and assessing the accuracy of financial records to ensure that companies adhere to tax laws. They play a crucial role in protecting organizations from fraud, identifying inconsistencies in accounting processes, and, on occasion, offering consultancy services to help businesses improve their performance. Auditors work across various industries, serving in different capacities to uphold financial integrity and compliance with tax laws. Auditors in professional auditing firms, such as MMBA Accountants, offer various meticulous roles.
Let’s have a look at the different roles an auditor and what particular category they belong to:
Types of Auditors According to Their Roles
There are five major categories of auditors
Internal Auditors – Guaranteeing Efficiency and Effectiveness
Internal auditors work within a company. They examine its finances, policies, and procedures. Moreover, they provide recommendations for improvements to improve the efficiency and effectiveness.
External Auditors – Offering Legal and Financial Compliance
External auditors typically work for auditing firms. Their primary goal is to audit the accounts of various client companies for legal and financial compliance.
Government Auditors – Reviewing Governmental Taxation
Government auditors review records of government departments and private entities that operate under government regulations or are subject to taxation. They detect embezzlement, analyze agency accounting controls, and evaluate risk management.
Forensic Auditors – Offering Services to Investigation Department
Forensic auditors specialize in criminal law. They investigate potential fraud and illegal activities. They often collaborate with law enforcement and legal professionals to collect evidence.
Technological Auditors – Revolutionizing IT Sector
Technological auditors focus on IT systems. They review and analyze procedures and controls. Secondly, their goal is to identify errors or fraud in financial reports. After an initial assessment, they make sure that all the procedure are complying with relevant legal, regulatory, and industry standards.
Qualifications & Certifications of an Auditor
External auditors employed by public accounting firms must hold a Certified Public Accountant (CPA) license, which is awarded by the American Institute of Certified Public Accountants. Additionally, they need to obtain state-specific CPA certification. While requirements vary by state, most mandate the CPA designation and at least two years of professional experience in public accounting.
Although not always compulsory, internal auditors are encouraged to obtain CPA accreditation as well. A bachelor’s degree in fields such as finance or other business-related disciplines, along with relevant experience and skills, is often sufficient for most internal audit and auditing roles.
The Pragmatic Role of an Auditor in a Firm
Auditors are responsible for providing an independent and objective evaluation of an organization’s financial health. They help to safeguard against fraud, errors, or mismanagement. Their role includes offering audit services. This also involves certifying compliance with laws, verifying financial statements, and confirming their accuracy.
Review and Verification of Financial Statements
Auditors analyze financial statements to ascertain that they accurately and fairly represent a company’s financial position. They verify the accuracy of assets, liabilities, income, and expenses while also reviewing compliance with accounting standards, legal regulations and assurance. Additionally, they identify any discrepancies or inconsistencies to deliver financial success.
The Role of Auditors in Agency Accounting Controls
Auditing involves a specific set of accounting principles that govern how an organization exercises controls to protect its assets, minimize fraud, and provide assurance regarding financial reports. Furthermore, auditors have the critical responsibility to evaluate and verify the effectiveness of these controls. Auditors help improve financial integrity by identifying weaknesses or gaps in the organization’s accounting processes.
Auditors Provide Assurance Services and Confidence in Financial Reporting
Accountants and auditors are two distinct professions, both involved in a company’s accounting processes, but they serve different roles and purposes.
Accountant
An accountant is typically an employee of the organization, responsible for handling the daily accounting tasks. Their primary objective is to present a clear and accurate financial picture of financial operations for the trading year to the client. Accountants also identify weaknesses or opportunities within the business, calculate the company’s tax liability, and ensure compliance with internal policies and external regulations.
Auditor
An auditor, on the other hand, reviews the work of accountants periodically and often does so for a third party. Auditors enhance the confidence, quality and value of the accounting process by assessing the financial records for accuracy and financial risk. They verify that the financial statements prepared by accountants are correct, and they actively search for errors or discrepancies.
Requirement of Audit According to the Size of an Organisation
According to the UK`s law, large companies must be audited yearly by an independent assessment external organisation; ‘large ‘is defined as meeting at least two of the following criteria:
- More than 250 employees.
- Balance Sheet total of over £18m.
- Turnover of greater than £36m.
Smaller companies do not have to provide an audit report of their accounts but they can do so if they wish to provide investors or suppliers assurance services with extra assurance. Similarly, some charities and membership organisations below the legal thresholds do have an audit or external financial review in order to provide reassurance.
Small businesses including the ones in the UK benefit from FreeAgent due to its functionality in expenses, projects, and VAT among others. It is useful for companies that do not have a specialised financial department.
Choosing the Right Auditor is Important for your Business
In conclusion, an auditor plays a vital role in ensuring the financial stability of both private businesses and government agencies through their independent assessment of financial records. By conducting internal audits and adhering to the highest standards set by professional bodies, auditors provide an accurate picture of a company’s financial health. The expertise of professional auditors, such as MMBA Auditor’s team, delivers quality and assurance to stakeholders, enabling organisations to maintain transparency and trust.
FAQs Related to Audit
What are financial services in audit?
Financial services in audit is an examination or evaluation of an organisation`s financial operations and records. These services provide assurance to the clients that the business’s financial statements are credible and consistent and meet legal requirements. It helps in an accurate picture in assessing the overall health of a company’s finances. Allows clients to understand their financial position and make informed decisions for the business.
What does a financial audit do?
A financial and audit report is a type of audit that gives an independent examination of the financial statements and the operations of a company. It provides a level of assurance to clients, investors, and stakeholders that the information contained in the company’s ledger is error free, comprehensive, and in line with recognized standards including IFRS or GAAP.
Why choose a financial service audit?
It helps to validate a company’s financial reporting processes, thus giving key stakeholders, such as clients and investors, confidence in your business. It improves the credibility of the financial reports, controls risks, and strengthens the decision-making process of the business. Lastly, a well-executed financial audit also assists organizations in detecting some operational disparities and increasing internal controls.
Facebook
Twitter
LinkedIn