What is an Auditor?

AuditorAuditors are financial professionals who review business records for accuracy and honesty. They are primarily employed by businesses or independent organizations to perform internal and external audits.

What are the Different Types of Auditors?

Financial auditors perform either internal or external audits. Internal auditors follow guidelines set by the Institute of Internal Auditors (IIA) to objectively evaluate financial activities. They maintain impartiality and independence through a customized chain-of-command reporting system. This means that they typically report directly to the board of directors, not management. Conversely, external auditors are employed by private firms or government agencies. They not only audit financial statements and processes, but the effectiveness of internal financial controls and the clarity of financial reporting. Both types of auditors will generally review accounting statements, books and software systems to verify accuracy and compliance with regulations. They ensure there is no financial waste, fraud or mismanagement.

Forensic Auditing

Certain public accountants specialize in forensic accounting or accounting. Their task is to investigate illegal financial activities as part of the litigation process. Forensic auditors may specialize in investigating insurance, investment or banking crimes. Forensic auditors investigate a wide array of crime categories, such as embezzlement, tax fraud, securities fraud and money laundering. They may also investigate bankruptcy, contract breaches, acquisition disputes and corporate reorganizations. Forensic auditors work closely with legal and law enforcement professionals. They may even be subpoenaed as expert witnesses during high-profile trials.

A Typical Auditor’s Education Background

According to the Bureau of Labor Statistics (BLS), most auditors have a bachelor’s degree in accounting or similar field. However, more and more auditors are expected to have a master’s degree in accounting or business administration. The Securities and Exchange Commission (SEC) requires accountants who submit mandatory reports to be Certified Public Accountants (CPAs). CPAs are certified through the American Institute of CPAs.

The American Institute of CPAs

The American Institute of CPAs sets accounting standards and advocates for financial professionals. They have a Center for Audit Quality (CAQ) that strives to increase public trust and investor confidence in public companies. They accomplish this through advancing policies and standards that promote objectivity and high quality audits. They also certify public accountants through their CPA exam. Eligibility for the CPA exam depends on education, experience and passing the CPA exam. First, candidates must have 150 college credits. Second, they must have one to two years of experience working under a CPA. Third, they must pass the CPA exam, which is a computer-based test consisting of four sections: Regulation, Auditing and Attestation, Business Environment and Concepts and Financial Accounting and Reporting. Upon graduating, CPAs must obtain accreditation through their state’s Board of Accountancy.

The Generally Accepted Auditing Standards

The Auditing Standards Board (ASB) of the American Institute of CPAs maintains their nationally recognized ‘Generally Accepted Auditing Standards’ (GAAS). These the goal of these guidelines is to provide audit objectives and quality metrics. There are ten main standards, which include standards of reporting and field work. For example, the auditor must maintain an independent mental attitude and properly supervise assistants. They must also properly understand the target entity and environment. Finally, they must obtain ample, appropriate evidence for all opinions and recommendations.


On the whole, auditors are financial professionals to review and verify the accuracy and integrity of accounting records. Auditors follow ABS guidelines to ensure that companies are continually held to the highest ethical standards.

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