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How To Become An External Auditor: Degree & Career Guide
In the world that we live in today, nothing can be taken at face value. Everything needs to be checked and rechecked once more. When you add finances into this, every element needs to be looked at with a fine-tooth comb.
Given that bookkeepers and accountants already have their hand's full with processing and compiling all the financial documents and transactions that take place in a company, it can be well understood that added hands may be needed to not only make sure that these reports are accurate, but that they are compliant with financial regulations.
It is here where the role of an auditor comes in.
To become an auditor, you would first need to obtain your bachelor's degree, then you would need to obtain your CPA certification, gain direct auditing and accounting experience, consider enrolling in a graduate degree program, and then apply for auditing roles.
Let us take a closer look at this career and field of study and what contribution auditors make to the field of accounting.
What Is An Auditor?
In basic terms, an auditor is someone that does an external examination of financial records or inventory of an organization. No matter the size of the organization or the profitability of the organization, an auditor is responsible for assessing all records from an objective point of view.
When looked at closer, it can be found that there are both internal and external auditors when assessing the financial records of an organization. Both auditors have the intention to help organizations make sure that their financial records and reports are in line with regulatory and accounting principles.
From risk assessment to consolidation, and much more in between, both internal and external auditors follow the same objectives. However, internal auditors are those that are employed within an organization, and external auditors are usually a part of an independent agency of auditors.
While they may conduct the same type of duties and assessments of the financial reports, their functions are slightly different in that it is not necessary for a company to have an internal auditor, but external auditing may be compulsory.
Auditors are required for two reasons. The first is that companies that operate as public entities are required to undergo auditing on an annual basis. Second, it is not just large corporations or entities that are audited. Financial institutions that lend money to individuals may require that the financial status of a borrower be audited to determine if they are a risk or if they are someone who is safe to lend to.
With a closer focus on external auditors, which are generally the type of auditing roles that one may find when searching for a job, you see that just in the same way that accountants work closely with numbers, so do auditors. However, the key difference is that while accountants are compiling the financial reports of an institute, an auditor serves as a checking point to ensure that all reports are true and correct.
In so doing, it can also be seen that some auditors gear their careers toward fraud detection and making sure that no internal or external "cooking of the books" has occurred.
Given that legislation, regulation, and statutory compliance is, in themselves, constantly changing, adapting, and extremely intricate, auditors not only need to understand how accounting processes operate, but how these processes operate in relation to corporate and legal guidelines.
External auditors usually work for private auditing firms and are hired to audit private companies and government entities. For private companies, auditors are there to ensure that the company, its employees, and its stakeholders and investors are protected by adhering to statutory requirements, and in government entities, auditors are hired to ensure that public funds are being used appropriately.
What Does An External Auditor Do?
External auditors check the company's finances in relation to accounting standards such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).
External auditors are responsible for checking the financial records of any organization and entity to ensure that they are complete, accurate, and compliant.
They also play a big role in the tax submission and the accuracy of such tax submissions of a company to ensure that an organization meets its tax requirements and that its tax processes and accounting processes are correct and in line with standard practices.
Moreover, auditors work closely with the finance division of an organization to assess the internal financial procedures and operations. They conduct a detailed analysis of the financial and accounting processes to identify any potential shortcomings or challenges and to provide suggestions to improve efficiency and accuracy which can lead to greater compliance and streamlined operations.
So, they not only check that a company meets financial compliance and requirements from an external point of view, but they also work with a company to optimize and enhance internal processes ensuring that compliance is easily met.
They also assess the overall financial health of an organization, and they are able to provide projections for future financial viability and possible budgetary adjustments that may need to be made to maintain a company's financial success.
Steps To Become An External Auditor
Step One: Earn Your Bachelor's Degree
Considering the monumental role that auditors play and that they work closely with sensitive financial data, it is paramount that they are equipped with the knowledge and skills required to complete their duties effectively and correctly.
It is therefore a minimum requirement that auditors have at the very least, a bachelor's degree. This is important for them to understand accounting principles and processes, financial and business management, to understand how to analyze the financial data of different organizations, and to know and understand legal and regulatory policies to which organizations are expected to adhere.
Obtaining a bachelor's degree in accounting should equip you with the requirements you need to pursue a role as an external auditor. You could complete major and minor subjects in accounting, bookkeeping, project management, business administration, and financial management to name a few.
Step Two: Become A Certified Public Accountant (CPA)
Before pursuing the role of an external auditor, you would need to have a CPA certificate which you can only obtain after you have your degree in hand. It will enhance your aptitude in the field and makes you a more appealing candidate during the hiring process when you do apply for a job.
Step Four: Gain Hands-On Experience
Now that you have covered classroom knowledge, it is time to apply that knowledge to practice by gaining experience. This can be done by applying for entry-level jobs or even internships which allow you to actively participate in the environment that you are expected to work in as an eternal auditor.
Step Five: Pursue A Graduate Degree
While not compulsory, many people choose to pursue a master's degree in accounting to enhance their employability, or to create greater career growth opportunities for themselves. If you are working in an entry-level role or completing an internship, it may be worth it to consider pursuing your master's degree.
Step Six: Enter The Workforce
You are now ready to search for an external auditor's role. With your credentials and experience in hand, you will be an eligible candidate for consideration.
What Skills Do You Need To Be An External Auditor?
You first need to have a knack for numbers. You would need to have the ability to objectively analyze and assess a company's financials and through extensive analytical skills, you would need to be able to provide solutions to any foreseeable issues that you expect a company to face.
You will also need accounting skills and in-depth knowledge and understanding of accounting software.
How Much Do External Auditors Earn?
According to the U.S. Bureau of Labor Statistics (BLS), accountants and auditors earn a median annual salary of $77,250. The BLS also states that the job outlook for accountants and auditors expects to see a projected 6% growth over the next decade.
Is External Auditing A Good Career?
Provided you are equipped with the skills, aptitude, and requirements that are needed to be an external auditor, the role can be extremely rewarding and can provide you with great growth opportunities. You will also experience job security well into your future as an auditor.
While staying within the field of finances and accounting, auditing allows for some variation offering you a different way to work within this field. If you enjoy working with numbers and you are effectively able to compare documents and check that financial values meet regulatory compliance, perhaps the role of an auditor is the one for you.
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