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Generally speaking, an external auditor is a financial expert who uses various analytical methods to review accounting information for accuracy. Below explains the benefits of audits and the duties and job requirements of external auditors.
What are the Benefits of Audits?
External audits offer numerous benefits for companies. For example, audits are one of the best ways to improve a company’s efficiency and profitability. This is accomplished through helping management understand the strong and weak points of their financial systems and processes. As a result, employees, consumers, suppliers and shareholders all benefit from a well-run, cost-effective system. External auditors will identify weaknesses in the organization’s financial structure that need improvement and recommend the proper changes. For example, the auditor may uncover financial inaccuracies and discrepancies within the accounting records, which may indicate poor financial management or even internal fraud. Therefore, having an external audit reduces risks, costs and inefficiencies.
Financial External Auditor
According to the Association of Certified Fraud Examiners (ACFE), external auditors are tasked with inspecting clients’ accounting records to verify if they are in accordance with applicable accounting standards, such as the Generally Accepted Accounting Principles (GAAP). External auditors must officially assert whether the company’s financial statements contain inaccuracies or misstatement. After the audit, a detailed report is created and shared with different groups, such as investors, shareholders and government agencies. External auditors are called in to inspect financial records at every type of business, from nonprofits to small companies to multinational corporations.
Sample Job Description
External auditors create audit plans, oversee financial and control based audits and submit audit results to management. They are required to review financial statements in order to ensure compliance with internal controls and regulatory standards. They act as a liaison between the company and the internal auditors who assist with the audit process. This will require constant communication with many departments or divisions, such as HR, sales, payroll, finance, accounting and logistics. They must have excellent analytical skills in order to evaluate the adequacy and efficiency of internal controls, processes and policies. They also may assist with developing and enhancing internal audit policies and programs. They must prepare and provide written reports and presentations to management regarding audit findings, observations and opportunities for improvement.
What are the Job Requirements for an External Auditor
Most external auditors have a bachelor’s or master’s degree in accounting, finance or a business related field, according to the Bureau of Labor Statistics. Almost all public accounting firms require a valid government-issued Certified Public Accountant license. Additionally, many prefer external auditors with professional certifications, such as Certified Fraud Examiner (CFE), Certified Internal Auditor (CIA) and Certified Management Accountant (CMA). Employers prefer auditors with a few years of public accounting experience. They also strongly prefer candidates with experience in internal control evaluations and risk assessments. Hand-on experience with off-site external audits, control walk throughs and compliance testing are preferred. They must be able to uncover and analyze root causes of internal control problems and make suitable corrective action recommendations. External auditors should be familiar with Excel, ERP software and data analysis auditing software. Finally, good communication and interpersonal skills will enable them with interviewing employees and collaborating with management.
Related Resource: Become a Certified Financial Planner
External auditors offer positive benefits to employers because they ensure that internal financial controls and accountability standards are upheld. As a result, this increases financial transparency and decreases mistakes and fraud.