There are several different kinds of accounting jobs that allow individuals to become auditors. The most common is working as an auditor for a CPA firm that audits the financial reports of publicly-held or nonprofit companies. These auditors must be independent of the company being audited. During these audits, the auditor is seeking reasonable assurance that the financial statements present fairly the status of the company and its operations. In other words, those who read the financial statements should be able to rely on them to get a fair picture of the company without material misstatements.
The Public Company Accounting Oversight Board regulates audits of publicly-traded companies. These audits are called integrated audits because auditors must not only express an opinion on financial statements but also on the effectiveness of internal control.
In order to accomplish an audit, accountants prepare an audit program that includes statistical testing of transactions, reviews of financial reports, interviews of financial and operating management, and reviews of the system of internal controls. Audits are not specifically designed to detect fraudulent activity, although they sometimes uncover it. An accounting course in auditing walks students through all of these areas, but the actual work can be much more complicated.
The U.S. Department of Labor, Bureau of Labor Statistics, 2010-11 Occupational Outlook Handbook provides a good overview of the role of auditors. Information from this site is summarized as follows. In addition to financial auditing, auditors might also review security, safety, information systems, environmental controls, and company operations. For nonprofits, auditors might conduct performance audits to determine whether the organization is meeting its objectives in areas where improvement is needed.
Additional information provided by the 2010-11 Occupational Outlook Handbook is included in summary form. For companies who want to improve product quality, auditors can perform quality audits that identify problem areas and corrective actions. Companies might also conduct project audits to verify that spending is appropriate and within contractual limits. For projects that must meet regulatory requirements, a regulatory audit could be conducted. Forensic auditors investigate white-collar crimes such as securities fraud and embezzlement, contract disputes, and money laundering. Forensic auditors might work with law enforcement personnel and testify as expert witnesses during trials.
The 2010-11 Occupational Outlook Handbook also points out that opportunities exist for internal auditors. Internal auditors work from within a company to help the company protect its assets from misuse or waste and to determine whether various functions and departments are operating effectively. Although these audits also include statistical sampling, the level of detail of an internal audit is usually much greater than an external audit. Internal auditors produce audit reports that are intended to improve operations and save the company money or improve asset management.
According to the 2010-11 Occupational Outlook Handbook, most auditors work in office settings. External auditors can spend most of their time at client offices or in field settings. For example, when conducting inventory audits, auditors might go to field locations like building material warehouses. Both external and internal auditors might travel to branch offices. Internal auditors might also travel to suppliers’ offices to validate costs and procedures for materials purchased. Work hours can exceed the standard 40-hour work week. This will often be the case during peak auditing seasons, such as during audits for the annual financial statements used in the annual report, or for quarterly reports.
The minimum level of education required is a bachelor’s degree, although a master’s is often preferred. A CPA is required for any accountant filing reports with the SEC. According to the Bureau of Labor Statistics, 2010-11 Occupational Outlook Handbook, “Employment of accountants and auditors is expected to grow by 22 percent between 2008 and 2018, which is much faster than the average for all occupations. Individuals who are proficient in accounting and auditing computer software and information systems or have expertise in specialized areas-such as international business, international financial reporting standards, or current legislation-may have an advantage in getting some accounting and auditing jobs. Median annual wages for accountants and auditors were $59,430 in 2008.”