What is an Auditor?

What do you get when you cross and accountant with a detective? An auditor! Auditors love accounting work mixed in with bit of investigative work.

They are responsible for looking at the validity of a company's financial statements and writing a report at the end of their investigation. This process is called an audit.

What does an Auditor do?

In a nutshell, an auditor is someone who looks to see how honest a company's financial records are by determining the level of accuracy and clarity that a company has accounted for.

In addition to examining and preparing financial documentation and written reports, auditors must explain their findings. This includes face-to-face meetings with organization managers and individual clients.

An auditor sitting at a desk and assessing a company's financial records.

An auditor typically does the following:

  • Examines financial statements for accuracy
  • Examines financial statements for compliance with laws and regulations
  • Computes taxes owed, prepares tax returns
  • Make sure taxes are paid properly and on time
  • Inspects account books and accounting systems for efficiency
  • Organizes and maintains financial records
  • Makes best-practices recommendations to management
  • Suggests ways to reduce costs, enhance revenues, and improve profits

Many auditors specialize, depending on the particular organization that they work for. Some specialize in assurance services (improving the quality or context of information for decision makers) or risk management (determining the probability of a misstatement on financial documentation). Other auditors specialize in specific industries, such as healthcare. Some workers with a background in accounting and auditing teach in colleges and universities.

The four main types of auditors are:

Public Auditors
Public auditors do a broad range of accounting, auditing, tax, and consulting tasks. Their clients include corporations, governments, and individuals.

They work with financial documents that clients are required by law to disclose. These include tax forms and balance sheet statements that corporations must provide potential investors. For example, some public auditors concentrate on tax matters, advising corporations about the tax advantages of certain business decisions or preparing individual income tax returns. They review clients' financial statements and inform investors and authorities that the statements have been correctly prepared and reported.

Some public auditors specialize in forensic accounting or investigating financial crimes, such as securities fraud and embezzlement, bankruptcies and contract disputes, and other complex and possibly criminal financial transactions.

Forensic Auditors
Forensic auditors combine their knowledge of accounting and finance with law and investigative techniques to determine if an activity is illegal. Many forensic auditors work closely with law enforcement personnel and lawyers during investigations and often appear as expert witnesses during trials.

Government auditors maintain and examine the records of government agencies and audit private businesses and individuals whose activities are subject to government regulations or taxation. Auditors employed by federal, state, and local governments ensure that revenues are received and spent in accordance with laws and regulations.

Internal Auditors
Internal auditors check for mismanagement of an organization’s funds. They identify ways to improve the processes for finding and eliminating waste and fraud.

External Auditors
External auditors are independent auditors that do not work for the company they are auditing. Investors, government agencies and general public companies rely on this type of auditor to present an unbiased and independent report.

Information Technology Auditors
Information technology auditors are internal auditors who review controls for their organization's computer systems, to ensure that the financial data comes from a reliable source.

Are you suited to be an auditor?

Auditors have distinct personalities. They tend to be conventional individuals, which means they’re conscientious and conservative. They are logical, efficient, orderly, and organized. Some of them are also enterprising, meaning they’re adventurous, ambitious, assertive, extroverted, energetic, enthusiastic, confident, and optimistic.

Does this sound like you? Take our free career test to find out if auditor is one of your top career matches.

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What is the workplace of an Auditor like?

Internal auditors work in offices as part of a company's staff, and will perform audits for all the various departments.

External auditors run yearly audits (typically at the end of every fiscal year), for government offices or outside firms.

Most auditors work full time and overtime hours are typical at certain times of the year, such as during tax season.

Frequently Asked Questions

What is the difference between an accountant and an auditor?

While both an accountant and an auditor are responsible for the accounting processes of a company, there are some differences between the two professions.

  • An accountant is usually an employee of the company for which they work, and the work done by an accountant is done on a daily basis.

  • An auditor, on the other hand, is responsible for reviewing the work of the accountant on a quarterly or annual basis, and is often hired from an outside firm to do so.

In summary, an accountant will create the financial statements for the company, and the auditor will look the financial statements over to make sure they are accurate.

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See Also

Auditors are also known as:
Financial Auditor Public Auditor Forensic Auditor Internal Auditor Information Technology Auditor External Auditor