Internal Auditors

Types of Auditors

An auditor is an individual who checks the accuracy and fairness of the accounting records of a company and determines whether the financial statements are in accordance with the Generally Accepted Accounting Principles. Three different types of auditors are described below.

The Certified Public Accountant (CPA)

Certified Public Accountants (CPAs) are auditors who serve the needs of the general public by providing auditing, tax planning and preparation, and management consulting services. CPAs can work as individuals or as employees of a firm; these firms range in size from one individual to international partnerships with more than two thousand partners. The largest of these firms have offices worldwide and are referred to as the "Big Four." Even though they only employ about 12 percent of all of the CPAs in the United States, they actually perform the audits of about 85 percent of the largest corporations in the world. These four companies are: Deloitte & Touche, Ernst & Young, KPMG, and PricewaterhouseCoopers. Those individuals who act as independent auditors must be licensed to perform audits by the state in which they practice. The laws vary from state to state as to the requirements that must be met in order to obtain such licenses. However, to be issued a license to practice as a CPA, all states require the individual to pass a uniform examination, which is prepared and graded by the American Institute of CPAs (AICPA). In addition to passing this examination, most states require an individual to have some experience working with another CPA prior to being licensed. Most states also require that after being licensed to practice as a public accountant, CPAs must take at least a certain minimum amount of continuing education coursework each year in order to have* their license renewed.

Internal Auditors

Internal auditors are employed by companies to audit the companies' own records and to establish a system of internal control. The functions of these auditors vary greatly, depending upon the needs and expectations of management. In general, the work includes compliance audits (to make sure the accounting is in compliance with the rules of the company and the laws under which they operate) and operational audits (a review of an organization's operating procedures for efficiency and effectiveness). Operational Audits review the business for efficient use of resources; they are meant to help management make decisions that will make the company more profitable. As with CPAs, many internal auditors are also certified by passing a nationally prepared examination. This examination is for the Certificate of Internal Auditing and is prepared by the Institute of Internal Auditors. Internal auditors generally must report to the highest level of responsibility within the company; this may include the Board of Directors or the Audit Committee of the Board of Directors. This is important because it gives the internal auditors more independence from the management team that they are reporting on. During a company's audit, internal auditors work closely with whatever external auditors (CPAs) have been hired by the company in order to reduce the amount of time that the outside auditor needs to spend with the company. Given the size of the internal audit staff and their independence within the company, they may be asked to perform several of the tasks that would have been prepared by the external auditors. The external auditors still have the ultimate responsibility to determine if the financial statements are presented in accordance with Generally Accepted Accounting Principles, and they are the ones who sign the report that is presented to the public. Using internal auditors is simply meant to reduce the number of detailed procedures that would otherwise have to be performed by the external auditors.

Дата добавления: 2015-11-16