| | | | | range of companies in many different industries. |
| There are many career opportunities available for | | | | Again, independence is important because there |
| college students graduating with a degree in | | | | can be no affiliation between an external auditor |
| accounting. Among these include tax services, | | | | and the client he or she is engaged with. Also, |
| fraud accounting, private accounting and auditing. | | | | external auditors are different in that they |
| Auditing is one of the largest areas of the | | | | provide an official opinion on the company’s |
| accounting profession. It is actually the only | | | | financial statements whether is be a privately held |
| section of the four part CPA exam that is its | | | | or publicly held organization. External auditors can |
| own section. As with many fields of work auditing | | | | issue four different types of opinions pertaining to |
| can be separated into two groups. Professional | | | | their assessment of a company’s financial |
| auditors may either work as internal or external | | | | statements and internal controls. The four |
| auditors. Auditors evaluate organizations to assess | | | | different opinions are unqualified, qualified, adverse, |
| the internal controls. The roles and responsibilities | | | | and disclaimer of opinions. The unqualified opinion |
| of internal and external auditors are different, but | | | | states that the auditor found that the financial |
| they have their similarities as well. The career | | | | statements of the organization where presented |
| opportunities for both fields are vast, challenging | | | | fairly in accordance with Generally Accepted |
| and rewarding. | | | | Accounting Principles (GAAP). A qualified opinion |
| RESPONSIBILITIES AND ROLES | | | | expresses that the financial statements present |
| All auditors, whether they are | | | | fairly with one or more material exceptions. An |
| internal or external, must adhere to a professional | | | | adverse opinion states that the financial |
| code of ethics and many of the professionals hold | | | | statements of the company do not present fairly |
| licenses such as a Certified Public Accountant | | | | with GAAP. A disclaimer of opinion says that the |
| (CPA), Certified Information Systems Auditor | | | | auditors were not able to express an opinion on |
| (CISA), Certified Internal Auditor (CIA), Certified | | | | the financial statement of the organization. An |
| Fraud Examiner (CFE) or Certified Management | | | | example of a disclaimer of opinion would be if the |
| Accountant (CMA). Both internal and external | | | | external auditor could not take a physical count of |
| auditors must follow Generally Accepted Auditing | | | | a material amount of inventory and there was |
| Standards (GAAS). These standards are | | | | not an alternative procedure available. Most |
| separated into general standards, standards of | | | | external auditors are CPAs and may hold other |
| field work, and standards of reporting. Under | | | | licenses as well. External auditors perform varying |
| these standards it is important that auditors have | | | | tests on a company’s financial statements |
| technical training pertaining to the work and | | | | and internal controls. Tests can include cash, cash |
| maintain independence. Independence is important | | | | disbursements, prepaid expenses and plant |
| because all auditors, including internal, must be | | | | property and equipment among others. Taking a |
| unbiased in their decision making and opinions. | | | | physical inventory for a company is also a test |
| Along with professional care and professional | | | | for an external auditor. External auditors may not |
| standards there are other similarities between | | | | always perform an actual audit. Agreed upon |
| internal and external auditors. Both sectors | | | | procedures, reviews, and compilations are other |
| analyze and document information pertaining to | | | | types of work for CPA firms. Auditors may also |
| the organization. Even though the information they | | | | audit a certain section of a company such as |
| process and analyze may be different, many of | | | | pension plans and 401k plans. Also, external |
| the procedures are similar. Collecting, analyzing, | | | | auditors may audit the information that the |
| and reporting data of an organization is the main | | | | internal audit team has gathered over the course |
| similarity between the two fields. Whether it is | | | | of the business year. External auditors have a |
| internal or external, collecting and analyzing | | | | more narrow approach than internal auditors |
| information helps the organization operate more | | | | because they can focus on certain areas of a |
| effectively. Through this similarity, both internal | | | | company. |
| and external auditors are critical to an | | | | CAREER OPPORTUNITIES |
| organizations success. | | | | Accounting majors have a plethora of career |
| INTERNAL AUDITORS | | | | opportunities at their feet once they graduate |
| The main difference between internal and external | | | | college. One can enter auditing and decide if they |
| auditors is who they work for and the types of | | | | want to be an internal or external auditor. As |
| information they process and analyze. Internal | | | | mentioned before, internal auditors work for one |
| auditors work internally for a certain company and | | | | company. Depending on the size of the company |
| usually report to upper management and the | | | | the internal auditor may work with a small or |
| board of directors. Even though they work for a | | | | large team of other auditors to assess the |
| specific company they still maintain their | | | | company’s controls. As an internal auditor it is |
| independence as auditors. There are many | | | | important to pass the CIA exam to become |
| different roles and responsibilities for internal | | | | qualified. Once passed, many doors will open for |
| auditors which include risk assessment and internal | | | | his or her career. |
| control evaluation. External auditors assess the | | | | External auditors have the opportunity to work |
| financial and internal control while internal auditors | | | | with different types of firms. An external auditor |
| add more assessment to the organization they | | | | can work for a national, regional or local audit firm. |
| work for. The Institute of Internal Auditors (IIA) | | | | Auditing and assurance is the largest sector of |
| says that internal auditing is | | | | revenue for the four national accounting firms. |
| "An independent, objective assurance and | | | | Auditors for the big four may have an |
| consulting activity designed to add value and | | | | opportunity work in assurance which deals with |
| improve an organization's operations. It helps an | | | | the credibility of information. The big four audit |
| organization accomplish its objectives by bringing a | | | | many large publicly traded companies across the |
| systematic, disciplined approach to evaluate and | | | | United States and internationally. Regional firms |
| improve the effectiveness of risk management, | | | | audit mostly publicly and privately held companies |
| control, and governance processes" (IIA). | | | | within their region but may also audit national |
| | | | | firms and occasionally international firms. Local |
| Improvements may be financial but there are also | | | | firms audit small, usually privately held companies. |
| other improvements internal auditors will assess. | | | | Auditors may also work in two other areas of |
| For instance, a particular internal auditor may | | | | the field. These career opportunities are |
| work for a retail clothing store chain. He or she | | | | governmental and regulatory auditors. |
| could be assigned to a certain district to assess | | | | Governmental auditors are considered to be |
| the controls and loss prevention for each individual | | | | internal auditors for the government. Regulatory |
| store within the district. Among their other duties | | | | auditors work for the internal revenue service |
| the internal auditor will physically evaluate each | | | | (IRS). The auditors can be considered external |
| store periodically. The internal auditor will assess | | | | auditors because they review tax payer’s |
| the store based on the company’s policies | | | | income tax returns to verify that it is in |
| and procedures to make sure the risk and | | | | accordance with the internal revenue code. If a |
| inventory loss is low. Without the internal auditor | | | | taxpayer’s return is not in accordance with |
| the company would not be able to evaluate the | | | | the internal revenue code, the tax payer will be |
| loss prevention. Because of the internal auditor | | | | audited by the IRS. |
| the company can operate more effectively. | | | | CONCLUSION |
| Internal auditors will give suggestions and | | | | In conclusion, Internal and external auditors have |
| recommendations to management and the board | | | | similarities in that they both gather information |
| of directors on how the company can operate | | | | and analyze the information to come to an opinion |
| better. Since the internal auditor is working for | | | | on an organization. Both internal and external |
| one particular company it is a broader sense of | | | | auditors must adhere to a professional code of |
| assessing control. Again, it is not limited to auditing | | | | ethics and remain independent. It is also crucial to |
| financial statements and internal controls related | | | | hold a license such as the CIA or CPA license. |
| to financial statements. There is a continuing | | | | Internal auditors work for a specific company and |
| assessment of controls because the internal | | | | audit all aspects of the company while external |
| auditor is working solely for one company. It is | | | | auditors engage with many different organizations |
| not an engagement as with external auditors. | | | | and audit financial statements and internal controls. |
| EXTERNAL AUDITORS | | | | External auditors prepare and put together |
| External auditors are not employed to evaluate | | | | reports that will hold one of four opinions. External |
| one specific organization’s financial statements | | | | and internal auditors have many career |
| and internal controls. External auditors are | | | | opportunities at their disposal. It depends of the |
| employed by an accounting firm to evaluate the | | | | professional as to which field he or she is |
| financial statements and internal controls of a wide | | | | interested in working in. |