External Auditor Job Description
External auditors review the financial records of organizations that they aren’t employed by—internal auditors, by contrast, perform similar tasks but are paid staff members. External auditors report their findings to concerned parties, such as company shareholders, the government, or the public. People trust them to give accurate, honest reports from an outsider’s perspective rather than having a vested interest in the outcome.
Many external auditors work for public accounting firms; others are self-employed. External auditors typically work full-time in an office setting. They sometimes travel to their clients’ places of business to perform work. According to the Bureau of Labor Statistics, employment of accountants and auditors will grow 10 percent from 2016 to 2026. The BLS states that this strong demand is due to “globalization, a growing economy, and a complex tax and regulatory environment.”
External Auditor Duties and Responsibilities
External auditors compile a complete financial picture of the clients they evaluate. Assembling such information involves a variety of core tasks. From our analysis of job postings, some of the main things external auditors do include:
Examining Finances and Business Activities
External auditors review financial statements. They look for errors and discrepancies to make sure bookkeeping is accurate. They also evaluate the measures the organization has put in place to manage financial risk and assess their effectiveness. Findings can have serious consequences, especially when an external auditor’s conclusions do not match what the company has been reporting. Investors may back out, or the organization could be charged with fraud. Accuracy and truthfulness, therefore, are musts.
When external auditors have completed the examination, they write up the findings. This information discusses where the company sits financially. The external auditor also may make recommendations for improving shortcomings. Such a report is completed at least once a year at most organizations.
Shareholders, investors, the government, and others interested in an organization’s finances depend on the finding of external auditors. Thus, an important part of an external auditor’s job is keeping a clean reputation so that others will believe what is said.
External Auditor Skills
External auditors need superior math skills since they spend so much time dealing with numbers. They also must be accurate, thorough, and detail-oriented in order to do their job properly and inspire client confidence. Other positive skills for an external auditor to possess include:
- Communicating clearly so that results can be understood by both business experts and laypeople
- Realizing the nature of the job makes those whose work is being scrutinized uneasy (even if they have nothing to hide)
- Committing to professionalism to encourage trust
- Problem-solving prowess to figure out why errors may be occurring in the bookkeeping
- Working well in teams since a company’s internal (in-house) auditors will often be helping to gather data and other information needed for the investigation
- Maintaining a stellar reputation because any unethical or questionable behavior can cost external auditors clients
- Sticking with one’s principles despite potential pressure or incentive to ignore or change one’s findings
External Auditor Tools of the trade
As they examine financial records, external auditors depend on the following:
- Computers – to write reports, look at data, use auditing/accounting software, and correspond with clients via email
- Accounting records – documents detailing the money coming in and out of an organization
- Accounting standards – a set of procedures, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), which companies must follow when they compile their financial statements
- Double-entry bookkeeping – an accounting practice in which every entry to an account needs a corresponding, opposite entry to a different account
External Auditor Education and Training
External auditors possess at least a bachelor’s degree, usually in a field such as accounting, business, or finance. Many hold master’s degrees. To work for a public accounting firm, plan on obtaining a certified public accountant (CPA) license. Specific requirements vary by state, but all involve a combination of education, experience, and examination. Holding a certified fraud examiner (CFE) credential also can increase job prospects.
External Auditor Salary
The median annual salary for external auditors, categorized by the BLS under “accountants and auditors” is $68,150. External auditors in the 10th percentile earn about $42,100 a year, and the highest paid make in excess of $120,900 a year. External auditors in the District of Columbia, New York, and New Jersey make the highest median salaries in the U.S. – $86,460, $80,440, and $80,400, respectively.
External Auditor Resources
Think becoming an external auditor might be a good career move? Here are some places to turn to for more information.
Auditing Careers Advice – This section of CareersinAudit.com features hundreds of articles on audit-related issues, including how to start a career in the industry, résumé tips, skills needed for advancement, and achieving work-life balance.
Association of Certified Fraud Examiners – This group of more than 80,000 members touts itself as “the world’s largest anti-fraud organization and premier provider of anti-fraud training and education.” Its objective is to reduce business fraud throughout the world and inspire public confidence. The ACFE website contains information on a variety of careers that work toward its mission, including external auditors.
Center for Audit Quality – This section on the website of the Association of International Certified Professional Accountants can keep you abreast of the latest news and trends in the auditing industry.
Auditing for Dummies – This book in the well-known series offers a crash course on what auditing is all about. One reviewer calls the guide “an excellent review of basic concepts,” and many praise it for being written in easy-to-understand language.
Principles of External Auditing – Looking for in-depth coverage of what external auditing is all about? The 4th edition of this respected textbook covers external auditing theories and practices in detail.
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