Monday, January 21, 2013

Auditor.... Friend or Foe? A Great entre for trusted corporate advisers by Patty DeDominic, Coach to High Achievers in Finance and Business

Introduction to Auditing Thank you to the good folks at Accounting Degree on line for this informative article. Introduction Accountants and auditors both play a significant role in the general preparation and examination of a corporation’s, business’, and/or individual’s financial records. These professions work to ensure the accuracy of financial records and taxes. In addition, accountants and auditors assess financial operations and offer consultation and advice on the ways in which financial transactions may run at a higher level of efficiency. The services and responsibilities of accountants and auditors are often intertwined, yet both fields are unique and distinct from one another. Specifically defined, accounting is the process of identifying, measuring, and communicating economic information for a variety of audiences. Accountants provide a company with reliable and comprehensive information about the company’s economic activities and the status of its assets and liabilities. This information is typically compiled in the forms of balance sheets, income statements, and equity statements. The services of accountants enable clients to understand key concepts such as financial stability and economic profitability. Auditing refers to an independent appraisal performed by an auditing expert. There are several types of audits; however, the most common type is the audit of financial statements. Audit of financial statements requires the examination of the financial statements and other relevant records of the company in order to ascertain whether or not the statements are fairly presented. The duties of auditors include the analysis and comparison of accounting reports as well as the verification of a company’s compliance with standards and regulations. Auditors External An external audit program requires an independent auditor to perform a comprehensive financial statement audit which offers information on internal controls over financial reporting. External auditors review accounting, payroll, and purchasing records. Common areas of concern for external auditors involve the classification and pay of a company’s employees. In some instances, external auditors are called in to perform a thorough investigation of a company whose shareholders doubt the accuracy or legitimacy of a company’s financial claims. Internal Internal Auditors check for any mismanagement of an organization’s funds. The primary role of Internal Auditors is to objectively review and evaluate financial activities in order to maintain or improve the efficiency and effectiveness of a company’s risk management, internal controls, and corporate governance. Internal Auditors evaluate the effectiveness of accounting operations, determine whether a company complies with laws and regulations, and investigates whether or not a company is taking the proper steps to address control deficiencies and audit report recommendations. Quality The Quality Auditor is a professional who understands the standards and principles of auditing. This type of auditor is knowledgeable about the auditing techniques of examining, investigating, evaluating and reporting in order to determine a company’s quality system adequacy and deficiencies. Quality audits are performed at fixed time intervals for the purpose of ensuring that the institution has clearly outlined internal system monitoring procedures. These types of audits determine the extent to which the organization complies with its defined quality system processes. Quality Auditors compiled reports, findings, and recommendations in order to provide the company with specific ways to improve. Types of Employment for Auditors Accountants and auditors held about 1.3 million jobs in 2008. Most accountants and auditors work in urban areas, where public accounting firms and central or regional offices of businesses are concentrated. According to the United States Bureau of Labor Statistics, a majority of accountants and auditors work in the offices of major corporations, although some are able to complete work from home. Nearly 24 percent of auditors work in accounting, tax preparation, bookkeeping and payroll services. Another 8 percent work for financial and insurance companies. Additional Resources The Institute of Internal Auditors is the internal audit profession’s representation, leader, and advocate. Members of this organization work in the areas of internal auditing, risk management, governance, internal control, information technology audit, education, and security. Internal Audit Benchmarking Association is a free association of corporations with internal auditing departments. This Association conducts a variety of benchmarking studies in order to identify methods of obtaining improved operations within an organization. Association of Government Accountants is an organization dedicated to supporting the careers and professional development of government finance professionals working in federal, state and local governments as well as the private sector and academia. National Association of State Auditors, Comptrollers, and Treasurers is an organization for state officials who work within the financial management of state government. Association of Certified Fraud Examiners is the world’s largest anti-fraud organization and provider of anti-fraud training, professional development and education. The Path to IT Audit provides comprehensive information on the education, training, and experience needed to become an IT Auditor.

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