Ever been hungry of knowing the nitty-gritty about how to become an internal auditor with the full package of also having within grasp the full knowledge of its essential skills? This is the right article to stumble on as a seeker of knowledge. Becoming a professional internal auditor does not in any way involve magical process as it only demands that you take into consideration some certain principles and possession of skills.
Concept of the Meaning of an Internal Auditor
Internal auditor examines and analyzes company records and financial documents. They identify issues like compliance concerns, risks, fraud, and data inaccuracies. After reviewing all records within their audit’s scope, they investigate any problems they find, using internal auditors use their knowledge of laws, industry regulations, and company policies to identify potential instances of noncompliance, fund misappropriation, and other risks to the business.
The situation of the profession is majorly about an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. Basically, internal auditors help safeguard organizations by analyzing compliance, risk, and potential. They examine company documents and data to identify issues like regulatory noncompliance, data inaccuracies, and employee theft.
These types of professionals work in many different industries, including healthcare, tech, education, and government. Internal auditors usually hold full-time positions, but they can also work as contractors for shorter auditing projects.
People who are good with numbers and like to work on their own often excel in this career field. Internal auditors report their findings to other internal stakeholders, but they complete most of their work independently. Like other accounting professionals, internal auditors need strong critical thinking skills and sharp attention to detail. Internal auditors are in high demand.
A Summary of Internal Auditor’s Roles and Primary Duties
The following highlights are the few roles and responsibilities often played by professional internal auditors in their various places of work:
- Objectively assess a company’s IT and/or business processes.
- Assess the company’s risks and the efficacy of its risk management efforts.
- Ensure that the organization is complying with relevant laws and statutes.
- Evaluate internal controls that safeguard company assets and make recommendations on how to improve.
- Assess business processes within organizations to identify improvements related to the accuracy, efficiency, reliability, and quality of the process and the resulting products and services.
- Promote ethics and help identify improper conduct.
- Assure safeguards are in place to protect the organization’s resources.
- Investigate fraud.
- Document the results of audit procedures.
- Communicate the findings, best practices, and recommendations to senior management.
- Provide opinions on the overall results of internal audits (Unqualified, qualified, adverse, or disclaim).
Types of Internal Auditing as a Professional Engagement
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Compliance Audit
A company may be required to adhere to local laws, compliance needs, government regulations, external policies, or other restrictions. To demonstrate compliance with these rules, a company may task an internal audit committee to review, compile appropriate information, and provide an overall opinion on the status of the compliance requirement.
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Internal Financial Audit
Public companies are required to perform certain levels of external financial auditing where a completely independent third party provides an opinion on the company’s financial records. Companies may want to dive further into audit findings or perform an internal financial audit in preparation for an external audit. Many of the tests between an internal or external auditor may be similar; the nature of independence separates the two types of audits for financial audits.
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Environmental Audit
As companies become continually more environmentally conscious, some take the steps of reviewing the business’ impact on the planet. This results in an internal audit covering how a company safely sources raw materials, minimizes greenhouse gases during production, utilizes eco-friendly distribution methods, and reduces energy consumption. Companies leveraging triple bottom line reporting may perform internal environmental audits as part of annual reporting.
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Technology/IT Audit
An IT audit may have different objectives. The internal audit may be the result of an external lawsuit, a company complaint, or a target to become more efficient. An internal audit focused on technology reviews the controls, hardware, software, security, documentation, and backup/recovery of systems. The goal is likely to assess general IT accuracy and processing capabilities.
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Performance Audit
An internal audit focused on performance pays less attention to the processes and more on the final result. The company will have likely have set performance objectives or metrics that may be tied to performance bonuses or other incentives. As a result, an internal auditor assesses the outcome of an objective that may not be easily quantifiable.
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Operational Audit
An operational audit is most likely to occur when key personnel leaves or when new management takes over an entity. The company may want to assess how things are done and whether resources are being used more efficiently. During an operational internal audit, the auditor will review whether current staff and processes fulfil the mission statement, value, and objectives of a company.
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Construction Audit
Development, operating, real estate, or construction companies may perform construction audits to ensure not only appropriate physical development of a building but appropriate project billing along the life of the project. This mostly includes adherence to contract terms with the general contractor, sub-contractors, or standalone vendors as necessary.
This may also include ensuring the company has remit the appropriate payments, collected the appropriate payments, and internal project reports regarding project completion are correct.
Important Skills Of Internal Auditors
Here are some of the examples of the skills which internal auditors must possess:
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Analytical Skills
In an era of rapidly changing technology, possessing core competencies in analytics is imperative for auditors, especially with the advent of Artificial Intelligence. Contrary to the assumption that AI might supplant these skills, it is crucial for auditors to use emerging technologies as supportive tools, learning to interpret and synchronize information effectively.
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Communication
Internal auditors need to be able to effectively communicate with team members, management, and other stakeholders to convey audit findings and recommendations.
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Learning
Internal auditors need to be committed to continuous learning and staying up-to-date on the latest auditing practices, regulations, and industry trends.
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Ethics/Integrity
Ethics and integrity are foundational for auditors, underpinning all other skills. The reality that anyone can commit fraud under the right conditions highlights the importance of auditors adopting a “trust but verify” approach. Using sound evidence and applying it judiciously are key aspects of ethical auditing.
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Attention to Details
Possessing a detail-oriented approach is crucial for auditors in both the input and output of information, whether verbal or written, in all aspects of an audit. Although not everyone naturally acquires this skill, it can be developed over time. To become detail-oriented, one must practice seeing from a broad to a detailed perspective, understanding how each element of an audit is viewed through the auditor’s core competency skills.
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Time Management & Adaptability
Internal auditors need to be able to manage their time effectively to meet deadlines and complete audits on schedule. Internal auditors need to be adaptable and flexible to changes in the audit process or unexpected developments.
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Logic and Problem-Solving Skills
These skills are fundamental to an auditor’s role, allowing for the identification and assessment of risks, problem-solving in complex financial situations, and innovative thinking. Activities such as formulating a thesis, engaging in strategy games, or pursuing professional certifications (e.g., CFE, CIA, CPA) can enhance these critical skills.
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Management of Risk
Internal auditors need to have a strong understanding of risk management principles and be able to identify and assess risks to the organization.
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Business Ingenuity
Internal auditors need to have a good understanding of the business environment in which they operate, including the industry and regulatory requirements.
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Professional Skepticism
Internal auditors need to have a healthy degree of skepticism to ensure that they are not overly trusting of information provided by auditees.
