External Auditor Job Description, Skills, and Salary
Get to know about the duties, responsibilities, qualifications, and skills requirements of an external auditor. Feel free to use our external auditor job description template to produce your own. We also provide you with information about the salary you can earn as an external auditor.
Who is an External Auditor?
External auditors are independent third-party auditors that review the financial records of companies. Publicly traded companies must consult an external auditor under the Securities and Exchange Act. Because they don’t have to make any relationships with employees, external auditors are preferred. More external auditors will be needed, particularly in the financial sector. According to the Bureau of Labor Statistics, external auditors’ employment will increase by 11 percent between 2014 and 2024. This is much faster than the average.
An external audit is an audit of financial records that is performed by an external auditor or an accounting firm as a whole. An external audit can be performed on the financial records of individuals, businesses, non-profit organizations, governments, and any other legal entity. This type of audit may be requested by a regulatory agency or performed at the request of an individual, business, or organization to ensure that accounting standards are being adhered to.
An external audit is valuable because the external auditor who evaluates the financial records is free from bias and prejudice. This helps ensure that the audit proceeds without any improprieties and that the final result is accurate and complete. After an internal audit has been completed by accounting professionals, an organization, or a firm, an external audit will be conducted every year. It is virtually impossible to miss any irregularities in financial records due to this two-pronged approach.
External auditors often include provisions for external audits in documents like orders of incorporation or by-laws. Non-profit organizations that depend on donations from donors and members to function are especially vulnerable. The audit findings are often made available to members and other donors. This allows transparency in the records of donations and the use of collected funds. It is common for religious organizations, as well as other non-profits, to have outside audits performed and their results published for the benefit and participation of all members.
The use of a checklist by external auditors can make the preparation of external audits much easier. This list can be obtained from any firm scheduled to perform the audit. An audit committee is usually responsible for reviewing the checklist and making sure all records are available to external auditors. The use of audit management software today can make it easier to conduct an external audit. This makes it possible for any issues to be resolved quickly. A good software package can allow external auditors to make any necessary corrections and sign off on accounting records that are fully compliant with all current regulations.
Corporate shareholders appoint external auditors to thoroughly examine the financial records of the company. External auditors are similar to internal auditors. They will examine financial records such as payroll and purchasing records to identify red flags. Audit planning begins with getting to know the organization. It is then their responsibility to assess whether the company is following the Generally Accepted Accounting Principles. External auditors are responsible for identifying financial misstatements that could be due to fraud, error, or embezzlement. They also conduct their tests and prepare detailed, and objective reports about corporate ethics for managers.
External Auditor Job Description
Below are the external auditor job description examples you can use to develop your resume or write an external auditor job description for your employee. Employers can also use it to sieve out job seekers when choosing candidates for interviews.
The duties and responsibilities of an external auditor include the following:
- Assessing financial statements for accuracy and compliance.
- Investigating internal systems and operations.
- Assessing risk management approaches.
- Performing audits in other departments.
- Reporting fraud and errors
- Providing feedback on findings.
- Visiting client sites to meet with different levels of management and to get a better understanding of the business.
- Planning, conducting, and designing your audit and testing procedures.
- Interviewing staff members and attending meetings to collect audit evidence
- Examining accounts, financial records, and other documentation
- Observing stock takes and other business procedures
- Using analytics to evaluate financial reporting, fraud, and operational business risk
- Preparing or contributing to a final auditor’s report, making recommendations for system or process improvements.
- Discussing the conclusions and recommendations of the audit with your clients
- Working towards your chartered accounting qualification. This could include taking study leave.
The following are other important tasks:
- Providing an opinion on Financial Statements
Managers mistakenly believe that external auditor firms will produce financial statements when in fact it is their job. The financial statements must be prepared following an accounting framework and free of material misstatements.
Although many external auditors will make recommendations, they might not be able to solve the problem. External audit firms are not responsible for providing complete assurance on financial statements. They only provide sufficient data to give reasonable assurance.
- Understanding the Entity and its Environment
Accounting is often viewed as a process of crunching numbers, but auditors know that financial statements are not static. An external auditor is responsible for gaining a thorough understanding of the workplace, operations, and internal controls. Auditors will conduct an initial risk assessment to determine the risks.
To ensure data integrity, external auditors often inspect the electronic accounting system. To identify irregularities in financial reporting, they will compare your business with others in the sector.
- Forming an opinion by providing sufficient evidence
An audit’s evidence is a large part of an external auditor’s opinion. Auditors must assess the enterprise’s riskiness to ensure that they have enough evidence. Auditors should gather more evidence if the company involved is at higher risk.
It is important to ensure that the evidence is of high quality. To corroborate your financial information, you will need to have some evidence from third-party sources such as banks or lenders.
Qualifications
A bachelor’s degree in any subject is required to join a graduate program. While some firms require a minimum of a third-class degree, others do not consider this a requirement.
Employers are looking to diversify their intake and encourage graduates from all majors to apply.
The next step is to get a chartered accountant qualification and a practicing certificate from one of these professional bodies.
- ICAEW (Institute of Chartered Accountants of England and Wales).
- ACCA (Association of Chartered Certified Accountants).
- ICAS (Institute of Chartered Accountants of Scotland).
- CAI (Chartered Accountants Ireland).
As part of a graduate program, your employer will usually fund and support your qualification. There are differences between the qualifications offered by different professional bodies. Your employer usually decides which professional body you will study with. However, smaller companies may allow you to choose.
You will be able to work in any area of accounting practice with your qualification. However, some professional bodies offer additional certifications in auditing.
Essential Skills
- Communication skills
External auditors can communicate their industry knowledge to shareholders and business leaders through communication skills. They need to communicate with financial experts and employees without financial knowledge. An external auditor’s ability to explain complicated topics is a strength. Written communication skills are also a benefit for auditors.
- Critical thinking skills
To use logic to solve problems, critical thinking must be applied. External auditors can be critical as they examine a company’s records and make recommendations to the management. It is important to be able to understand and communicate the results of audits. However, it is more valuable to deliver actionable results for businesses. Businesses can use these actionable solutions to improve their practices and rules, making audits easier and less stressful.
- Initiative
You can demonstrate initiative in your auditing career by learning and growing through professional development. To stay informed about legal and regulatory changes, you can enroll in training courses and earn additional certificates.
- Empathy
A business manager or other employees can find an audit stressful. Managers can be reassured by external auditors who have empathy skills. You can use empathy language to calm employees who are feeling anxious.
- Analytical skills
Analytical thinking is essential for performing an audit. Analytical skills can help you draw stronger conclusions when auditing the company’s processes. These skills will help you show your expertise to companies.
- Business acumen
Knowing your industry can help you be a better external auditor. It can provide insight into common problems as well as possible solutions. While experience as an external auditor can give you some business insight, another skill is keeping up to date with industry trends. During an audit, you can demonstrate your business acumen by asking intelligent questions and offering knowledgeable suggestions.
- Collaboration
An audit may be performed with other financial professionals. Collaboration is an asset for external auditors. An audit can be viewed as a collaborative effort with the company to determine the best financial practices. Flexibility and collaboration with businesses are key to building stronger working relationships.
- Technology skills
External auditors also benefit from technology skills. A great skill for external auditors is to be able to use different financial software. You can also continue learning new things through this skill. External auditors can recommend security measures for companies. Therefore, it is beneficial to have a good understanding of best practices in technology.
- Organizational skills
The importance of organizational skills in auditing cannot be overemphasized. External auditors need to possess this skill to organize their financial documents. External auditors can use organizational skills to manage their time and help them meet their deadlines. Organizational skills are also helpful for presenting professionalism to shareholders and business executives that you meet during audits.
- Service is the main focus
External auditors are hired by companies because they need advice and to ensure that their records are in order. Focusing on auditing as a service can help you build a relationship with companies and work with employees to find solutions. You can use the service model of auditing to help you write more empathic reports.
Leadership
Leadership skills are important for communicating authority with business executives, whether you are working with other auditors or with a group of them. Leadership can communicate expertise which can help you build better relationships with the businesses you audit.
How to Become an External Auditor
Although the steps required to become an external auditor are straightforward to follow, they can take time. First, you must meet the educational requirements. This will require an advanced degree. The second step is usually to obtain certification. Once both of these steps are completed, it is time to get certified.
Auditing financial information is a job that most external auditors do. They review the information and check for inaccuracies. Although some cases involve the discovery of fraud cases, the majority of external auditors are responsible for verifying and checking facts. Discrepancies that are discovered are more likely to be mistakes than fraud attempts. External auditors should be meticulous and be able to present their findings convincingly.
A majority of people who want to be external auditors will go to college and get an accounting degree. If you are looking to expand your options and consider other career paths, a business degree with a focus on finance may be an option. Students who are interested in becoming external auditors may choose to pursue a Master’s degree. This will give them an edge when applying for jobs. Internships are often available to students who earn a degree either undergraduate or graduate.
Even if the person has already found a job as an external auditor, certification may still be needed after graduation. It usually takes at least two years to become a certified auditor. The type of job the person is interested in will determine the designation they choose.
Where to Work
To understand the intricacies of business, an external auditor will typically specialize in one industry. This could be manufacturing, healthcare, or real estate. However, external auditors will not be associated with just one organization. They are instead hired by auditing and public accounting firms. To oversee corporations, some external auditors may be hired by federal, state, and local government agencies. Many external auditors also work as consultants and are paid by the companies that they audit. While most external auditors work full time, one-fifth of them works more than 40 hours per week. They are often required to travel frequently in order to inspect the business operations of clients.
External Auditor Salary Scale
The remuneration of external auditors largely depends on the size of the client’s business, level of expertise, and the number of hours expended on the audit engagement. The average annual salary of an External Auditor in the United States is $64,002.