Becoming an External Auditor: Key Steps and Skills

If you’re interested in finance and ensuring accuracy in business records, becoming an external auditor might be a great career for you. This position involves examining financial documents to make sure they are valid and comply with requirements. But what an external auditor is, what they do, their main responsibilities, and how you can become one.

What is an external auditor?

An external auditor is a professional who checks a company’s financial statements for accuracy and compliance. Unlike an internal auditor, an external one works independently from the organization they audit, providing an objective review of the company’s finances. Their job is critical because it ensures businesses are following the rules and that their financial reports are truthful.

Skills and Qualifications

To excel as an external auditor, you need certain skills and qualifications:

• Educational Background: A bachelor’s degree in accounting, finance, or a similar subject is typically necessary. Many external auditors also become Certified Public Accountants (CPA) for better career prospects.
• Analytical Skills: Strong analytical abilities are required to assess financial data and spot discrepancies.
• Attention to Detail: A keen eye for detail is required to guarantee that financial records are correct.
• Communication Skills: Clear verbal and written communication is essential for explaining complicated audit findings to customers and stakeholders.
• Technical Proficiency: You should be familiar with accounting software and enterprise resource planning (ERP) systems to analyze data and create reports.
• Ethical Integrity: External auditors must uphold high ethical standards, providing fair and objective financial assessments.

What is the job description of an external auditor?

The external auditor job description involves several key tasks:

• Financial Reviews: Auditors inspect financial statements to confirm their accuracy.
• Compliance Checks: They confirm that the company complies with accounting laws and regulations, such as GAAP or IFRS.
• Internal Controls: External auditors assess the company’s internal controls to see if they effectively prevent fraud and errors.
• Risk Identification: Part of their job is to spot financial risks and advise on reducing them.
• Reporting: After an audit, they compile reports on their findings, giving recommendations for improvements.

What are the responsibilities of an external auditor?

An external auditor has various tasks depending on the company and type of audit. Key responsibilities include:

• Planning Audits: Creating a clear plan that defines what will be reviewed and how the audit will be conducted.
• Conducting Fieldwork: Visiting the company to check records, talk to staff, and observe how things operate.
• Analyzing Data: Using tools to examine financial data and spot any unusual patterns or errors.
• Preparing Audit Reports: Writing reports that explain the findings and give recommendations, often with a summary for key decision-makers.
• Presenting Findings: Sharing the audit results with management and offering suggestions for improvements.

What do external auditors do?

External auditors play a critical role in the financial sector. Their main duties include:

• Assurance Services: They check if financial statements are accurate, helping to maintain trust and confidence among investors.
• Risk Assessment: Auditors evaluate how well a company manages risks and point out any weak spots.
• Compliance Checks: They guarantee that the company complies with applicable laws and accounting standards, such as the
• Sarbanes-Oxley Act or International Financial Reporting Standards.
• Fraud Detection: By reviewing financial records and internal controls, auditors help identify and prevent fraud.
• Advisory Services: Some auditors also advise companies on how to improve their financial processes and systems.

Steps to Becoming an External Auditor

If you’re wondering how to become an external auditor, here’s a simple roadmap:

1. Obtain a Relevant Degree

The first phase is to obtain a degree in accounting, finance, or a similar discipline. This provides the foundational knowledge of financial principles and practices needed for auditing.

2. Gain Practical Experience

After completing your degree, gaining hands-on experience through internships or entry-level roles in accounting firms or financial departments is crucial. This helps you understand the practical aspects of auditing and financial analysis.

3. Achieve Professional Certification

Most external auditors obtain professional certifications, such as Certified Public Accountant (CPA). To obtain CPA certification, you must pass exams and meet particular academic and experience requirements. In some countries, certifications like Chartered Accountants (CA) are also available.

4. Develop Specialized Knowledge

Specializing in areas such as tax audits, compliance, or operational audits can boost your career. Expertise in a given field might lead to more opportunities.

5. Build a Professional Network

Networking is important in the auditing field. Joining professional associations, attending industry events, and building connections with other professionals can help with career growth and job opportunities.

6. Continue Professional Development

Auditing standards and laws shift over time, so it’s critical to stay informed. Participating in workshops, seminars, and continuing education programs ensures that you remain current in the field and continue to grow professionally.

Challenges and Benefits of Being an External Auditor

Like any job, working as an external auditor comes with its challenges, but it also has many benefits.

Challenges:

• Tight Deadlines: Audits often need to be completed within strict timelines.
• Complex Regulations: Staying updated with the latest rules and regulations can be tough but necessary.

Benefits:

• High Demand: The role of an external auditor is in high demand globally.
• Career Growth: There are numerous prospects for promotion, including entry into more specialist fields such as forensic auditing.

Start Your Rewarding Career Path in External Auditing

Becoming an external auditor can be a great career for those who enjoy working with finances and making sure businesses follow the rules. External auditors review financial records, find risks, and help prevent fraud. To start, you need the right education, hands-on experience, and certifications. Ongoing learning is also important to stay updated. While the job can be challenging with deadlines and regulations, it offers good career growth and is in high demand around the world.