Do you want to become an internal auditor? Here is everything you need to know to get there!
If you’re passionate about numbers and don’t shy away from an Excel sheet, internal auditing may be for you. As an internal auditor, you look at the company’s processes to spot inefficiencies or places where they’re not compliant with regulations.
When they find places where the company isn’t compliant, they report their findings and give recommendations on fixing that.
As an internal auditor, you’re looking at the systems in the organization, from IT to finance. It’s a diverse job where you can learn plenty.
Here’s exactly what an internal auditor does, their average salary, and how you can become an internal auditor yourself.
What does an internal auditor do?
An internal auditor is a financial professional who carries out an independent evaluation of a business’s financial and operational performance. They ensure that an organization is complying with the national and state laws and regulations. The financial professional will identify loopholes in the financial systems and correct them before an external auditor discovers them.
Some of the critical responsibilities of an internal auditor include:
- Keep stringent controls. The internal auditor should ensure the authenticity of the financial records and the efficient operation of the business.
- Implementing an inventory of practices, policies, and processes of a company and ensuring adherence to these policies.
- Auditing the existing financial system controls to determine if there are any vulnerabilities in the system. When there are, an internal auditor will address and resolve them.
- Recommending policies, software, and audit triggers to the financial management.
What is the average salary of an internal auditor?
The average salary of an internal auditor is $103,274. The pay ranges from $26,000 to $185,000 depending on various factors like education level, skills and experience, and the position’s specific responsibilities. The potential earnings will also depend on the job position.
How to become an internal auditor
There are specific requirements needed to become an auditor. While the exact prerequisites will depend on the job you are applying for, there are some basic ones. These are:
The majority of employers require internal auditors to have a minimum of a Bachelor’s degree in accounting, finance, or a related field. An MBA or a Master’s degree in accounting will offer a candidate better opportunities. While it is not compulsory for an internal auditor to have a Master’s degree, some states require auditors to earn college credits on top of the Bachelor’s degree to become Certified Public Accountants.
Some of the university courses a student can take include auditing, financial accounting, business communication, and business law. Internal auditors who have a graduate degree are more likely to be considered for promotions and seniors positions during their careers.
After their hiring, internal auditors will need to go through training. During this period, they work under experienced professionals who supervise their work and advise them on areas to improve. The training period depends on the exact organization and the positions but lasts between a few months to one year.
Internal auditors can also get training through internships during or after completing a Bachelor’s or a Master’s degree. The internship offers them practical experience in their preferred fields. The internship is also included as part of the graduation requirements in the post-graduate programs.
If you would like to specialize in a particular branch of internal auditing, like IT auditing or government agency auditing, you will need to earn the necessary certifications. Certification can make an auditor more competitive in the job market. It also helps auditors to expand their knowledge and expertise. Some of the standard certifications for internal auditors are:
- Certified Public Accountant. The majority of employers require internal auditors to have a CPA certification. To attain this certification, candidates need to pass a 4-part examination. In nearly all states, CPA candidates should complete 150 semester hours of their college coursework on top of their bachelor’s degree coursework. In several states, working in public accounting for a few years may substitute this coursework.
- Certified internal auditor (CIA). Candidates with at least a Bachelor’s degree from an accredited program can apply for the CIA certification at the Institute of Internal Auditors. They will need to pass a four part-examination and have the minimum work experience. Bachelor’s degree holders should have experience of at least one year. Master’s degree holders should have experience of two years, while candidates with an associate degree should have five years of experience.
- Certified fraud examiner. Professional internal auditors can detect and prevent fraud and earn certification as accredited fraud examiners from the Associate of Certified Fraud examiners. To get this certification, candidates should attain 20 hours of continuing education credits every year and maintain their annual membership.
- Certified Government Auditing Professional (CISA). The IAA offers CGAP certification for professionals intending to work as internal auditors in government agencies. To get this certification, you should have a minimum of an associate degree from a recognized institution. Candidates should also have the necessary work experience.
- Certified Information Systems Auditor. ISACA offers CISA certification to professionals tasked with auditing, controlling, assessing, and monitoring business systems and information technology. To attain this certification, candidates should have at least five years of experience.
Skills needed to become an internal auditor
There are hard and soft skills needed to become an internal auditor. These are:
- Analytical skills. Internal auditors check issues with documents and suggest the right and practical solutions. Therefore, they must have good analytical skills.
- Organization. The professional works with various financial documents that demand good organizational skills. By keeping paperwork and documents organized, they can ensure efficient and accurate processes.
- Communication. Internal auditors often work closely with other professionals and therefore need to have good communication skills.
- Mathematical skills. An internal auditor should have good knowledge of accounting principles. They should be able to interpret statistics that may require in-depth analysis.
- Attention to detail. The internal auditor should maintain accurate documentation that ensures the company’s compliance with the financial systems. Therefore, the professional should have attention to detail.
The work environment of internal auditors
Internal auditors work in an office environment and often on a full-time basis. There are specific periods of the year when they may work long hours. That may include the end of a taxation period or during a budget year. While internal auditors work alone most of the time, they may also work with accountants and external auditors.
Job outlooks of internal auditors
According to the U.S Bureau of Labor Statistics, there were 1.4 million jobs that internal auditors and accountants held in 2019. Some of the sectors that had the highest demand for internal auditors and accountants were:
- Accounting, bookkeeping, payroll services, and tax preparation: employed 24%
- Finance 7 insurance: 9%
- Government: 8%
- Corporate management: 7%
- Private practices: 7%
Between 2019 and 2029, the demand for auditors and accountants is expected to grow by 4%. This is also the average growth rate for other professions.
It is expected that there will be 125,700 openings for internal auditors and accountants every year over the next ten years. Many of these openings will result from replacing retiring workers and those who transfer to other locations.
Some of the factors that will cause a rise in the demand for auditors to include globalization, a growing economy, complex regulatory and taxation environment. The general health of the economy will also affect the job prospects of internal auditors.
With a rebound of the economy expected post-covid, the job prospects of the financial professionals will continue. The continued globalization of the economy will also raise the demand for accounting and auditing experts with knowledge of international mergers and acquisitions.
The role of internal auditors will also be affected by technological changes. While automation will increase the efficiency of internal audits, the change is not expected to reduce the demand for auditors. When duties such as data entry become automated, the need to analyze and audit that data will be more prominent.
With the increased demand for internal auditors, the job prospects of entry-level positions will rise. However, the competition for well-paying jobs will still be high. Like we have already noted, internal auditors with professional certifications such as CPA and CIA will have better prospects. Candidates with an MBA or a Master’s degree in accounting will have an added advantage.
FAQs on internal auditors
Here are the frequently asked questions on internal auditors.
How long does it take to become an internal auditor?
It takes an average of 7 years to become an internal auditor. That includes four years of Bachelor’s degree, two years of the CPA exam, one year’s internship, and three months of CIA qualification.
What are the common challenges faced by internal auditors?
Internal auditors suggest that they face common challenges such as lack of support from the management, lack of business knowledge, and the refusal by external auditors to rely on their work.
Is internal audit a promising career?
Internal audit is a lucrative and sustainable career. It provides an excellent opportunity to reach the highest level of the accounting profession. A career in internal audit can lead to higher positions such as the group’s financial controller or finance director. Therefore, this is one of the most straightforward routes of climbing to a line management position.