An auditor is a popular career option for those who have an analytical mind and a desire to operate within the business world or even with private personal finances. An auditor primarily provides accurate and in-depth review and analysis of financial documents, typically completed as part of a support role to a CFO or a CEO. Typically, the auditor is responsible for providing all financial reports, financial statements, accounting documentation and accounting processes that support the financial statement and internal control requirements. A skilled auditor can also conduct other financial functions including auditing asset and liability accounts, internal control over financial reporting (ICS), internal tax function and financial planning.

Auditors perform the role of monitoring the activities of the company by performing an objective review of financial information and activities. They are charged with ensuring that the organization has a sound financial structure in place. In general, there are four types of audits; internal audit, external audit, client audit and supervisory audit. The different types of audit depend on how the auditor identifies and uses information and what the auditor finds.

Internal Audit: Generally performed by a member of the organization’s management, internal audit examines internal accounting policies, procedures, controls and systems used to assess, evaluate and account for the financial aspects of the organization. Internal audit also involves an evaluation of internal control over financial reporting, including the assessment of whether the process for internal control is adequate in relation to the requirements of applicable laws, rules, regulations and policies. Internal audit also includes an assessment of whether adequate safeguards exist to protect against loss, theft, fraud or unauthorized access or use of funds by management.

External Audit: External auditors are hired for specific purposes related to the performance of a client’s organization. These include audits of corporate accounts, internal controls, and the company’s external relationships. External audit usually includes an independent third party with extensive experience conducting financial and management audits. An independent third party should be a certified public accountant, or a highly regarded non-governmental organization (NGO), and must have a proven history of conducting highly qualified and thorough audits. When performing this type of audit, the auditor should be able to explain their findings to the client without bias.

Client Audit: This type of audit is typically conducted by an independent non-certified public accountant that performs the audit as part of a contract between the client and an organization or individual. Typically, a client will hire an auditing firm to assist in assessing its company’s internal controls and internal reporting practices for the preparation of a detailed financial statement. If the client does not have a certified accountant, the auditor would be hired to perform an independent audit of the internal controls and internal reporting system to prepare the financial statement and provide a recommendation for corrective action.

Supervisory Audit: This type of audit is usually done as part of a contract for the audit of a client’s management or accounting practices. This is sometimes referred to as an audit of internal control over financial reporting (ICS). The auditor will review the management’s practices with respect to the preparation and maintenance of accounting records. The auditor will perform audits that are designed to examine areas such as internal controls, the use of internal control (ICS), the accounting process, and the control of financial reporting within the company.

Supervisory audit is sometimes referred to as an audit of the internal management practices of the business, and is typically an evaluation of the control and internal processes of the accounting process. Supervisory auditors also will perform a review of the management’s financial statement preparation practices, including the preparation of the balance sheet, the preparation of the statement of condition, and the preparation of the income statement, along with reviews of the internal control over financial reporting procedures. They may also review the internal financial reporting system for the company’s accounting system.

Internal audit is very important to the success of an organization. Internal auditing is essential to ensure that the activities performed by the company, employees, and the business itself are being conducted and reviewed in accordance with accounting standards. Because the activities involved in internal auditing can vary from company to company, it is imperative that an independent auditing service is used when conducting these activities. to assure that the activities are consistent with the standards set forth by GAAP (Generally Accepted Accounting Principles), which are used by most of the largest firms in the United States.