Contents
Who’s it: An auditor is a party that carries out an official examination of the systems, accounts, legal records, and documents of a company. Their work and examinations cover various areas, such as finance, marketing, information technology, and banking.
Types of auditor
Based on the relationship with the company being audited, we can classify auditors into two:
- External auditors
- Internal auditors
External auditors
An external auditor is an independent company or individual who is appointed by the company to be audited. They express an opinion about whether the company’s financial statements are free from material misstatement, whether due to fraud or error.
For public company audits, they will usually also examine and express an opinion on the effectiveness of internal control over financial reporting.
Depending on the agreement, they may also be involved in other auditing work, which may not be related to financial reporting.
Even though they are employed and paid for by the company being audited, they must be considered independent. Their responsibility is to the users of the financial statements, not to the management of the company being audited.
Internal auditors
Internal auditors work as staff within the company. They help organizations to evaluate and improve the effectiveness of risk management, control, and governance processes. Their responsibility is to management.
The scope of work of the auditor
Although broadly divided into two: external and internal, the scope of work varies greatly, especially for internal audit. It depends on the company and which position they work for. In the following, I will list some of the scopes of work of an auditor.
Banking audit
In this case, the auditor examines the bank’s operational activities. They are appointed and responsible to the board of directors to assess all bank operations. Their work usually includes systematic supervision, verifying all bank books, and submitting reports to bank directors and commissioners.
Advertising audit
Their scope of work includes a thorough review of marketing plans, objectives, strategies, and activities. Its purpose is to see what is working and what is not. The audit results help management to identify areas for improvement.
For example, for an inspection related to advertising, their job might be to track, count, and verify ad banner requests or verify the website ad reporting system.
Company financial audit
Auditors have professional qualifications in conducting financial audits and the company’s internal accounting system by applicable accounting standards. They are responsible for the company’s financial information accuracy.
Among their duties are:
- Checking company books such as checking transaction documents, accounts payable, and asset value.
- Carry out a test to verify the correctness of the records.
- Check if the accounts are complete and consistent and match the purchases, sales, and other inventory records.
From the examination results, they then state the audit opinion regarding the company’s financial fairness, whether the reports have been presented fairly and following the applicable accounting standards.
Government audit
Auditors in the public sector are tasked with examining and maintaining records of government agencies. Depending on where they work, the scope of duties may include auditing businesses and private individuals, whose activities are regulated or taxed.
Auditors may also specialize in forensics. They carry out an examination of criminal practices involving finance. They help law enforcement to identify potential fraud and financial crimes.
Construction audit
The main scope of the audit is the analysis of costs incurred for a particular construction project. They will check various documents and information, such as:
- Contract awarded to contractors
- Price paid
- Order changes
- Permitted overhead costs for reimbursement
- On-time completion
The primary purpose of a construction audit is to ensure that the costs incurred for a project are reasonable.
Information system audit
Unlike some other financial audits, information systems auditors must have qualifications in the field of information technology.
They are usually tasked with reviewing and controlling software development, data processing, and access to information systems. The audit’s primary purpose is to ensure that the company’s information systems provide accurate information to users and make sure that only authorized parties can access data and information.
Operational audits
Operational audits are relatively complex. The auditor must carry out a detailed analysis of the objectives, planning processes, procedures, and business operations results. They may work within the company or as external professionals.
Their main task is to evaluate the company’s operations and business processes and provide recommendations for improvement.
Tax audit
The scope of duties is the analysis of tax returns submitted by individuals or business entities. The auditor will see whether the tax information and any resulting income tax payments are valid.
