Many people know about accountants, but what about auditors? How do auditors differ from accountants? Well, like accountants, auditors also deal with financial papers. Auditors go through these documents to spot mistakes and suggest fixes to their clients. Some auditors focus on catching fraud.
What Does an Auditor Do?
Auditors examine financial records to find mistakes, suggest better financial plans, and look into possible fraud. In the auditing world, there are different roles like internal auditors, external auditors, and government auditors. Internal auditors check their own company's finances, while external auditors examine other companies. Government auditors, also known as IRS auditors in the U.S., work for federal or state governments in external auditing roles.
Having a bachelor's degree is a valuable start for those entering the auditing field. Some choose to enhance their skills with further education, like a graduate degree. If you're an accountant or a business professional considering a career shift, auditing could be a suitable option. As of May 2021, the Bureau of Labor Statistics (BLS) reported that auditors typically earn a median salary of $77,250.
Also Read: The Ultimate Guide to a Career in Finance
- Check a company's financial records for mistakes.
- Study how an outside organization makes money, manages its finances, and handles risks.
- Regularly inspect operations to find ways to work better, save money, and lower financial risks.
- Examine financial documents to ensure they follow laws and rules for reporting finances.
- Write reports summarizing findings from an internal or external audit.
What Are the Steps to Become an Auditor?
At the very least, auditors are required to hold a bachelor's degree. The path to becoming an auditor can differ, but many individuals start by gaining entry-level experience before considering further training or pursuing a graduate degree. This section will guide you on how to become an auditor.
Earn a Bachelor's Degree in Accounting
The majority of auditors typically obtain a bachelor's degree in accounting, but other common majors include economics, finance, and business administration. During their undergraduate studies, aspiring auditors should enroll in courses related to finance, auditing, and management accounting. Additionally, many programs include general business classes that focus on developing analytical and decision-making skills.
Aspiring auditors can enhance their prospects by developing transferable soft skills and focusing on professional growth. Skills like effective communication and collaboration are valuable for auditors. Moreover, pursuing internships during undergraduate studies can assist in building a professional network.
Get an Entry-Level Auditing Job
Having a bachelor's degree allows auditors to apply for entry-level positions. Building a professional network, participating in career fairs, and completing internships can increase the chances of college graduates securing employment. Additionally, recent graduates may explore career bridge or job placement programs offered by their educational institutions.
Earn Your Master of Accounting
Obtaining a master's degree can provide auditors with advanced training and open doors to specialized roles. While a graduate degree is not mandatory for auditors, it can significantly boost career prospects.
Many auditors choose to pursue a Master's in Accounting with a focus on auditing. Alternatively, they may opt for a Master's in Economics or a Master's in Finance.
The cost of a master's degree can vary widely, just as the earning potential with the degree can. Before committing to graduate school expenses, it's essential to consider the total cost of the degree in comparison to the potential earnings to determine your return on investment.
Get a Job as an Auditor
Professional experience can be a key factor in helping auditors assume more significant roles and increase their earning potential. Payscale data from August 2022 indicates that auditors with approximately five years of experience can expect their salaries to rise by approximately $12,000 compared to their starting salaries.
As auditors gain experience and continue their education, they can also transition into specialized fields such as:
- Government Auditing
- Healthcare auditing
- Insurance auditing
- Higher education auditing
- Corporate auditing
Consider Continuing Education or a Specialization
Auditors can improve their skills by pursuing continuing education or earning a professional certification. These options help auditors stay current and adapt to changing technologies and methods. Other options include a graduate certificate in finance or a doctorate in accounting.
Although auditors are not required to obtain licenses or certifications to practice, pursuing voluntary professional certifications can highlight their skills and potentially facilitate their transition into specialized roles.
Licensing and Certification
In general, auditors are not obligated to hold a license for their profession. Nevertheless, individuals with several years of experience might require a Certified Public Accountant (CPA) license if they intend to submit financial documents to the U.S. Securities and Exchange Commission. Auditors can also choose to pursue voluntary certifications as a means to showcase their expertise. Various professional organizations provide these certifications. For example, the Institute of Internal Auditors offers a range of certifications tailored for auditors, including the Certified Internal Auditor credential.
Common auditor certifications include:
- Certified public accountant
- Certified internal auditor
- Certified financial services auditor
- Certified fraud examiner
- Certified government auditing professional
The requirements for a professional certification vary. However, most certifications require an accredited college or university degree and auditor experience. Candidates must also successfully complete a certification exam to demonstrate their knowledge. Obtaining certification can be instrumental for auditors seeking to transition into different roles and enhance their income prospects.
What to Know Before Becoming an Auditor
Prospective auditors should always opt for an accredited college. Accredited institutions adhere to rigorous standards of academic excellence. These schools, including accredited online ones, must meet strict criteria related to student learning outcomes, faculty qualifications, and their educational mission. Attending an accredited school also opens up more opportunities for financial aid.
Based on data from the National Center for Education Statistics (NCES), the average tuition fees at a four-year university vary between $9,375 and $35,852, depending on the type of institution. To reduce costs, many students opt for online programs and seek financial aid. Prospective students should also factor in additional expenses such as textbooks, supplies, and living expenses. Hidden costs like transportation can further contribute to the overall expenses of attending college.
Auditors and accountants reported a median pay of $77,250 per year in 2023, according to the BLS. Salaries vary by job title, experience, and location. Entry-level and lower-paying positions report around $47,000, while the highest-paid auditors and accountants report over $128,000.
Location is a significant factor in determining earning potential for auditors. According to the Bureau of Labor Statistics (BLS), the top-paying states for auditors include New York, New Jersey, and California. In New York, the average annual salaries for auditors exceed $100,000. Massachusetts and Washington are also among the high-paying states for professionals in this field.
What qualifications do you need to become an auditor?
Auditors need a bachelor's degree, often in accounting, business, finance, or related fields, to qualify for entry-level roles. Gaining hands-on experience through internships during college can be valuable. Professionals can further advance their careers with a graduate degree or professional certification.
What is the fastest way to become an auditor?
The quickest path to becoming an auditor is to earn a bachelor's degree, typically taking four years for full-time students. Accelerated degree programs are available to shorten this timeline. Most auditors opt for a bachelor's degree in accounting, which provides relevant coursework in auditing methods and accounting systems. Alternatively, those with a different undergraduate degree can consider a graduate certificate in auditing or accounting to acquire the necessary skills.
What is the difference between an auditor and an accountant?
While both auditors and accountants work with financial documents, their roles differ. Accountants create financial documents such as tax returns and financial statements. On the other hand, auditors review these documents to identify errors, investigate fraud, and ensure compliance with regulations. Auditors can work internally within their organization or externally for outside companies, while accountants often focus on creating financial records.
Can I become an auditor with an online degree?
Yes, you can become an auditor with an online degree. Many accredited colleges offer online business and accounting degrees, including specialized auditing training. Online programs cover forensic accounting, tax return auditing, and fraud examination. Graduates of online accounting programs are well-prepared for auditing careers. Additionally, auditors can pursue further education, such as an online graduate certificate or master's program, to enhance their skills.
How much money can I make as an auditor?
The salary of an auditor varies based on factors like job title, experience, location, and industry. In May 2021, the median annual salary for accountants and auditors was $77,250, according to the Bureau of Labor Statistics (BLS). Entry-level positions may offer salaries of around $47,000, while experienced auditors can earn over $100,000. Location also plays a significant role, with states like New York, New Jersey, and California offering higher salaries for auditors.