Perspectives
How auditors safeguard businesses and individuals
The first clues came in from the employee tip line: Workers complaining about a former manager forcing them to work overtime and process non-routine transactions while he bought a new home, a new truck, and a new boat.
A team of auditors sprang into action, reviewing records and conducting interviews. They soon discovered that the employee complaints were legitimate.
The ex-manager had misappropriated company equipment and accepted what amounted to bribes. He had also forced employees to work without pay on the weekends and created potential safety issues for the company’s operations. In all, the auditors identified over $100,000 in costs related to the manager’s malfeasance.
>> Test your auditing and fraud detection skills in our “That’s a Red Flag!” quiz.
What auditors do
Auditors, many with Master of Accounting (MAC) degrees, provide a critical role in the business world. They ensure we can trust financial information, identify risks before they become problems, and, sometimes, catch cheats, frauds, and criminals. Auditors might be the closest thing the business world has to superheroes.
Public companies are audited by independent external auditors every year to ensure their financial statements are accurate and follow accounting standards, so investors can trust them when making decisions.
Professor Lynn Dikolli highlights interesting elements of her audit courses.
“One of the fundamental roles auditors play in society is providing trust,” says Lynn Dikolli, a UNC accounting professor who teaches auditing. “We’re that objective third party that allows you to trust either a statement or assertion that somebody has made.”
And, she adds, auditors highlight in their reports when information cannot be trusted – such as when financial statements are inaccurate or incomplete – whether due to an unintentional error or deliberate fraud.
It’s not just external financial statements that need assurance. Many companies hire auditors to routinely assess whether corporate policies and procedures are being adhered to, review information systems and financial records, and identify risks that a company may be exposed to.
In addition to auditing financial statements, auditors help organizations assess cybersecurity risks and understand new technologies, such as blockchain and cryptocurrencies. Some auditors tackle manufacturing supply chains or corporate social responsibility programs. Auditors even ensure the accuracy of Hollywood’s Academy Awards each year.
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What skills do auditors need
Auditing is both interesting and important. Like most professions, auditing requires a unique set of skills and a particular acumen. Here are four critical attributes you need to become a successful auditor:
People skills. Auditors spend their days getting information from other people and asking questions. Whether the audit is focused on wrongdoing or is a routine review, auditors have to be good at getting people to open up, picking up subtle cues, and knowing when to dig deeper.
One of the fundamental roles auditors play in society is providing trust. Auditors play an important role as an objective third party that allows you to trust either a statement or assertion that somebody has made.
A learning mindset. While a MAC degree will give you deep accounting knowledge, you’ll still end up applying that knowledge to other industries. Whether it’s manufacturing, health care, financial services, or something else, auditors are always learning. As an external auditor, you might conduct an inventory at a rum plant one month and the next month find yourself reviewing shipping and storage records for a drug manufacturer. Internal auditors often spend their time digging into areas of their own companies where they might have little first-hand experience.
Critical thinking. If problems with information accuracy were obvious to everyone, there would be no need for auditors. But often these problems aren’t obvious at all. Auditors have to understand the data they’re examining, identify what might be missing, and put it in the context of the company’s overall business and the wider economy.
Accounting expertise. Of course, auditors need top-notch accounting skills. They need to understand accounting standards and the analytical skills that come with a Master of Accounting degree. Auditors learn specific statistical techniques, computer-driven data mining procedures, and other methods that allow them to assess large amounts of information.
Auditor career paths
The fastest way to turn your eye for detail and curiosity into an auditing career is to earn a MAC degree. Many MAC graduates go directly into external auditor roles at large public accounting firms. Other MAC graduates use the degree to take their career up a level in their current organization, jumping into a new role as an internal auditor.
Auditors are critical in the modern economy, safeguarding the information that financial markets, managers, and ordinary individuals use to navigate our increasingly complex economy. Auditors, particularly internal auditors or forensic auditors, are skilled in identifying the red flags in financial results or employee behavior that point to fraud or deception.
Being an auditor isn’t exactly the same as Wonder Woman or Captain America battling evildoers — you probably won’t be dodging bullets or throwing punches. But if you become an auditor, you will be protecting people and organizations against mistakes, misleading or missing information, or possibly even malfeasance.
Can you spot fraud?
Wondering if auditing might be a good career path for you? Take our “That’s a Red Flag!” quiz to test your attention to detail, your business acumen, and your critical thinking skills.