What Is Auditing?

Professionals interested in finance and accounting may find an interest in auditing. Learn more about how to become an auditor.
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Updated on April 5, 2023
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  • Auditing involves reviewing an organization's financial information and processes.
  • There are three types of auditing including internal, external, and government.
  • Auditors need a bachelor's degree and often pursue additional certification, like a CPA.

Auditing is a specialization in the business field that involves reviewing a company's financial statements to make sure the organization is following regulations and standards and representing their financial position fairly.

An auditor is an independent accountant with a background in accounting. They can conduct audits internally for a company they work for or externally as an unbiased third party. Other financial roles, like an accountant, may have other responsibilities during an audit as well.

What Does an Auditor Do?

Auditors are typically detail-oriented professionals with a good understanding of how to structure a business. During an audit, an auditor inspects a company's financial records to make sure the business is following generally accepted accounting principles (GAAP). Experienced auditors often oversee or review audits.

Auditors usually have a bachelor's degree in accounting. While licenses or certifications are not always required, many auditors choose to pursue a certified public accountant (CPA) license or a certified internal auditor (CIA) certification to earn credibility in the field.

Auditor Responsibilities

  • Review accounting documents for accuracy, efficiency, and use of generally accepted accounting principles.
  • Ensure that the organization's financial processes comply with laws and regulations.
  • Assist with taxes by calculating taxes owed, filing taxes, and preparing returns.
  • Find potential risks for fraud and make recommendations for best practices.
  • Make suggestions to improve processes that will increase revenue and profit (and cut costs).
  • Prepare written reports and present information to financial personnel to explain findings.

Auditing Specializations

Auditors can be grouped into three types including external auditors, internal auditors, and government or IRS auditors. External auditors perform audits of other companies or organizations, while internal auditors work within an organization to analyze internal operations. Government auditors verify the accuracy of tax returns for the government.

As they advance in their career, auditors may choose to specialize in a specific type of accounting (internal, external or IRS) or in a specific industry as they build knowledge in those areas. Many auditors choose to pursue additional certifications relevant to those specialty areas, like a CPA license or a CIA certification.

Auditor Job Demand and Salary

The Bureau of Labor Statistics (BLS) projects that employment for accountants and auditors will grow 7%, which is about the average growth rate for all professions from 2020-2030. Due to globalization and a growing economy — and because so many organizations rely on auditors — the BLS projects a steady demand for accountants and auditors.

According to the BLS, auditors made median salaries of $77,250 in 2021. The top 10% of earners took home over $128,970. Auditors in the finance and insurance sector made the most with median annual salaries of $79,310.

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Auditing Careers

Staff Accountant

A staff accountant can work for a private company, public organization, or an auditing firm. Staff accountants generally perform the duties required for an audit, like reviewing financial materials and preparing reports. Staff accountants typically have a bachelor's degree in accounting, and many pursue a CPA license.

  • Median Annual Salary (May 2021): $77,250
  • Projected Job Outlook (2020-2030): 7%

Internal Auditor

Internal auditors perform audits for the company they work for. They typically report to upper management and use their findings to identify strengths and weaknesses within the organization. An internal auditor will often need a bachelor's degree in finance or accounting and a CPA license or a certified fraud examiner (CFE) license.

  • Average Annual Salary (July 2022): $60,910
  • Projected Job Outlook (2020-2030): 7%

Tax Examiner and Collector

Tax examiners and collectors determine how much businesses and individuals owe in tax. They review tax returns and contact businesses and taxpayers if more documentation is needed or if they have overpaid or underpaid. They may conduct investigations into a business' or an individual's income tax return to verify information or update liabilities.

  • Median Annual Salary (May 2021): $56,780
  • Projected Job Outlook (2020-2030): -4%

How to Become an Auditor

There are many ways to become an auditor. Auditors typically have a bachelor's degree in accounting, finance, or a related discipline. Professionals with a bachelor's degree in another subject who are interested in auditing can pursue a certificate in accounting to learn critical skills.

While it is not required, some auditors also may choose to pursue a master's degree in accounting, business administration, or forensic accounting.

You can pursue an entry-level auditing job with a bachelor's degree. A certification or license may not always be required. But there are several certifications in accounting that an auditor may find beneficial, depending on the industry and type of work they pursue, like:

  • Certified public accountant
  • Certified management accountant
  • Certified Internal auditor
  • Certified information systems auditor
  • Chartered financial analyst
  • Certified fraud examiner
  • Chartered global management accountant

Depending on the industry of specialization and career goals, some auditors may even choose to pursue a doctoral degree in accounting.

The Future of Auditing

The auditing field is currently seeing a lot of transformation in how it conducts business. With the influx of remote work from the COVID-19 pandemic, businesses are working to solve how to conduct audits remotely and coach new auditors. Leveraging new technologies is an important focus area in auditing.

Documenting and testing work in public organizations to abide by rules set forth by the Public Company Accounting Oversight Board (PCAOB) requires a lot of effort. So, there's a high demand for auditors in this sector. The auditing field in general continues to grow as the government regulations of public companies grow.

Is Auditing Right for Me?

People that excel working independently often do well in auditing. While auditors may conduct work independently, they also need to be good communicators that collaborate well with others. Auditors often have to make independent decisions and be able to communicate those decisions to stakeholders. Because auditors work largely with numbers, math-minded people often enjoy this career.

Frequently Asked Questions About Auditing

How much does an auditor make?

How much an auditor makes varies based on specialization, employer, experience, and location. Other credentials like additional degrees or certifications may also increase your earning potential.

However, generally speaking, Payscale data from July 2022 reports that the average auditor base salary is $59,020 per year. Entry-level auditors with less than one year of experience can make about $54,630 per year on average. Later in their career with over 20 years of experience, they could earn six-figures or more.

What is a night auditor?

A night auditor also handles finances but is very different from a traditional auditor. A night auditor ensures that a hotel continues to run smoothly 24 hours per day — even though the night. They conduct the night audit, which is reviewing the day's guest account transactions against revenue transactions. A night auditor also monitors account credits and delivers financial reports to management to make sure accounts are settled correctly.

The night auditor in a hotel is typically an experienced hospitality professional with finance experience who has a strong understanding of hospitality functions and the front office accounting system.

What is the difference between auditing and accounting?

Accounting is an important part of auditing. Auditing involves much of the record keeping and maintenance of financial documents central to accounting. Accounting is ongoing as the business functions, as it tracks an organizations' financial success.

An audit, on the other hand, is something that happens at a fixed point in time but doesn't usually happen again until the next audit begins. Auditing involves reviewing accounting documents to ensure that they give a true and fair view of an organization's success. Auditing relies heavily on accounting practices, so these two processes are very closely linked to one another.

Can I become an auditor with an online degree?

Yes. To become an auditor, you'll need a bachelor's degree in accounting, finance, or a related discipline. There are many places you can earn a bachelor's degree, including online degree options.

Pursuing an online degree can be helpful if you're looking for more flexibility in your classwork. Online programs can also open up options for you to attend schools you may not otherwise have access to based on where you live.

What does an internal auditor do?

An internal auditor is employed by an organization to review their financial processes and information.

Internal auditors perform a variety of auditing tasks for their organization including:

  • Reviewing financial statements to review their accuracy in presenting financial data.
  • Ensuring that operating procedures are following laws and regulations.
  • Ensuring that operating procedures are efficient and cost-effective.
  • Reviewing processes and documents for fraud.

Internal auditors share this information with other people in the company, often with financial managers within the organization.

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