Companies are obligated to follow rules and regulations that ensure they aren’t violating any laws and that their business practices don’t put the enterprise at risk. This applies equally to large companies, such as Facebook and Apple, and to small businesses with just a handful of employees. The role of making sure that companies are in accounting and finance compliance falls to internal auditors.
Internal auditors evaluate companies’ finances and business practices to ensure that they comply with financial rules and regulations. They are a key element in a company’s success because they effectively allow companies to resolve their own issues without outside interference, leading to overall improvement and increased efficiency.
Becoming an internal auditor requires both the right educational foundation and specific certification. Although internal auditors must have at least a bachelor’s degree, many invest further in their education with a master’s degree, such as a Master of Accountancy (MAcc).
What Is an Internal Auditor?
Internal auditors review financial and business processes to identify areas of opportunity and locate violations of compliance. An internal auditor might discover that the company has a significant payroll discrepancy or that it hasn’t been paying the correct taxes or annual franchise fees.
When an internal auditor brings these issues to the attention of company leadership, the company can often self-correct without facing penalties. Audits may reveal flaws in accounting, violations of state or federal law, or inefficiencies in the company’s processes. Regardless of the issue, it’s far better for an internal auditor to identify problems than to have an external auditor find them.
The core difference between an internal auditor and an external one is that external auditors aren’t affiliated with the company. Corporate shareholders or government agencies typically hire external auditors. If an external audit reveals fraud, compliance violations or other issues, a company may be subject to fines and legal recourse. This is why the internal auditors’ role is so important.
Steps to Become an Internal Auditor
The path to becoming an internal auditor begins with earning a bachelor’s degree. No specific degree is required, but a background in accounting, finance, mathematics, economics or business often proves to be beneficial.
The next step in the process is obtaining certification. Certified public accountant (CPA) and certified internal auditor (CIA) credentials are similar in that they both certify an individual as trained to professionally audit a company, but while CPAs are recognized only in the U.S., CIAs can operate internationally. CPA certification is largely recognized as the industry’s “gold standard” for beginning internal auditors, although CIA certification may help with later career advancement.
The requirements for these two certifications differ as well. Aspiring CPAs must complete 150 semester hours of college coursework in addition to passing a four-part national exam. CIA candidates must pass a four-part exam and meet work requirements based on their degree level (master’s degree: one year; bachelor’s degree: two years; associate degree: five years). Both also require continuing professional education (CPE), with specific requirements dictated by each state.
Although CIA and CPA are the most common certifications for those pursuing internal auditor roles, three other certifications are also available. Certified government auditing professional (CGAP) is designed for those who want to be an internal auditor for government organizations. Candidates must have at least an associate degree to take the exam, a character reference and work experience based on their degree level similar to CIA certification requirements. Continuing professional education is also required.
Certified fraud examiner (CFE) certification is intended for internal auditors who aim to specialize in fraud detection and prevention. To become a certified fraud examiner, candidates must pass an exam and undergo CPE training.
Certified information systems auditor (CISA) certification is for internal auditors who want to specialize in the IT elements of auditing. CISA certification requires candidates to pass an exam, accrue five years of on-the-job experience auditing information systems, and undergo continuing professional education.
While a bachelor’s degree and certification will qualify an individual for entry-level positions, many companies prefer candidates with a Master of Accountancy degree and several years of experience for high-level roles such as internal auditor. Requirements will vary by company, but a MAcc is an excellent way for candidates to make themselves stand out to potential employers, and a graduate degree in accounting equips students to pass certification exams.
What Skills Does an Internal Auditor Need?
First, internal auditors must be highly analytical and organized, with a keen eye for detail. Their main role is to identify issues that have been previously overlooked or ignored.
Additionally, internal auditors must be highly proficient in mathematics and accounting procedures. If a company’s financial records contain mistakes, they must be able to uncover them before an external auditor has the opportunity to do so.
Internal auditors also must have excellent communication skills. A key part of their role is communicating with company leadership or specific departments to explain their findings, including detailed suggestions as to how to resolve issues in a timely fashion.
Finally, internal auditors must be highly ethical. Their role is predicated on policing a company and calling out violations, no matter how inconvenient they may be for company leadership. Internal auditors who discover fraud or compliance issues and either ignore them or further conceal them will have short careers.
Internal Auditor Salary and Career Outlook
According to the U.S. Bureau of Labor Statistics (BLS), accountants and auditors made a median annual salary of approximately $73,560 in 2020. The BLS projects that positions will increase by an estimated 4% between 2019 and 2029.
Education, experience, certifications, region and employer all affect salaries.
Begin Your Journey to Becoming an Internal Auditor
Internal auditors play a critical role in helping companies comply with regulations and adhere to state and federal laws. Those interested in becoming internal auditors should explore the University of Nevada, Reno’s online Master of Accountancy. Courses such as Intermediate Accounting, Federal Taxation, Auditing, and Taxation of Corporations help provide students with the education and skills to establish themselves as prime candidates in this highly competitive field.
Begin your journey to becoming an internal auditor today by learning more about the University of Nevada, Reno’s MAcc.