Internal auditors contribute to the financial, operational, compliance, control and governance functions of the business. It is a role that requires deeper understanding of how business and operational processes work, and the ability to sift through large amounts of data in order to find patterns or loopholes.
Internal auditors are employed by companies in all sectors of the economy from banks to manufacturing companies, service sector companies, government departments and so on. In fact, the demand for internal auditors has been steadily increasing as the global economy and regulatory environment becomes more complex. Cyber security threats, internal fraud and operational risks have also played their part in increasing the need for more internal auditors.
Internal auditors are usually expected to have a degree in accounting or finance. Other degrees in fields like business, economics or mathematics may also be considered. The idea is to have the necessary quantitative skills in order to look logically at accounting, financial reports and other data that comes your way.
Professional certifications like ACA, CPA, ACCA or the equivalent may also be required for certain roles. This differs from company to company and is dependent on what the role requires. Having a more advanced certification like this greatly increases the value of your CV and will also positively impact your overall compensation and career growth. See more CV tips in the linked article. <link to CV tips article>
Such professional certifications are by no means necessary for all internal audit rules, but some companies do insist on them.
Internal audit is a role that does require some amount of prior work experience. Most internal auditors spend a few years in accounting, financial planning, budgeting, or other finance roles. With a few years of experience under your belt, it becomes much easier to move into an internal audit role. Experience with accounting firms (especially the Big 4) is considered valuable and will further add value to your CV.
It is also possible to transition into internal audit straight out of college if you’re willing to work at an entry level role. Accounting or audit internships will help to bolster your chances of success at an interview. Many large companies offer internship opportunities to college students which also allows them to assess their suitability for a permanent job offer.
Such internship opportunities are the best way to get some on-the-job experience. Additionally, if you perform well, then that internship can also turn into a permanent offer straight out of college.
What skills do internal auditors need?
Risk management skills
The ultimate aim of internal auditors is to reduce the overall business and operational risks to which the company may be vulnerable. This requires a thorough understanding of risk management principles and their application in the real world.
In addition to identifying risks, internal auditors are also expected to come up with plans and implementation strategies in order to better control and monitor those risks in the future. This means that the role is not only about identifying problems but also remedying them.
Internal auditors can come across complex problems on a daily basis. For example, consider a situation where you need to figure out how to process a massive database of transactions for any errors or intentional manipulation. As another example, consider a situation where you detect an operational error and have to devise a mechanism to prevent and control for it in the future.
Such problems require out-of-the-box thinking and the ability to tap into previous experience in order to solve them. A multidisciplinary approach is usually called for which combines operational, technological, risk management and business principles.
Accounting experience is always preferred as the internal audit function has a lot in common with the role of accountants. It is because of this reason that most internal auditors have an accounting background or even professional accounting certifications.
This is not a mandatory requirement in all cases, but it is definitely something that can add value to your CV as an internal auditor.
Project management skills
Some internal audit tasks can be big enough to qualify as independent projects in their own right. Auditors must then put on their project management hats in order to effectively plan, executive and report on such audit missions.
Planning for audit projects starts with understanding the goals of the project, the resources available, the timelines, manpower needs, cross department support, external consultants etc. Once the requirements are in place, a plan must be drawn up and goals, deliverables and responsibilities stated.
Then the actual execution begins where the internal audit team must communicate with all other business functions in order to get the relevant data and other information necessary for them to perform their audit mission. This is followed by data analysis and other checks and ends with a final audit report prepared for management.
In order to successfully audit a business function or process, a deep and thorough understanding of the underlying product or service is necessary. Some products can be quite complex and internal auditors need to have the necessary product knowledge to effectively perform their duties.
For example, an internal auditor working at a financial institution may need to have experience about derivatives, fixed income products, credit risk and so on. While an internal auditor working at a manufacturing company might need to understand how the head office works, how the factories operate, how the distribution centres operate, how the sales offices handle their data, how the service centres perform their roles, what are the tasks assigned to third party vendors and so on.
Internal auditors look at regulatory reports and also need to audit financial statements and the data that goes into them. This requires a thorough understanding of local laws related to their business as well as international accounting and reporting standards.
In addition to all of this, companies also have their own internal guidelines, control mechanisms and governance rules that need to be followed. All of this necessitates a considerable amount of ongoing training.
Internal auditors spend a lot of time gathering data and information from other teams and communicating the result of their audits with management and leadership. Both of these tasks require exceptional verbal, written and interpersonal communication skills.
Effective communication is necessary in order to get the relevant data from the correct people and at the right time. Similarly, corporate leadership expects concise and to the point results which internal auditors must effectively communicate to them.
Internal audit is a rather data-driven function which necessitates the use of advanced computational and data analytics techniques. This is why many companies now prefer candidates with data analytics and computational programming experience of some sort. For example, experience in SQL or other database management tools will be considered quite relevant.
Internal auditors are expected to lead a team of professionals in order to achieve their goals. This requires team management, budgeting, task allocation, coordination, conflict management and all the other skills needed to effectively run a department.
Internal auditors have their own chain of command which can go all the way up to Chief Audit Officer or Chief Internal Auditor. Going higher up the chain of command means more responsibility, while also offering more opportunities for professional growth.
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