If you’ve got an eye for detail, and a head for figures, you might like to become an external auditor.
An external auditor is employed by an accounting firm or a government department to examine the financial records of a company.
Their role is to make sure these records are accurate, that companies pay the right amount of tax, and that their business is transparent.
The role of the external auditor is particularly important when dealing with a public company.
They also examine the records of companies who hold money in trust, such as a real estate agency or a law firm.
In the instance of several minor discrepancies, or any major ones, an external auditor will report a company to the relevant authority.
The best auditors have a good ability with math and equations.
They are also good problem solvers, and enjoy doing a little bit of detective work as a part of their role.
If you are interested in accountancy, but are looking for a specific role that is challenging and varied, you might consider becoming an external auditor.
Education Requirements for an External Auditor
The first step to become an external auditor is your education.
You will need to attend college and complete a four year accounting degree.
Those who complete a degree such as a bachelor of commerce or business administration that has an accounting component may also qualify.
Some accountants go on to complete postgraduate study such as a master’s of accounting, or an MBA.
This is not essential if you want to become an external auditor, but it can help you to land some of the high profile jobs later in your career.
Depending on your goals and preferences, you may decide to become a CPA.
To do this you will first need two years of experience as an accountant, as well as passing a written exam.
To become a CPA you need to undergo continued professional development, and meet with a code of ethics.
After college, apply for graduate roles within auditing firms, or accountancy firms that have a strong external auditing branch.
External Auditor Job Description
When you become an external auditor, you can look forward to one of the most varied roles within accounting.
Your job will take you to visit all kinds of businesses in many different settings.
You will get to meet people from all walks of life.
An external auditor usually works from the site of the business they are auditing.
They will provide the business with a list of files and records which are to be examined.
Once there, they will often issue a ‘surprise’ or discrepancy list of additional files that they need.
This is to ensure transparency, making sure that they aren’t being given dummy records.
An external auditor can spend anywhere from a few hours to a few months working with the one company.
They will ensure that all files are accurate, that companies have followed all financial regulations, and that they have paid any tax on time.
In many industries a yearly external audit is compulsory.
Here are some of the tasks of an external auditor:
- Communicating with a range of clients
- Requesting files and records
- Ensuring records are accurate
- Ensuring a company has followed accounting laws
- Ensuring a company has paid tax
- Reporting discrepancies to the relevant authority
External Auditor Salary and Career Path
It’s likely that when you graduate from college you will gain an entry level role working for an accountancy firm.
You’ll start working as an assistant auditor, accompanying other auditors and helping with their work.
After some time you could become a head auditor.
Some auditors move on to senior roles later in their career, such as a senior auditor, or a financial controller.
The median wage of an external auditor is $59,000 a year.
Some similar roles to that of an external auditor include:
When you become an external auditor, you can look forward to a job with good security, a good salary, as well as benefits.
There is also plenty of room for promotion and professional development for successful people in this field.
Frequently Asked Questions
What does an external auditor do?
An external auditor is a third-party consultant, whose main job is to review a company’s financial records.
Unlike internal specialists, external auditors have not formed a relationship with the company or the employees, that’s why their decision will not be affected by any personal factors.
Specialists are, most of the time, appointed by corporate shareholders.
An external auditor would have to plan the audit, get to know the company or organization and the way it works; after that, the auditor checks all the records and financial records.
The main mission of an external auditor is to find out whether the organization is following the GAAP (Generally Accepted Accounting Principles) or not.
External auditors might end up finding proof of fraud or even embezzlement.
How much do external auditors make?
On average, external auditors make around $55.000 per year in the United States.
In case you decide to follow this career path, you can expect to earn anywhere between $33.000 and $85.000 annually.
The salary would mainly depend on your education level, experience, and the location.
External auditors that have some experience in the field can earn around $23-$27 per hour.
How much does it cost to become an external auditor?
You would need a bachelor’s degree to become an external auditor (in finance, accounting, business administration, etc.).
A year in a university will cost you anywhere between $8.000 and $30.000 depending on whether you are an in-state student or not, whether the university is private or public, and on the overall prestige of the institution.
The cost of books, supplies, and accommodation is not included.
Some experts suggest going for a master’s, in order to be able to apply for the highest-paid jobs.
It will cost you $30.000 and more to acquire a master’s degree.
You can choose to pass an exam and become a Certified Fraud Examiner.
The CFE application fee is $400 and the membership fee is $175.
What is the demand for external auditors?
Between 2016 and 2026, the auditor job market is expected to grow by 10%.
This is one of the careers that are going to provide excellent employment opportunities in the near future.
The government regulations are becoming stricter, that’s why there will be a need for more auditors.
There might be a higher demand for internal auditors, as companies want to make sure that their reports meet all the standard requirements.
The few states where the auditor industry is concentrated include New York, California, and Texas.
How long does it take to become an external auditor?
It will take you 4 years to acquire a bachelor’s degree and another 1-2 years to get a master’s (in case you decide to go for it).
There are institutions that offer baccalaureate programs in auditing.
The majority of future external auditors starts as clerks, junior auditors or bookkeepers, as you might be required to have at least 2 years of accounting experience.
To become a Certified Public Accountant, you would need to possess at least 150 hours of working experience.