Internal auditor career guide

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What does an internal auditor do?

Are you interested in a career as an internal auditor? It’s an excellent career choice if you enjoy analyzing details. In this position, you can help a business or government agency use their resources efficiently and ethically.

Auditors explore how an organization manages funds, income sources, and internal controls. They review statements and analyze financial data. Then, they inform authorities regarding any mistakes, discrepancies, or potentially problematic areas.

Specific tasks for an internal auditor typically include:

  • Reviewing, analyzing, and evaluating documents or procedures
  • Reporting findings to management
  • Recommending any necessary changes

Internal auditors typically work only within the organization they audit. Even so, they must be objective in reviewing financial data, procedures, and activities. They report findings to management, who can then implement any necessary changes. These analyses can help companies and government agencies identify potential issues like fraud, waste, and similar financial risks.

Auditors notice patterns in data and make recommendations that can lower costs or improve efficiency. For example, they may notice that an alternate division of responsibilities could be more practical or economical. In a large company, internal auditors typically need to study each sector individually. By focusing on the minutia, they’ll be able to make more specific suggestions regarding effective management.

Internal auditors often play an essential role in communication within an organization. They have daily contact with policymakers in management positions and also with those implementing procedures. In this way, they can observe the effectiveness of policies and practices, and inform high-level executives of any that require explanation or modification.

Where do internal auditors work?

Many organizations and entities employ internal auditors. Some of these businesses include:

  • Small businesses
  • Large corporations
  • Healthcare institutions
  • Federal, state, or local government agencies
  • Non-profit organizations
  • Educational institutions

Some organizations may require that the internal auditor travel between multiple locations, such as a main office and branches. These might all be within the same city or region. If not, long drives or air travel could be necessary.

Required skills

Internal auditors need strong analytical skills to evaluate data, identify potential issues, and devise solutions. Therefore, attention to detail and critical thinking are crucial.

Additionally, they should possess well-developed oral and written communication skills. These enable them to present their findings in meetings or through typed reports. Being highly organized allows them to work effectively while comparing numerous financial documents. Last but not least, strong math skills are essential. Internal auditors may need to use statistical analysis and calculus to examine and compare data.

How to become an internal auditor

Internal auditors typically need a bachelor’s degree in accounting or a related field. However, some organizations favor candidates with a master’s degree. Students may choose to obtain a master’s in accounting or a Master of Business Administration (MBA) qualification with a concentration in accounting or internal auditing.

Earning a bachelor’s degree

To get into an undergraduate accounting program, you’ll need proof that you completed high school or a GED. Most colleges request a transcript, a minimum GPA of 2.5, and SAT or ACT scores. Some universities may require additional items like a personal statement or academic references.

Full-time students typically take 4 years to complete a bachelor’s degree, which consists of approximately 120 credit hours. Undergraduate coursework includes topics like:

  • Financial and managerial accounting
  • Profit planning and control
  • Federal taxation
  • Auditing
  • Accounting for healthcare institutions and non-profits
  • Analysis of financial statements

Positions available with a bachelor’s degree

While some employers may require a master’s, as cited above, the following positions are typically accessible to applicants with an undergraduate degree. Responsibility and pay both increase with each experience level.

Entry-level internal auditor

A new internal auditor with 0 to 2 years of experience earns, on average, $60,015 annually. At this point, the professional works on low-complexity projects and receives close supervision from a manager or supervisor. About 62% of workers at this level have a bachelor’s degree and 30% have a master’s.

Intermediate internal auditor

Internal auditors typically start learning the more complex aspects of the job when they have 2 to 4 years of experience. They still require direction on some tasks, reporting to a supervisor or manager. While 60% have a bachelor’s degree, 37% have already earned a master’s degree. The average yearly salary is $71,671.

Senior internal auditor

Most internal auditors at this level have 4 to 7 years of related experience. They can work independently and collaboratively on moderately complex projects and typically report to a manager or department head. The median yearly pay is $88,423. About 54% of senior internal auditors have a bachelor’s degree, while 44% have earned a master’s.

Project lead internal auditor

With 6 to 8 years of experience, an internal auditor is often working very independently on complex projects or leading a team. Approximately 43% of professionals in this position have a master’s degree, while 53% have a bachelor’s credential. They typically report to a department head or manager. The average pay is $104,643 per year.

Earning a master’s degree

A master’s degree isn’t necessary for most internal auditing positions. However, if you hope to move into a management position, it can give you an advantage over the competition.

Entering a master’s program in business or accounting requires transcripts of your undergraduate work. You’ll need to show you have a bachelor’s degree in one of these areas. Sometimes, a similar degree, like one in finance, is acceptable. A minimum undergraduate GPA of 2.75 may be necessary, but will depend on the institution, along with a resume, personal statement, recommendations, and work experience. Some programs request GRE or GMAT scores. Essays and an interview may also be part of the admissions process.

If you study full time, a master’s degree usually takes 2 years to complete. Coursework for a master’s in accounting includes topics like:

  • Advanced financial accounting
  • Auditing theory
  • Accounting ethics
  • Taxation of business entities

In some instances, you can choose an audit specialization, including courses that cover topics like:

  • Applied auditing
  • Accounting for acquisitions and mergers
  • Advanced auditing
  • Information management and analytics technology

Online

Internet-based coursework is becoming increasingly popular. It allows students more flexibility to manage family or work responsibilities while earning a degree. Some programs are available exclusively online.

Hybrid

Hybrid courses that combine online and in-person classes provide similar benefits. Both alternatives offer students the convenience of learning from home. Depending on the school, internet-based classes may also cost less than traditional on-campus studies.

Accreditation

Accreditation is a means of certifying that educational institutions and programs reach high standards of quality. To ensure your degree meets national requirements and qualifies you for professional certifications in the future, you should make sure any institution you attend is accredited by an official agency.

The following agencies accredit schools and programs in business and accounting in the U.S.

  • International Accreditation Council for Business Education (IACBE)
  • Association to Advance Collegiate Schools of Business (AACSB)
  • Accreditation Council for Business Schools and Programs (ACBSP)

Be especially cautious with online programs. Careful research will allow you to confirm whether the degree will be recognized on a national level.

Degree costs and financial aid

The cost of an undergraduate degree can vary significantly from one program to another. For example, yearly tuition for a bachelor’s degree in accounting is between $6,695 and $28,963. The numbers are similar for an undergraduate business degree, ranging from $6,670 to $29,736 annually. Tuition and fees for a master’s degree typically fall between $8,950 and $29,670 per year.

It’s wise to check with your school’s financial aid office regarding options for scholarships, grants, and loans. You can complete the Free Application for Federal Student Aid (FAFSA) to determine your eligibility for government assistance. One such opportunity is the Federal Work-Study (FWS) program.

Professional certification

The need for certification beyond your degree depends on the position you seek. Some employers require one or more certifications. Others may not make it mandatory but it’s still preferred. Regardless, holding a professional credential is typically helpful for your resume.

Here are several certifications an internal auditor might opt for:

Certified Internal Auditor (CIA)

This qualification is awarded by the Institute of Internal Auditors (IIA) and recognized worldwide. It’s typically necessary for advancement to senior internal auditing positions. To obtain this certification, the candidate goes through a series of steps, including

  • Submission of identity documents and character references
  • Proof of degree completion at an accredited institution
  • Passing an exam
  • Showing experience in the field

The IIA accepts multiple education and experience levels for this qualification, including:

  • An associate’s degree or less, plus 5 years of internal auditing experience
  • A bachelor’s degree with 2 years of experience
  • A master’s degree and 1 year of internal auditing experience

According to the IIA, professionals with a CIA credential earn an average of $38,000 more annually than those who don’t have one. The Internal Audit Practitioner Designation is a preliminary qualification that shows a candidate is on the way to obtaining a CIA.

Certified Public Accountant (CPA)

This designation is the most important among public accountants. The American Institute of Certified Public Accountants (AICPA) awards this certification. To obtain this qualification, a candidate typically needs a bachelor’s degree in accounting and a total of 150 semester hours of coursework.

The exact number of class hours varies from state to state. Some professionals choose to take graduate-level courses as part of these requirements. Candidates must also pass a computer-based test to become a CPA.

Other specialized certifications

Candidates can earn several other certifications bypassing their corresponding exams and meeting educational and experience requirements. These credentials are useful to professionals who practice in specific areas of internal auditing.

Certified Fraud Examiner (CFE)

To obtain this credential, you must first be a member of the Association of Certified Fraud Examiners (ACFE). You can then apply to take the CFE exam, which tests your understanding of law, fraud prevention, investigation, and financial transactions and fraud schemes.

Certified Information Systems Auditor (CISA)

Auditors who work with information systems (IS) or information technology (IT) may wish to obtain this certification to validate their expertise. In addition to passing an exam, candidates must demonstrate at least 5 years of related work experience within the last 10 years.

Certification in Risk Management Assurance (CRMA)

To earn this qualification, you first need to have at least an associate degree and pass the first part of the CIA exam. Work experience, proof of identification, and a character reference are also necessary, plus a passing grade on the CRMA exam.

Qualification in Internal Audit Leadership (QIAL)

This credential shows you can ethically lead an organization’s internal auditing activities. After submitting proof of education, identity documents, and character references, you can register for the exam. This process occurs through the IIA’s certification candidate management system (CCMS).

Related career options

Internal auditing professionals may have advancement opportunities in executive management. These positions typically require a bachelor’s degree plus at least 5 years of business experience. Graduate coursework may increase your chances of getting one of these high-level jobs:

Top executive

Positions include chief executive officer (CEO), chief operating officer (COO), chief financial officer (CFO), and other high-profile jobs. The average salary for these professionals is $104,690 per year.

Financial manager

There are several types of financial managers. They include

  • Controllers, who oversee the preparation of reports regarding an organization’s financial status
  • Credit managers, who are responsible for supervising the company’s credit-related policies and transactions
  • Treasurers and finance officers, who focus on meeting the organization’s financial goals through budgeting and investing
  • Risk managers, who work to limit risks of financial losses
  • Cash managers, who keep track of the organization’s cash flow
  • Insurance managers, who seek to protect the company from risks, like accidents and lawsuits

These professionals earn an average of $129,890 per year.

There are numerous organizations related to internal auditing, as seen in the section on professional certification. Here are a few of the most prominent national and governmental organizations in the field.

Institute of Internal Auditors (IIA)

This organization offers numerous certifications for internal auditors. They include the CIA, CRMA, and QIAL qualifications. Information on events and courses can also be found on the IIA website.

Association of Certified Fraud Examiners (ACFE)

This agency provides a professional certification process for fraud examiners. The site also contains links to training and events. The ACFE also makes fraud resources available online.

U.S. Government Accountability Office (GAO)

The GAO acts as an auditing body for the federal government. It supplies Congress, agency heads, and the public with information about how taxpayer dollars are being spent. The GAO’s role is to prevent fraud, waste, and mismanagement of federal funds.