It is accurate to state that some accountants are auditors, and some auditors are accountants. In order to clarify any distinction, it is necessary to understand the roles and duties of various types of auditors and accountants.
What is an Auditor?
There are many types of auditors. Included in this general term are tax auditors, financial auditors and compliance auditors. Generally, an auditor is sampling accounting transactions, or otherwise following trails of information, that reveal whether an entity is complying with applicable laws, internal accounting controls, or meeting specified standards. The findings of an audit are presented to interested parties in a report.
External financial auditors follow a set of professional standards and ethics when conducting an audit. These standards are known as Generally Accepted Auditing Standards, or GAAS. Auditing standards are in place to ensure audit quality and objectives. The standards also specify procedures that guide the acts necessary in order to adhere to GAAS. Auditing standards are promulgated by the Auditing Standards Board, which is a committee of the American Institute of Certified Public Accountants, AICPA.
A compliance audit may be performed along with a financial audit. This type of audit also falls within the Auditing Standards Board’s purview and is performed to determine if management is following compliance procedures. For example, compliance audits may be done to determine if a governmental entity is administering a program in accordance with requirements. Another example is when an auditor employed by a governmental agency audits taxpayers to determine if they are accurately paying sales, use, or state and federal income taxes. Obviously, the Internal Revenue Service employs tax auditors, but most states also employ tax and compliance auditors. Other auditors who are internal to a corporation work to ensure that the organization’s management complies with laws, accounting controls and other relevant guidelines.
What is an Accountant?
Large certified public accounting firms have an audit, or assurance, division. Some local public accounting firms also provide audit services. Auditors working within these departments complete audits of private and publicly held corporations. The purpose of these financial audits is to render an opinion as to whether the financial statements accurately present the financial condition of the company in accordance with generally accepted accounting principles, or GAAP. These principles are set forth by the Financial Accounting Standards Board, FASB. The FASB is a standard-setting board within the private sector.
In many states, accountants must complete a specified number of financial audit hours in order to become a certified public accountant, CPA. The experience requirement is usually broken down into specific audit activities. However, not all states require a CPA candidate to fulfill an audit requirement. Some accountants can be certified by working in other areas of public accounting such as taxation.
Some accountants may choose to never work in a public accounting firm or to later accept employment within a corporation or governmental entity. In that case, they are not offering services to the public. They may work in a corporate tax or financial reporting department. Some may work as auditors internal to the corporation. Those accountants who choose a profession in internal auditing may pursue the Certified Internal Auditor, CIA, designation. Please refer to the website of The Institute of Internal Auditors for information regarding the CIA credential.
From this discussion, one can see that an accountant working within any specialized area of the profession may have worked as an external auditor at some point. It is also apparent that some compliance auditors may not even be accountants. If one chooses an accounting career as an internal or external auditor, it is best to learn about and pursue the appropriate accounting education and credentials.
