Who is an auditor?


An auditor is a person who is appointed for another firm especially for analyzing the financial statements of the firm according to the rules of Generally Accepted Accounting Principles (GAAP). An auditor is like a detector who performs for the other firm for executing an audit.

An auditor performs multiple tasks when they are called for an audit and do a survey of the firm and their financial statements for making a result at the end of the investigation. 

An auditor already knows how they perform after a meetup with the firm’s management and with the financial record system. To execute an audit, they get the authority of accounting and auditing by the RBI (Government of India) for verifying the scope, relationships, goals, after checking the firm’s profits and losses of the previous and current year.

The compulsion of an audit program had been confirmed by the securities and exchange commission (SEC)

Important terms


An audit is an independent external examiner to get out financial information of the firm with the legal authorities. Under auditing, the auditor prepares an accounting book in which they mention a single statement regarding the firm’s profit and loss which is required by the law.

It is a legal person who has the authority to decide while auditing and the right to match all the firm’s accounting legal rules with the given legal government rules.

Audits show the clarity of the firm’s health by providing audit reports with the firm’s management for more control on their financial actions and ready to take action to improve the firm’s side by organizing different projects so that they can meet all the lost projects.


The term auditing describes the books of accounts evaluated and recorded by the auditor in the financial books of accounts. Auditing is a natural process of examining the real accounting status of the firm and stating that the firm is going to the profit or loss.

Auditing has been started from earlier times and now it is a continuing process with the given rules, no behavior changes but changes in maintaining the accounting process in the financial books. It has been explored and necessary in many industries whether it is corporate and public or government for identifying the management control effectiveness of a firm.

What is the role of an auditor?

As we said above, an auditor is like a detective for the firm appointed by the company for finding out the company’s health status by verifying the various financial statements such as:

  • The Auditor performs according to the given rules of accounting law.
  • It checks the accounting records and takes voice statements from the shareholders of the firm.
  • It performs many tasks to find out the reality of the firm’s brake by the firm and disabled things.
  • It tries to find out the fraud transaction in the firm’s records so that they can take legal action against them by reporting to the central auditing commission of the communist party of the soviet union.
  • Auditors revise the audit program to find out the circumstances and avoid financial circumstances by adopting different audit standard programs.
  • Audit prepares audit reports based on the size, goal, scope, health, goodwill of the firm.
  • With the documentary audit papers, the auditor needs to perform an audit by applying the rules of standards on auditing (SA’s).
  • It covers all the firm’s departments to fetch all the financial data by following accounting principles and procedures.
  • Auditor follows some programs of auditing like:
  • Accuracy in the financial statements
  • Evaluation of assets and liabilities
  • Reliability in accounting books
  • Verification of existing stocks with the purchased stock records
  • Disclose the errors through reconciliation statement
  • Inspection of firms’ management by asking some critical questions regarding financial recorded statements.

Why are the auditors responsible for audit reports?

Auditors are responsible for audit reports because they are the only ones who are appointed by the firm for completing the auditing procedure. That’s why they are responsible. Based on the auditor’s final report, four members have the authority to take a final decision regarding the firm. The four members are:

  • Audit committee
  • Auditee manager
  • IS auditor
  • CEO of the firm

These members only decide based on final audit reports given by the auditor, not filling the audit reports by analyzing, evaluating the financial reports. Auditors are the one who has to be responsible in future if any issue will arise.

That’s why the committee of an audit allows only those professional auditors to go for the audit who can deal with the firm by following legal rules and procedures. Even firms have the right to select a person to perform the auditor’s role.

The auditor’s report defines the expression of opinion for the firm’s financial statements and suggestions of improvement regarding the content report written by the auditor on the audit report. The auditors follow the standard rules conducted by the PCAOB to make a qualified or unqualified report. There are two types of reports – Qualified and Unqualified reports by which senior audit judges make decisions regarding a firm’s health.

The decision can be negative or positive after judging and analyzing the qualified and unqualified auditor’s report

Difference between qualified and unqualified reports

Qualified reports

The reports are prepared by the auditors based on the Public Company Accounting Oversight Board (PCAOB), in which auditors need to express their qualified reports with relevant reasons and opinions regarding the whole firm.

Unqualified reports

The reports are prepared by the auditors based on the Public Company Accounting Oversight Board (PCAOB), in which auditors need to express unqualified reports with relevant reasons and opinions based on financial statements by overseeing the accounting framework. To express an unqualified report, it is necessary to discuss with other auditors regarding critical audit matters on the financial statements.

How does an auditor prepare an audit report?

When the auditors go to perform an audit role, they need to reach the positive or negative end for the firm’s insights. The auditor’s reports are identified based on the financial statements, not on the critical audit reports because audit reports represent the issues in the financial statements. Critical audit matters such as:

  • Brokers and clients under Exchange Act Rule 17a-5
  • Purchase stock
  • Savings
  • Investment companies under the Investment Company Act (1940)
  • BD companies under Business Development Company Act
  • Other business growth matters

These critical matters are mentioned by the auditors in the audit report if they want to represent the information in the auditor’s report.

Elements to prepare an audit report

There are some basic elements to prepare an audit report are:


According to the Report of Independent Registered Public Accounting Firm, the title must be mentioned on the top of audit reports, it reflects the relevant formation. The title may be in the form of – Reports of XYZ accounting firm.


According to the Report of Independent Public Accounting Firm, addresses must be mentioned due to sending the audit report to all the recipients such as shareholders, board of directors, company’s managers, and other management of the company who should be the part of it.

In the audit reports, the firm’s address or current location (city and state) must be mentioned because of identifying information about them in future processes.

Introductory para

Auditors need to be introduced to their company so that action takers can familiarize themselves with the auditor’s firm because auditors are responsible for the opinion of the financial statements of the firm.

Name, Date, and Time

Name, time, and date must be mentioned by the auditor of the audited company. 

Name – It represents the organization.

Time – It represents the audited time. (Auditing time)

Date – It represents the audited date. (Auditing date)

Scope of audit

The scope of the audit includes audit conduct by NCAOB and audit held for analyzing the financial statements and giving opinions about reports.

Auditor’s opinion

As we know, auditors share two opinions – qualified and unqualified. These opinions are based on the financial statement which represents the materials, frauds, financial status, financial notes written by the organization accountant, balance sheet, cash flow records of the past year of the period. The Company’s management is responsible for these records whether it is negative or positive and the auditors are responsible for the recorded statements in the audit reports based on the opinion held by the auditors.

Prepare audit plans by the auditor

Auditors need to prepare audit plans for starting an audit session so that PCAOB in the United state can check and pass the format of the session of an audit. Those plans included:

  • Procedure to deal with the risk and fraud statements.
  • Held test for the company’s management to check the real financial reports
  • Match the amounts with real accounts
  • Estimate the management work by using accounting principles
  • Prepared advanced questions for the management


The signature of the auditor’s firm must be mentioned in the auditor’s report so that the auditing company identifies the auditor’s firm.

Who is finally appointed as an auditor?

According to the provisions, the auditor general is finally appointed as an auditor who sits in the office of an auditors general made by the constitution of the country. General auditors are responsible to receive accounting books from the government offices for analyzing their financial statements and make a report in the form of an audit, then transferred to the prime minister for the final approval.

When they are appointed for the audit session as an auditor, they need to attend this session for checking out the accounting books of the specific firm and prepare an audit report including all required elements such as date, intro, time, signature, scope, opinion, location.

Duties of an auditor general

The duties of an auditor general are to collect the accounting books of any government firm for audit purposes. After performing as an auditor and making an auditor’s report on an opinion basis, they need to pass that audit report to the government for approval. The Auditor needs to make sure that information included in the audit report should be in proper format with basic elements and must represent simplicity, consistency, realism, information, and relevance.

Responsibilities/Duties of an auditor during performing audit

  1. Auditors must have a duty to prevent assets from unnecessary sales by using internal and external control procedures.
  2. Always alert the firm at the time of taking a wrong decision based on wrong financial reports. Guide them by analyzing the right reports.
  3. Matching the sales and purchase transaction with the existing stock.
  4. Organize programs and events and attend seminars or workshops for acquiring the technical and non-technical methods for updating the accounting records.
  5. Held verbal or non-verbal test for the management for executing the audit session
  6. Give some opinions and suggestions regarding the firm’s accuracy.
  7. Motivate the whole team of employees for getting better results.
  8. Should be prepared a list of questions in mind for the company’s management for checking the accessibility power.
  9. The job role of an auditor is a budget analyst, financial analyst, management analyst, accounting analyst, revenue and expense analyst, tax reports analyst.

How to become an auditor?

First of all, an auditor must have some qualities to become an auditor so that he/she represents himself/herself in front of the management.

Qualities must have in an auditor

Professional skills are required to become an auditor such:

  • Leadership quality must-have in the auditor
  • Optimization quality must-have in the auditor
  • Analyst quality must-have in the auditor
  • Communication skills must have
  • Examiner and Questionaire skills must have
  • Accounting skills must have
  • Advisors skills must have

Qualification of an auditor

After knowing the qualities, need to concern about qualification must be needed to become an auditor:

When we apply for the role of an auditor, we need to check our qualifications with the requirements of the role.

  • First, a bachelor’s degree must have the role of an auditor with a good percentage in accounting. Bachelor count as a minimum qualification for the role of an auditor.
  • The Big organization invited only those applicants to perform as an auditor who has a master’s degree in accounting and finance and qualified from any professional course like Chartered Accountant (CA), Company Secretary (CS), and ICWA. The additional certified audit courses are recognized by the Reserve Bank Of India (RBI), Ministry of Information Technology (MIT), National Stock Exchange, Comptroller, and Auditor General of India (C&AG).
  • There are some other courses of the accounting profession which are conducted by international audit associations (IAA) all over the globe such as the Institution of Internal Affairs (IIA), Information Systems Audit and Control Association (ISACA).
  • Experience count in computer accounting cost accounting.

Types of Auditor

For becoming an auditor, first, we should know about the auditor types so that we will know. The Auditor is one of the main roles in the accounting process which has huge responsibilities, expertise, and knowledge regarding accounting functions such as finance, tax, laws.

Every auditor has specific goals and reaches out information through opinion. They show the fiscal year position by estimating all the values and make a report of it.

Internal auditor

Internal auditors are the main role in accounting who perform the detective activities inside the company and work as an analyst such as budget analyst, management analyst, financial analyst such as expenses, revenue, sales, income, cash flow records, balance sheet, tax records.

The role of the internal auditor is to take out all accounting documents to check out the real health of the company. After analyzing, they need to make an audit report to control deflation and perform according to the company’s requirements and send it to the board of directors for final approval.

The Internal auditor performs all the detective responsibilities like searching for a criminal, evidence, fraud cases through investigation.

External Auditor

External auditors have the responsibility to first coordinate with the department of the firms. External Auditors are appointed by the company for an auditing session so that they can find out the real position of the company. When external auditors come for the audit session, then they should be prepared with some questions for the company’s management.

Sometimes, they become an advisor such as offering opinions and suggestions to the shareholders of the company for increasing their opportunities and maintaining financial statements. They can communicate with anyone who is part of the company and wants to know about profit and losses of the past year’s. An external auditor can ask them for the previous year’s report of the balance sheet, income, and expense statement for analyzing revenue. They are biased with everyone because they have no personal advantage.

Government auditor

Government auditors are also known as auditor generals who are conducted by the government. Offices for completing the auditing process. Government and corporate auditors are the same but there is little difference in the industry, otherwise, all the processes are the same. 

Sometimes, Government agencies and private businesses interact together for performing some activities such as taxation, foreign exchange. 

Government auditors and public auditors have to summarize the financial statements for making audit reports with proper clarity of accounting picture.

Forensic auditor

Forensic auditors are the auditors who find out only fraud cases in the organization after checking all the financial statements from accountants and bookkeepers. Against criminals, they can file in court for further hearing.

These types of auditors have to be strong mentally so that they can deal with complications happening in the company and they can familiar all the issues with the shareholders of the company.

Tax auditor

Tax auditors are the auditors who analyze the tax reports of an organization so that they can know whether a firm has paid all the taxes or not, able to pay all the taxes or not and verify all the tax statements with accuracy, given time and consistency.

The Tax auditor reminds the shareholders to file the taxes on time, otherwise, they have to pay a penalty on it.

What is the salary of an auditor?

The average salary of an auditor is around $67,056 per year.

For fresher applicants – around $46,000.

For experienced applicants – around $88,000

Salary depends on your skills, not your experience.

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