What does an internal auditor do?

What is an Internal Auditor?

Internal auditors are tasked with checking and improving how well an organization’s internal controls, risk management, and governance work. They work within the company to ensure that financial and operational practices follow laws, regulations, and company rules. Their insights and recommendations support management in making informed decisions and achieving strategic goals.

What does an Internal Auditor do?

Duties and Responsibilities
Internal auditors perform a range of activities that play an important role in ensuring organizational stability and accountability. Their key responsibilities include:

• Evaluating Internal Controls – Internal auditors assess the design and effectiveness of internal controls that ensure the accuracy and reliability of financial reporting, protect assets, and promote operational efficiency.
• Risk Assessment – They identify and analyze risks that could impact the organization, including financial, operational, compliance, and strategic risks. This involves understanding the organization’s risk appetite and ensuring that the risk management processes are robust.
• Compliance Audits – Internal auditors review the organization's adherence to laws, regulations, policies, and procedures. This helps ensure compliance with relevant standards and prevents legal and regulatory issues.
• Operational Audits – They examine the efficiency and effectiveness of business processes and operations, identifying areas for improvement and potential cost savings.
• Financial Audits – Internal auditors verify the accuracy and completeness of financial records, ensuring that financial statements are reliable and accurate.
• Reporting – Internal auditors report their findings, conclusions, and recommendations to management, and sometimes to the audit committee or board of directors. They provide actionable insights to improve organizational performance and control.
• Follow-Up – After audits, they follow up on the implementation of their recommendations to ensure that appropriate corrective actions have been taken.

Types of Internal Auditors
Now that we have a sense of the scope of the internal auditor’s work, let’s look at some different types of these auditors, often categorized based on their specific areas of focus or expertise:

• Financial Auditors – These internal auditors focus on the accuracy and reliability of financial reporting. They evaluate financial statements, accounting practices, and internal controls over financial reporting to ensure compliance with accounting standards and regulations.
• Operational Auditors – Operational auditors examine the efficiency and effectiveness of an organization's operations. They assess business processes, procedures, and performance to identify areas for improvement, cost savings, and operational efficiency.
• Compliance Auditors – These auditors ensure that the organization adheres to applicable laws, regulations, policies, and procedures. They may focus on specific areas such as environmental regulations, data protection laws, or industry-specific compliance requirements.
• Information Technology (IT) Auditors – IT auditors evaluate the organization's information systems, cybersecurity measures, and IT infrastructure. They assess the effectiveness of controls over data security, access management, and system reliability.
• Forensic Auditors – Forensic auditors specialize in investigating fraud, financial misconduct, or other irregularities. They use investigative techniques to uncover evidence of fraudulent activities and may assist in legal proceedings.
• Environmental Auditors – These auditors assess the organization's compliance with environmental regulations and its impact on the environment. They may focus on areas such as waste management, emissions, and sustainability practices.
• Quality Auditors – Quality auditors evaluate the organization's quality management systems and processes. They ensure that products and services meet quality standards and identify areas for improvement in quality control.
• Risk Auditors – Risk auditors focus on identifying and assessing risks across the organization. They evaluate the effectiveness of risk management processes and suggest improvements to mitigate potential threats.
• Industry-Specific Auditors – Some internal auditors specialize in specific industries, such as healthcare, financial services, manufacturing, or government. This specialization involves understanding the unique regulations, risks, and operational challenges of the industry.

What is the workplace of an Internal Auditor like?

Internal auditors can work for a wide range of organizations across various sectors. These are among their most common employers:

• Corporations – Large and medium-sized companies in industries such as manufacturing, retail, finance, technology, and healthcare often have internal audit departments.
• Financial Institutions – Banks, insurance companies, investment firms, and other financial institutions employ internal auditors to ensure compliance with financial regulations, manage risk, and safeguard assets.
• Government Agencies – Local, state, and federal government entities employ internal auditors to review and evaluate the efficiency and effectiveness of government operations, ensure compliance with laws and regulations, and promote transparency and accountability.
• Non-Profit Organizations – Charities, educational institutions, and other non-profit organizations employ internal auditors to ensure that funds are used appropriately, internal controls are in place, and financial reporting is accurate.
• Public Sector Entities – Public sector organizations, such as healthcare systems, public utilities, and transportation authorities, employ internal auditors to assess compliance, risk management, and operational efficiency.
• Consulting Firms – Some internal auditors work for consulting firms that provide internal audit services to other organizations. These auditors may work on a variety of projects across different industries and clients.
• International Organizations – Global organizations, including multinational corporations, intergovernmental organizations such as the United Nations, and international non-governmental organizations (NGOs), employ internal auditors to manage and assess risks, compliance, and operations across various countries and regions.
• Educational Institutions – Universities and colleges may employ internal auditors to ensure financial integrity, compliance with regulations, and effective use of resources.

The workplace of an internal auditor can vary depending on the organization that employs them, the nature of their audits, and their specific roles and responsibilities. Here are some common aspects of an internal auditor's workplace:

• Office Environment – Internal auditors typically work in an office setting, often within the headquarters or a regional office of the organization. They may have individual offices, cubicles, or shared workspaces, depending on the organization's setup.
• Remote Work – With advancements in technology and changes in work culture, many internal auditors have the flexibility to work remotely or in a hybrid model. This is especially common when working for organizations with multiple locations.
• Travel – Internal auditors may need to travel, especially if they are responsible for auditing multiple locations, subsidiaries, or branches of the organization. This travel can vary in frequency and duration, depending on the scope of the audit and the organization's geographic spread.
• Interaction with Other Departments – Internal auditors frequently interact with various departments within the organization, including finance, operations, IT, legal, and human resources. They collaborate with these departments to gather information, understand processes, and evaluate controls.
• Confidentiality and Independence – The nature of the internal auditor's work often requires maintaining confidentiality and independence. They must be objective and impartial in their assessments and maintain professional skepticism.
• Access to Information – Internal auditors have access to a wide range of information, including financial records, operational data, and sensitive information. They must handle this data with care and adhere to data privacy and security protocols.
• Work Schedule – The work schedule for internal auditors can vary. While they typically work regular business hours, there may be times when extended hours are necessary to meet audit deadlines, especially during busy audit periods or special projects.
• Use of Technology – Internal auditors use various software tools and technologies, such as audit management software, data analytics tools, and financial reporting systems, to perform their work efficiently.
• Teamwork and Collaboration – Internal auditors often work in teams, especially for large or complex audits. They may also work closely with external auditors, particularly during the annual financial audit.