Auditing is a very profound career option for a commerce student. Auditing determines the integrity of the whole accounting system and also counted among the high paying jobs. Statutory Auditor is an individual or a firm who examines the financial statements of the company to express an opinion and to provide reasonable assurance on true and fair view of financial statements. Now that we have a better understanding of who an Auditor is let’s directly jump to how someone can become an Auditor.
There are a few steps that you need to follow in order fulfill your dream of becoming a Statutory Auditor:
Step 1– Let’s start from basic. To pursue career in Auditing you have to be preferably of commerce background as you will be able to grasp concepts of Auditing more quickly and clearly, though other streams student can also go for it. By being commerce students, it means that you must have commerce subjects at a senior secondary level i.e., in class XII.
Step 2– After completing 10+2 examination one can go for graduation in different courses of under-graduation degree such as B.Com(P), B.COM(H), BBA, BMS, BBM, BBS or a Bachelor of Accountancy. In short, you need to have a bachelor’s degree with major subjects being Accountancy, Business, Economics, Finance and Auditing. Subjects like Data Analytics can help you give an edge on the auditing profession.
Step 3– In today’s world most of the firms also prefer a professional degree along with bachelor’s degree. Some examples of professional degree are Chartered Accountant course offered by the Institute of Chartered Accountants of India (ICAI) and other degrees also like CMA, CS, CPA, ACCA and CFE etc. In conclusion professional degree provides with an edge over others.
Step 4– In this progressing world, only theoretical knowledge won’t be enough and also either might be outdated or not relevant enough in the practical world. So, an aspiring Auditor should get practical working experience. Either through campus placement of the University or through the Articleship which is mandatory for students pursuing CA course and even working in a CA firm will also help a lot. In short, practical experience is important.
These above steps take you to your dream of becoming an Auditor.
Now, we have gained the knowledge of Who an Auditor is and how to become an Auditor but we are still left with a question of What an Auditor do? i.e., what are the duties and responsibilities of an Auditor. Let’s understand in brief all the work an Auditor performs.
Duties and responsibilities of an Auditor are defined under section 143 of The Companies Act, 2013. Below are few of the key duties of the Auditor:
- Inquire into certain matter u/s 143(1)
(a) whether loans and advances made by the company on the basis of security
have been properly secured and whether the terms on which they have been made are prejudicial to the interests of the company or its members;
(b) whether transactions of the company which are represented merely by book entries are prejudicial to the interests of the company;
(c) where the company not being an investment company or a banking company, whether so much of the assets of the company as consist of shares, debentures and other securities have been sold at a price less than that at which they were purchased by the company;
(d) whether loans and advances made by the company have been shown as deposits;
(e) whether personal expenses have been charged to revenue account;
(f) where it is stated in the books and documents of the company that any shares have been allotted for cash, whether cash has actually been received in respect of such allotment, and if no cash has actually been so received, whether the position as stated in the account books and the balance sheet is correct, regular and not misleading
- Audit Report of financial statement – u/s 143(2)
The auditor shall make a report to the members of the company on the accounts examined by him and on every financial statements which are required by or under this Act to be laid before the company in general meeting and the report shall after taking into account the provisions of this Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of this Act or any rules made thereunder or under any order made under sub-section (11) and to the best of his information and knowledge, the said accounts, financial statements give a true and fair view of the state of the company’s affairs as at the end of its financial year and profit or loss and cash flow for the year and such other matters as may be prescribed.
- Comply with Auditing Standards – u/s 143(2)
Every auditor shall comply with the auditing standards.
Auditor also possesses some right such as:
- Right to access the books of accounts of the company at all times.
- Auditor has a right of inquiring or obtaining information from the officers of the company in accordance with his performance.
- Auditor has a right of access to the records of all the subsidiaries and associate companies of a holding company.
- Auditor has a right to receive notices of any general meeting and he also has right to be heard at such meeting.
In the above points, we discussed some of the questions that every student having a dream of becoming a Statutory Auditor has in his mind. Now let’s discuss some of the basic yet important things one should know before going for career in Auditing.
First most let’s discuss various types of Auditors:
- Internal Auditor
- External Auditor / Statutory Auditor
- Forensic Auditor
- Government Auditor
- Independent Auditor
- Tax Auditor
- Financial Auditor
Career opportunities for an Statutory Auditor:
Auditors are required in all the major sectors. Public, private and government companies require an Auditor to express an opinion their financial statements are materially true and fair. Let’s look at some of the employment opportunities available for an Auditor:
- Auditor of private companies
- Auditor of public companies
- Employment with CA firms
- Employment with MNC’s (for supporting conduct of audit)
The average salary of an Auditor in India ranges around INR 5,00,000 – 8,00,000 for freshers.
Companies Recruiting Auditors
- Companies like BIG4s.
- Firms other than BIG4s, like ASM, GT, BDO, Mazars, etc.
- Outsourcing companies like Accenture, Genpact, Cognizant, etc.
- IT majors like Wipro, Infosys, etc.
- MNCs like HUL, ITC, Airtel, etc.
Pros of becoming a Auditor
- If you’re an auditor it is all about crunching numbers and analyzing compliance with accounting standards and standards of auditing and various other regulations. This gives you a much clearer career path as compared to others.
- The job prospects for an auditor are expected to expand in coming years. As long as people need help with taxes and as long as businesses exist, there will be a need for auditors.
- Once an auditor has adequate experience, they enjoy high salary packages and other perks.
- You get an opportunity to move from client to client and from office to office applying your skills and knowledge to a new set of circumstances which helps you build experience and expertise.
Cons of becoming a Auditor
- Unlike other industries, the learning doesn’t stop for an auditor. To progress in their career, the auditor will require to upgrade skills and certifications from time to time.
- The work can be dull sometimes as it involves number crunching and compliances which can be very boring sometimes.
- When you are responsible for giving opinion on company’s financial statements, there is bound to be some pressure which can lead to stress.
Now, we have clearly gained much needed knowledge of being an Auditor but let’s examine how you can pursue a particular type of Auditor as career, for example, there are internal auditors, tax auditors, etc. So, if someone wants to become an internal auditor what other things except mentioned above are needed to be fulfilled. Here are the details regarding specific qualifications required in each field of Auditor:
- Internal Auditor– According to The Companies Act, 2013, a certain class of companies are required to appoint an Internal Auditor for evaluation of their Internal Control functioning. Internal auditors are employed by public and private companies, non-profit organizations and government companies. They operate as independent agents within an organization. If we talk about qualification bachelor’s degree is required and some also gain position after having a professional experience in the firms. There are many professional certifications relevant to internal auditors. Some positions in the field require job candidates to hold one or more certifications, while other jobs list certifications as preferences rather than requirements. The two most important certifications in the field are the Certified Internal Auditor (CIA) and Certified Public Accountant (CPA).
- External Auditor– This field mostly requires the qualifications as we discussed above. An external auditor reviews the financial information of a company and gives opinion on the true and fair view on the financial statements. There is nothing new that need to be followed. This type of auditor is commonly known as Statutory Auditor.
- Forensic Auditor– Forensic accountants investigate fraud and uncover financial crimes. Some work in law enforcement, conducting criminal and civil investigations into crimes like illegal financial transactions, embezzlement and Anti-money Laundering. Forensic accountant scan also work as fraud examiners reviewing financial documents to resolve civil disputes. A Bachelor’s degree is sufficient in most of the fields but for being a forensic auditor some employer’s prefer master’s degree, or a seasoned internal auditor or CFE (Certified Fraud Examiner). CFE is the only degree specializing in Fraud Examination.
- Government Auditor– As mentioned earlier, not only private organizations, but also government organizations should have their own auditors (appointed by CAG, RBI, etc.) and therefore government organizations in India appoints candidates / firms for auditing positions through empanelment. Normally, government organizations look for candidates with CA for auditing positions and candidates with appropriate qualification can apply for these jobs.
- Independent Auditor– Mostly all types of auditors are expected to be an independent auditor to avoid conflicts of interest and to ensure the integrity of performing an audit.
- Tax Auditor– The role of a tax auditor is vital in ensuring that an individual or business’s taxes are in line with tax laws. To do this, tax auditors analyse financial documents, perform tax calculations, gather necessary financial documents, and create tax audit reports.
In conclusion, becoming an Auditor though requires a lot of hard work and efforts but at the same time also provide with an opportunity to earn a good amount of salary package and along it also helps you to understand the world of financial statements of a company more accurately. Also, with a little effort you will be able to understand that the real world of Auditing is far better and entertaining than some simple theoretical knowledge. In the end, this information will help you a lot to understand the key things you are required to keep in mind before pursuing the career in Auditing and also provide you with the pathway to become an Auditor.