Most companies hire external auditors to review their employees’ work and look for errors, oversights, or irregularities. An internal auditor is a person hired by a company to perform the same task. The difference is that, while the external auditor works for a fee and has many clients, the auditor is an employee who works alongside other employees within the company. This is a critical role because it is frequently the auditor who detects poor work quality, waste of time and materials, fraud, theft, and deliberate acts of industrial sabotage.
Examining a transaction or process, comparing how it was done to how it is documented in an operating procedure or accounting convention, and reporting any differences to management is the standard method for conducting an audit. Internal auditors use a variety of methods to collect data, and they frequently have to create one-of-a-kind analysis tools, or at the very least adapt an existing tool, to keep track of the data under review. Spreadsheets, tables, graphs, and run sheets are just a few of the tools that are used to collect data for the final report.
This data is critical to management’s ability to run a successful business while also providing jobs and value to the community. Internal auditors are responsible for reporting in a factual, objective, and emotion-free manner. Although recommendations can be made in the audit report, it is up to management to decide what action is required.
Most employees do not intend to make mistakes, and many of the issues discovered during an audit are minor and easily corrected. When there is a high turnover of staff and a lack of attention to training new people, errors can occur in more complex processes. By looking at the data and speaking with the employees, an internal auditor can determine this.
The person in this position must tread a fine line between management and the rest of the workforce. On the one hand, the internal auditor is a paid employee who is expected to help the company. The auditor, on the other hand, is also a worker who must be able to form good working relationships with his or her coworkers. An inquisitive mind, the ability to interact with a variety of people, a thorough understanding of work processes and how they are documented, and the ability to prepare and present management reports are all required of an internal auditor.