The 101 series: external auditor
Auditors will always be in high demand given the vital role they play in ensuring that organisations present true and fair accounts of their financial positions. Auditors are employed by accounting firms focussing on SMEs all the way up to the Big 4 professional services firms – Deloitte, EY, PwC, KPMG – auditing the world’s largest multinational organisations.
What do external auditors do?
In many cases a legal requirement, an external audit is an independent review of an entity’s financial statement and is performed by qualified accountants. External auditors examine financial records and other data to provide organisations, their investors and market regulators with a clear picture of recent and current performance. They are also expected to make recommendations for improvement based on their findings and to help orgasnisations identify and manage risks from across their operations.
Key day-to-day tasks and responsibilities include:
- Visiting client sites and often working there for extended periods
- Meeting with different levels of management to understand the entity and its needs, and to gather audit evidence
- Planning and executing audit procedures and tests, which can involve designing bespoke audits for more complex clients
- Working within and keeping track of the audit engagement budget
- Examining accounts, financial records and other documentation; using analytics to assess financial reporting, fraud or operational business risks
- Observing stock takes and other business procedures
- Preparing audit working papers and deliverables
- Preparing or contributing to the final audit report, including making recommendations for improvements to systems or processes, and highlighting areas of risk
- Presenting and discussing the conclusion and recommendations from the audit with clients
Do they only audit the finances?
External auditing, which often falls under the broader category of assurance services, isn’t limited to financial data; increasingly auditors are asked to review sustainability performance, or check that organisations meet legal and voluntary obligations in health and safety, IT and social responsibility.
Former EY Malaysia senior audit manager Wong Chun Hoe FCCA also highlights how he helped clients navigate compliance issues by reviewing their adoption of complex accounting standards, such as IFRS 16, IFRS 15 and IFRS 9.
‘Compliance with newly issued standards can be challenging for organisations, especially during the first-year of implementation, as it requires significant knowledge. I played an important role in advising clients on compliance and assessing the financial impact of these new standards from a methodology point of view. Knowing that my work contributed positively to my clients gave me a sense of satisfaction,’ he says.
What external auditors need to know
To this end, external auditors must keep abreast of all manner of relevant information, such as new regulations and accounting standards, technical accounting knowledge (CPD), market movements and sector news relevant to their clients, broader business news, and technology trends.
Furthermore, as with many areas of the accountancy and finance profession, auditing is going through major changes, which is affecting the skills profiles required to perform the roles.
‘Rapid advances in technology, such as the increasing sophistication of AI, are inevitably changing the nature of how we work today,’ says Lorraine Twist, director at Hays specialising in Accountancy and Finance. ‘External audit is becoming more data-driven and automated, which could be an advantage as it reduces the often manual and repetitive nature of many tasks that the role entails. Notably, the larger audit teams in the top 10 accountancy organisations now have specific technology data teams, in addition to onsite auditors.’
Get ACCA Careers working for you...
Search hundreds of roles from all over the world on ACCA Careers
Sign up for a job alert tailored to your desired location and role
External auditor: key skills
Generally speaking, to be a successful auditor, a person needs to have a high attention to detail, an agile mindset, strong data analytical skills, commercial acumen, and a passion and competency to work with numbers.
‘And as this is a client facing role,’ continues Twist, ‘soft skills are crucial; the ability to communicate effectively, problem-solve, learn new things and adapt to change are all essential for a flourishing career in audit. Professionals must also be driven by client contact and enjoy the variety and challenge that the job brings.’
- Interpersonal and influencing skills: to build relationships and negotiate with clients
- Written and verbal communication: to present complex information with accuracy and clarity
- Business and commercial acumen: to understand your clients, their businesses and the markets in which they operate
- Analytical skills: to effectively gather, interpret and evaluate data and information
- Technological competence: to use software programmes and digital solutions, including AI and machine learning tools, to perform data analytics and modelling
- Project management skills: to plan and carry out audit activities and to meet deadlines
- Critical thinking skills: to review audit evidence and make sound judgments
- An aptitude and desire to continue learning: to develop the technical knowledge and skills needed in this career
How ACCA prepares you for a role in external auditing
External auditors must be qualified accountants and a member of a professional body such as ACCA. Aspiring external auditors will benefit from taking the following ACCA Strategic Professional Options exams:
- Advanced Audit and Assurance (AAA)
- Advanced Performance Management (APM)
Where can external auditor roles lead?
After qualification, there is often a clear progression from junior through to senior roles, especially defined in the larger firms. Many professionals have long and distinguished careers in such firms working in audit and assurance, where they can move up to become senior managers, directors and partners.
Many people specialise within the audit sphere, such as by becoming experts in certain sectors, such as the public sector or non-profits, or in certain types of audit, for example, sustainability, fraud or risk. Combined with further qualifications the opportunity to specialise can lead to transitions into areas such as forensic accounting, digital transformation and innovation, or ESG (environmental, social, governance).
Given that auditing provides exposure to a wide variety of clients across multiple sectors, and therefore a deep understanding of how these businesses work, auditors are highly valued by business and often move into commercial finance or executive teams.
‘I loved exploring how organisations are run and working as an auditor offered me a great way to gain real insight into a wide range of industries,’ says Hoe. ‘I was fortunate throughout my audit career to work with diverse clients, which fed my natural curiosity and taught me about the operations of various types of organisations, ranging from startups and non-profits to publicly listed and large multinational companies, not to mention that I also worked with stakeholders at all levels.’
Auditing helped Hoe to develop knowledge and skills that could take him anywhere, such as to his new role as director and head of risk modelling at a financial services conglomerate. ‘Such skills and experience are invaluable and combine to create a career with endless advancement opportunities,’ he says.