A guide to auditing skills
Do you like working with numbers? Are you naturally inquisitive? Then auditing might be for you. Auditors make sure an organisation’s financial records are current, accurate, not fraudulent, and fully compliant with the law. They work for banks, government agencies, and corporations, looking for inconsistencies and discrepancies in accounts.
There are specific technical skills that an auditor needs to succeed in their role. If you have a keen eye for detail, love analysing data, and have strong numeracy skills, then becoming an auditor may be a good career path for you.
In this article, we cover what auditor skills are as well as essential qualifications to get started in this career.
What are audit skills?
Audit skills help auditors gather, interpret and report on financial records. They include technical, transferable and interpersonal skills, to know how to audit financial records, to communicate with colleagues and clients, and to stay organised and efficient.
Technical skills: a deep understanding of accounting principles, auditing standards and data-analysis tools.
Soft skills: critical thinking, problem solving, written and verbal communication skills, attention to detail and curiosity.
Interpersonal skills: teamwork, collaboration and client-relationship management.
All of these skills work together, and each is just as important as the next. You’ll need a strong knowledge of accounting principles and auditing standards to know what to look for, and proficiency in the data-analysis tools you'll use every day. Critical thinking, problem solving and attention to detail are also essential, as are communication skills so you can liaise with clients and accurately report your findings.
Technical auditing skills you should know
Technical skills of an auditor include specific priciples and methodologies to do with the field, and are essential to be able to do the job.
Accounting principles and standards
As an auditor, you’ll need an in-depth understanding of Generally Accepted Accounting Principles (GAAP), as well as International Financial Reporting Standards (IFRS) if you’ll be working with overseas clients. These are standard accounting principles organisations use to ensure their financial documents are consistent and accurate. As an auditor, you’ll need to understand how these standards and principles work, as well as different account cycles for revenue, inventory and more to audit financial records.
Auditing standards and methodologies
Aside from knowing the most common financial practices of companies and organisations, you also need to know Generally Accepted Auditing Standards (GAAS) as well as International Standards on Auditing (ISA) if working with international clients. These are the standard guidelines auditors use to ensure their processes are accurate.
There are 10 standards under GAAS, including general standards, standards of fieldwork and standards of reporting. Under these standards, you need to:
Properly plan your work
Gain a good understanding of the company you’re auditing
Provide high-quality evidence
Identify and declare inconsistencies with reports
Form opinions and make suggestions
Data analysis and technology tools
As with any job, there is specific software you will need to learn how to use. At the very least, you will need to know how to use spreadsheet software, such as Microsoft Excel, to collect and arrange data.
You’ll also need to be comfortable with using specialised auditing software such as ACL Analytics, Caseware IDEA, HighBond and more. Many of these also include data visualisation and reporting tools to present your audit findings in an easy-to-understand way to stakeholders and clients. Other data visualisation tools like Tableau, Microsoft Power BI, Zoho Analytics or Google Charts can also be useful, especially if you need to create ongoing report feeds or dashboards for clients.
Internal controls and risk assessment
One of the many skills of an auditor is to be able to identify and evaluate internal controls and be able to assess risks. Internal controls are the processes a company has in place to maintain accurate financial records as well as adhere to laws and regulations. They’re broken down into:
Preventative controls: the control of who has specific duties, such as transaction authorisation.
Corrective controls: the systems in place to detect issues or errors.
Detective controls: the actions and processes in place if an error occurs.
These can change depending on the organisation, so it’s important to be adaptable and able to take on new information for every job. Then you must be able to assess risks at each of these levels to identify potential errors within financial records.
Sampling and statistical analysis
Organisations have a lot of data, so checking every entry can take weeks, even months or years, depending on the size. As an auditor, you need to learn statistical sampling techniques to check data. The five most common sampling methods are:
Random selection or sampling: a process of selecting random items from the entire data available for assessment, commonly used for auditing physical items, like invoices or monetary units.
Systematic selection or sampling: involves reducing the sample size, ideally using a random number generator. For example, using a random number generator to select a range of 50 units out a population of 5,000 units.
Monetary unit sampling: involves treating each dollar (even in multi-dollar transactions) as a separate sampling unit. This is then divided by the number of records to use as a sample size, acting as a base sample to find an estimated volume of errors in financial records.
Haphazard sampling: a non-statistical technique, which involves selecting sample items at random with no reason for which is being selected.
Block selection: involves taking a block of data from the greater selection to work at a smaller scale, using many blocks to minimise sampling risks.
You should be able to do manual sampling and statistical analysis, as well as use statistical analysis tools to assess audit risk too.
Soft skills needed as an auditor
While every auditor needs to develop their technical skills, soft skills are just as important in helping you effectively communicate and work with other people. Soft skills and traits help you adapt to new situations, problem solve, overcome challenges, stay organised and build rapport.
Critical thinking
Critical thinking means being able to look at things in a rationale and logical way. These skills give you the ability to analyse information, ask the right questions, and evaluate data to make a judgement. This is essentially what auditors do: think critically about the information and data provided to them to be able to find errors or potential fraud and to make recommendations.
Communication
Strong written and verbal communication skills are important for any auditor. You’ll need strong written communication skills to help you document your findings clearly and concisely in reports. On the other hand, you’ll use your verbal communication skills to be able to present complex audit findings to your clients and stakeholders in a way that’s both professional and easy for them to understand. Working on your communication skills will also help you improve your listening skills and help you better understand your clients’ needs.
Attention to detail
As an auditor, you will need a very keen eye for detail to be able to find small errors and inconsistencies in financial records. Your attention to detail will also help you prioritise tasks and manage your time to meet deadlines. Detail-orientedness is critical to your accuracy and success as an auditor.
Professional scepticism
Professional scepticism means keeping a questioning mindset, not just accepting the first answer as it appears. It’s using your own professional judgement to conduct audits to the best of your knowledge and abilities, instead of relying on established processes to guide you. It means upholding ethical standards and reporting any potential fraud or misconduct you find during your audits.
Collaboration
Being able to collaborate with others is important in most jobs. Within your own team, you’ll need to work with other auditors to use your combined skills to learn from each other and provide thorough auditing services. In your early career, this will help you grow your skills and knowledge. You’ll also need strong interpersonal skills to build relationships with your clients in order to get the answers you need to do your job.
Client relationship management
Your client relationship management skills can not only help you do a thorough auditing job, but also progress your career. Being able to build rapport and trust with clients, while maintaining professional boundaries, is essential when dealing with sensitive information like a company’s finances. A good client relationship means they can approach you with concerns or questions and take on constructive feedback and recommendations to improve their internal controls and financial reporting practices.
Is auditing the right career for you?
Auditing can be a rewarding career, especially if you love analysing data and problem solving. You’ll need to be good with people and work well under pressure, as well as have an eagle eye for detail.
There are different career paths within auditing, like auditing clients’ financial records, internal auditing at a company, government auditor roles, and auditing for non-profit organisations. If you’re looking for a challenging financial career that isn’t in accounting or bookkeeping, auditing may be a good option for you. There is also plenty of career progression, growing with an auditing company or pursuing a career in finance.
Auditing requires a unique skill set to succeed. If you’re considering a career in auditing, your first step should be to look into a bachelor of business (accounting) or a bachelor of accounting or looking for entry-level auditing jobs near you.
FAQs
What are the main types of skills needed to be a successful auditor?
To be a successful auditor, you will need both hard skills and soft skills. Hard skills include understanding of principles and standards, performing risk assessments, evaluating data and use of auditing software. Meanwhile, soft skills include critical thinking, communication and attention to detail. You will also need to be good at managing client relationships, and understanding different accounting cycles and internal systems within different environments.
How important is a strong understanding of accounting principles for auditors?
It’s essential for auditors to have a strong understanding of accounting principles to ensure documents are complete and accurate. Auditors will need to know generally accepted accounting principles (GAAP), which are approved standards by the Financial Accounting Standards Board (FASB).
What software and tools do auditors use?
Auditors use many common tools, like Excel spreadsheets, as well as specialised software and computer-aided auditing tools (CAATS). These tools help auditors collect, organise and interpret data and information efficiently.
How do auditors assess the accuracy of financial records?
Auditors use a number of tools and methods to ensure financial records are accurate and up to date, including examining and reviewing records. For large data sets, they use specialised tech to collect, analyse and display information to more easily ensure the accuracy of financial records.
What are some key qualities that help auditors think critically and solve problems?
Some qualities that will help auditors think critically and to solve problems include:
Attention to detail, to interpret data and catch errors
Analytical thinking, to ask the right questions
Open-mindedness, to think outside the box
Curiosity, to seek out diverse perspectives
Confidence, to get information from high-level stakeholders
How do auditors communicate their findings to clients and other stakeholders?
Auditors communicate their findings through written and verbal reports to clients and stakeholders. They may also offer recommendations based on their findings in the report or presentation. There is specialised software that can help auditors present their findings visually in an easy-to-understand way.
Why is it so important for auditors to pay close attention to detail?
It’s important for auditors to pay close attention to detail to ensure accuracy in financial reporting. They need to have good attention to detail to find potential errors, inconsistencies and fraudulent activities when reviewing large amounts of data.
What does it mean for an auditor to maintain professional scepticism?
For an auditor to maintain professional scepticism means to always be questioning and querying, and being alert to data that may indicate possible errors or fraud. It’s essential for auditors to approach their jobs objectively and to always investigate situations thoroughly.
How do auditors collaborate effectively with their team and clients?
Auditors can collaborate effectively with their teams and clients by being transparent with their practices, processes and findings. They should always keep information confidential and secure, and offer information when requested.
What are some ways someone can develop the skills needed for a career in auditing?
To develop the skills needed for a career in auditing, consider further education such as a bachelor’s degree in business or accounting. You can also look into professional development programs and courses to help further develop your skills.
