- Most jobs require at least a bachelor's degree in accounting or a related field.
- Job opportunities should be favorable; those who have earned professional recognition through certification or licensure, especially a CPA, should enjoy the best prospects.
- Much faster than average employment growth will result from an increase in the number of businesses, changing financial laws and regulations, and greater scrutiny of company finances.
Auditors perform two broad types of work - the financial audit and the performance audit.
The Financial Audit - Financial audits include financial statement and financial related audits. Financial statement audits provide an opinion on whether the financial statements of an audited entity present fairly the financial position, results of operation, and cash flows in conformity with generally accepted accounting principles. Financial related audits include determining whether:
- the array of financial information meets established or stated criteria;
- the entity adheres to specific financial compliance requirements;
- the entity has an adequate internal control structure over financial reporting and the safeguarding of assets; and
- the financial information systems comply with applicable requirements.
Financial audits may cover a broad range of subjects. The subjects include financial statements such as statements of revenue and expenses, statements of cash receipts and disbursements, and statements of fixed assets. They also include financial information in items and matters such as those governing the bidding for contracts, amounts billed, amounts due, safeguarding assets, and responses to allegations of fraud. Financial audits may include response to Congressional requests, hotline allegations, allegations of fraud, and support for investigations of fraud.
The Performance Audit. The performance audit is an objective and systemic examination to provide an independent assessment of the performance of a government organization, program, activity or function. Performance audits are of two types - the economy and efficiency audit, and the program audit. The economy and efficiency audit determines whether an entity acquires, protects, and uses its resources such as personnel, property, and space economically and efficiently, the causes of less than maximum performance, and whether the entity complies with applicable laws and regulations on matters of economy and efficiency. In an economy and efficiency audit, the auditor may examine such matters as:
- procurement practices;
- acquisition of the appropriate type of resources at appropriate cost;
- duplication of effort, idleness and overstaffing;
- valid and reliably reported measure of economy and efficiency; and
- information system development and security.
The performance audit determines the extent to which an entity achieves the desired results or benefits established by regulation or other authorization, the effectiveness of organizations, programs and activities, and whether an entity is complying with law and regulations applicable to a program. Program audits may cover these types of items:
- the relevance or appropriateness of program objectives;
- the extent to which a program achieves a desired level of program results;
- factors inhibiting satisfactory performance;
- alternatives for carrying out the program;
- the adequacy of management controls; and
- the validity and reliability of reported program effectiveness.
Other Activities. Auditors may also perform services other than audits. They may, for example, assist a legislative body by developing questions at hearings, develop methods for evaluating a new program, forecast potential program outcomes, assist investigators, work on advisory teams, and perform special studies, evaluations, and inspections.
Phasing of Audit Work
Planning the Audit. As a general basis for planning the scheduled audit of an organization or function, the auditor obtains comprehensive information including internal control information about the entity and determines the audit objectives. The auditor studies pertinent laws, legislative history, regulations, contracts, and management controls to ascertain:
- the purpose, scope, and objectives of the organization or function;
- the manner in which the organization or function is conducted and financed; and
- the nature and extent of management authority and responsibility for the organization or function.
Based on preliminary studies, the auditor decides on the basis of materiality and risk the areas of examination that are likely to produce the most valuable results. For example, operations may not comply with requirements, actions may be illegal, labor costs may seem exceptionally high, inventory figures too low, depreciation reserves questionable, or management of consulting services weak or inefficient. The auditor determines the methods of operation by getting advice from others, following previous audits, or devising new approaches.
In activities with computerized processing systems, the auditor audits around or through the system. When auditing around the system, the auditor may check computer outputs such as payroll summaries against source documents such as payroll vouchers. In auditing through the system, the auditor may prepare test transactions, the results of which are known and processes those transactions through the system to determine if the system produces correct results.
Conducting the Audit. The auditor examines and tests (using statistical and/or judgmental sampling) financial records and management controls to determine the degree of efficiency, economy, and effectiveness with which the activities audited discharge their financial responsibilities, and/or to determine that the financial records have been maintained in accordance with applicable regulations. Financial records may include journals and ledgers and also records of such activities as production control, inventory management, cash management, maintenance, procurement, contract management and award, and property disposal.
The auditor conducts the audit in accordance with generally accepted Government auditing standards. The standards require the auditor to complete these actions:
- studying and evaluating the existing system of internal control to determine the level of system reliability; determining those audit procedures required to attain audit objectives in view of the level of system reliability; and,
- obtaining sufficient reliable evidence through inspection, observation, inquiries, and confirmation to provide a reasonable basis for an opinion regarding the activity under examination.
The auditor evaluates the financial management of the activity in terms of these factors:
- adherence to prescribed policies;
- accomplishment of intended purposes;
- operational efficiency;
- economical use of property and personnel;
- effective control over expenditures, liabilities, revenues, and assets;
- proper accounting for resources and financial transactions;
- production and reporting of accurate, reliable, timely, and useful financial data;
- compliance with applicable laws, regulations, and precedent decisions; and
- compliance of agency accounting systems with generally accepted accounting principles and standards.
Although the same concepts, principles, and standards are applicable to all audit work included in this series, specific procedures vary depending on the activity audited. The audit of an activity with an accounting system that is judged to be reliable may begin with examining entries in financial records and proceed to evaluating the operating controls and management decisions that resulted in those entries. In contrast, the audit of an activity with an accounting system of questionable reliability may begin with physically observing entity operations. For example, after confirming by physically observing the stockpiles of equipment in warehouses, the auditor might then examine financial records to determine if these stockpiles are properly recorded in accounting records. These approaches are equally professional in nature provided the financial evaluation requires accounting knowledge to the degree characteristic of this series.
Reporting the Audit. The auditor occasionally makes reports orally, but more often, provides findings and recommendations in writing to the management level having the authority and responsibility to act on the audit findings. The auditor may identify conditions such as inefficient or uneconomical practices, ineffectual operations, or noncompliance with regulations. The auditor reports significant audit findings that cover the conditions discovered, their cause and effect, and recommendations for remedial action. Recommendations may address such matters as putting funds to better use, questionable costs, and major non-monetary benefits.
Reports on financial statement audits provide reasonable assurance on whether the financial statements of an audited entity present fairly its financial position, results of operation, and cash flows in conformity with generally accepted accounting practices. Reports on financially related audits may address areas such as: specific elements, accounts, or items of a financial statement; adherence to financial compliance requirements; or internal control structure over financial reporting. Also, in some instances, auditors prepare reports that present trend data and other information summarizing the results of a number of audits.
Performance audit reports typically cover audit objectives, scope, methodology, findings, conclusions, and planned and/or recommended corrective actions. Reports may include the views of responsible officials, and descriptions of noteworthy management accomplishments. Auditors may issue interim reports during an audit to bring significant matters to the attention of appropriate officials.
"I am responsible for evaluating and analyzing accounting, financial management, and other programs and systems at the Murray Plant. I am responsible for completing accurate, objective, and concise audit reports, which encompass objectives, scope and methodology, audit results, recommendations, statement on auditing standards, compliance with laws and regulations, management controls, views of responsible officials, noteworthy accomplishments, issues needing further study, and confidential information. I also provide technical advice and assistance to management and program officials in audit areas and conduct follow-up audits of audit reports."
"I completed seven audits during the past fiscal year. These included both financial and operational audits. The audits concerned, among other things, personnel administration and equal opportunity within Morale, Welfare, and Recreation (MWR), cost controls and purchasing procedures within MWR's Food and Beverage Division, the recording of obligations, payments, and fiscal year charges under the Supply Department's warehouse contract, staffing of the Facilities' Energy Manager position and administration of the Energy Conservation program, use of company travel charge cards, Installation and Environment's use of funds established for critical repairs to property, and the control of bond money and professionalism of the plant's Security Guard Department."
Most accountants and auditors need at least a bachelor's degree in accounting or a related field. Many accountants and auditors choose to obtain certification to help advance their careers, such as becoming a Certified Public Accountant (CPA).
Education and training. Most accountant and auditor positions require at least a bachelor's degree in accounting or a related field. Some employers prefer applicants with a master's degree in accounting, or with a master's degree in business administration with a concentration in accounting. Some universities and colleges are now offering programs to prepare students to work in growing specialty professions such as internal auditing. Many professional associations offer continuing professional education courses, conferences, and seminars.
Some graduates of junior colleges or business or correspondence schools, as well as bookkeepers and accounting clerks who meet the education and experience requirements set by their employers, can obtain junior accounting positions and advance to accountant positions by demonstrating their accounting skills on the job.
Most beginning accountants and auditors may work under supervision or closely with an experienced accountant or auditor before gaining more independence and responsibility.
Licensure and certification. Any accountant filing a report with the Securities and Exchange Commission (SEC) is required by law to be a Certified Public Accountant (CPA). This may include senior level accountants working for or on behalf of public companies that are registered with the SEC. CPAs are licensed by their State Board of Accountancy. Any accountant who passes a national exam and meets the other requirements of the State where they practice can become a CPA. The vast majority of States require CPA candidates to be college graduates, but a few States will substitute a number of years of public accounting experience for a college degree.
As of 2009, 46 States and the District of Columbia required CPA candidates to complete 150 semester hours of college coursework—an additional 30 hours beyond the usual 4-year bachelor's degree. California, Colorado, New Hampshire, and Vermont are the only States that do not require 150 semester hours for certification. Many schools offer a 5-year combined bachelor’s and master’s degree to meet the 150 semester hour requirement, but a master’s degree is not required. Prospective accounting majors should carefully research accounting curricula and the requirements of any States in which they hope to become licensed.
All States use the four-part Uniform CPA Examination prepared by the American Institute of Certified Public Accountants (AICPA). The CPA examination is rigorous, and less than one-half of those who take it each year pass every part on the first try. Candidates are not required to pass all four parts at once, but most States require candidates to pass all four sections within 18 months of passing their first section. The CPA exam is now computerized and is offered 2 months out of every quarter at various testing centers throughout the United States. Most States also require applicants for a CPA license to have some accounting experience; however requirements vary by State or jurisdiction.
Nearly all States require CPAs and other public accountants to complete a certain number of hours of continuing professional education before their licenses can be renewed. The professional associations representing accountants sponsor numerous courses, seminars, group study programs, and other forms of continuing education.
Other qualifications. Previous experience in accounting or auditing can help an applicant get a job. Many colleges offer students the opportunity to gain experience through summer or part-time internship programs conducted by public accounting or business firms. In addition, as many business processes are now automated, practical knowledge of computers and their applications is a great asset for jobseekers in the accounting and auditing fields.
People planning a career in accounting and auditing should have an aptitude for mathematics and be able to analyze, compare, and interpret facts and figures quickly. They must be able to clearly communicate the results of their work to clients and managers both verbally and in writing. Accountants and auditors must be good at working with people, business systems, and computers. At a minimum, accountants and auditors should be familiar with basic accounting and computer software packages. Because financial decisions are made on the basis of their statements and services, accountants and auditors should have high standards of integrity.
Certification and advancement. Professional recognition through certification or other designation provides a distinct advantage in the job market. Certification can attest to professional competence in a specialized field of accounting and auditing. Accountants and auditors can seek credentials from a wide variety of professional societies.
The Institute of Management Accountants confers the Certified Management Accountant (CMA) designation upon applicants who complete a bachelor's degree or who attain a minimum score or higher on specified graduate school entrance exams. Applicants must have worked at least 2 years in management accounting, pass a four-part examination, agree to meet continuing education requirements, and comply with standards of professional conduct. The exam covers areas such as financial statement analysis, working-capital policy, capital structure, valuation issues, and risk management.
The Institute of Internal Auditors offers the Certified Internal Auditor (CIA) designation to graduates from accredited colleges and universities who have worked for 2 years as internal auditors and have passed a four-part examination. The IIA also offers the designations of Certified in Control Self-Assessment (CCSA), Certified Government Auditing Professional (CGAP), and Certified Financial Services Auditor (CFSA) to those who pass the exams and meet educational and experience requirements.
ISACA confers the Certified Information Systems Auditor (CISA) designation upon candidates who pass an examination and have 5 years of experience auditing information systems. Information systems experience, financial or operational auditing experience, or related college credit hours can be substituted for up to 2 years of information systems auditing, control or security experience.
For those accountants with their CPA, the AICPA offers the option to receive any or all of the Accredited in Business Valuation (ABV), Certified Information Technology Professional (CITP), or Personal Financial Specialist (PFS) designations. CPAs with these designations demonstrate a level of expertise in these areas in which accountants practice ever more frequently. The business valuation designation requires a written exam and the completion of a minimum of 10 business valuation projects that demonstrate a candidate's experience and competence. The technology designation requires the achievement of a set number of points awarded for business technology experience and education. Candidates for the personal financial specialist designation also must achieve a certain level of points based on experience and education, pass a written exam, and submit references.
Many senior corporation executives have a background in accounting, internal auditing, or finance. Beginning public accountants often advance to positions with more responsibility in 1 or 2 years and to senior positions within another few years. Those who excel may become supervisors, managers, or partners; open their own public accounting firm; or transfer to executive positions in management accounting or internal auditing in private firms.
Management accountants often start as cost accountants, junior internal auditors, or trainees for other accounting positions. As they rise through the organization, they may advance to accounting manager, chief cost accountant, budget director, or manager of internal auditing. Some become controllers, treasurers, financial vice presidents, chief financial officers, or corporation presidents.
Public accountants, management accountants, and internal auditors usually have much occupational mobility. Practitioners often shift into management accounting or internal auditing from public accounting, or between internal auditing and management accounting. It is less common for accountants and auditors to move from either management accounting or internal auditing into public accounting. Additionally, because they learn about and review the internal controls of various business units within a company, internal auditors often gain the experience needed to become upper-level managers.
Accountants and auditors held about 1.3 million jobs in 2008. They worked throughout private industry and government, but 24 percent of accountants and auditors worked for accounting, tax preparation, bookkeeping, and payroll services firms. Approximately 8 percent of accountants and auditors were self-employed.
Most accountants and auditors work in urban areas, where public accounting firms and central or regional offices of businesses are concentrated.
Some individuals with backgrounds in accounting and auditing are full-time college and university faculty; others teach part time while working as self-employed accountants or as accountants for private industry or in government.
Accountants and auditors are expected to experience much faster than average employment growth from 2008-18. Job opportunities should be favorable; accountants and auditors who have a professional certification, especially CPAs, should have the best prospects.
Employment change. Employment of accountants and auditors is expected to grow by 22 percent between 2008 and 2018, which is much faster than the average for all occupations. This occupation will have a very large number of new jobs arise, about 279,400 over the projections decade. An increase in the number of businesses, changing financial laws and corporate governance regulations, and increased accountability for protecting an organization's stakeholders will drive job growth.
As the economy grows, the number of business establishments will increase, requiring more accountants and auditors to set up books, prepare taxes, and provide management advice. As these businesses grow, the volume and complexity of information reviewed by accountants and auditors regarding costs, expenditures, taxes, and internal controls will expand as well. The continued globalization of business also will lead to more demand for accounting expertise and services related to international trade and accounting rules and international mergers and acquisitions. Additionally, there is a growing movement towards International Financial Reporting Standards (IFRS), which uses a judgment-based system to determine the fair-market value of assets and liabilities, which should increase demand for accountants and auditors because of their specialized expertise.
An increased need for accountants and auditors also will arise from a greater emphasis on accountability, transparency, and controls in financial reporting. Increased scrutiny of company finances and accounting procedures will create opportunities for accountants and auditors, particularly CPAs, to audit financial records more thoroughly and completely. Management accountants and internal auditors increasingly will be needed to discover and eliminate fraud before audits, and ensure that important processes and procedures are documented accurately and thoroughly. Forensic accountants also will be needed to detect illegal financial activity by individuals, companies, and organized crime rings.
Job prospects. Job opportunities should be favorable. Accountants and auditors who have earned professional recognition through certification or other designation, especially a CPA, should have the best job prospects. Applicants with a master's degree in accounting or a master's degree in business administration with a concentration in accounting also may have an advantage.
Individuals who are proficient in accounting and auditing computer software and information systems or have expertise in specialized areas—such as international business, international financial reporting standards, or current legislation—may have an advantage in getting some accounting and auditing jobs. In addition, employers increasingly seek applicants with strong interpersonal and communication skills. Many accountants work on teams with others who have different backgrounds, so they must be able to communicate accounting and financial information clearly and concisely. Regardless of qualifications, however, competition will remain keen for the most prestigious jobs in major accounting and business firms.
In addition to openings from job growth, the need to replace accountants and auditors who retire or transfer to other occupations will produce numerous job openings in this large occupation.
Median annual wages of wage and salary accountants and auditors were $59,430 in May 2008. The middle half of the occupation earned between $45,900 and $78,210. The bottom 10 percent earned less than $36,720, and the top 10 percent earned more than $102,380. Median annual wages in the industries employing the largest numbers of accountants and auditors were as follows:
|Accounting, tax preparation, bookkeeping, and payroll services||$61,480|
|Management of companies and enterprises||59,820|
According to a salary survey conducted by the National Association of Colleges and Employers, bachelor's degree candidates in accounting received starting offers averaging $48,993 a year in July 2009; master's degree candidates in accounting were offered $49,786 initially.
Wage and salary accountants and auditors usually receive standard benefits, including health and medical insurance, life insurance, a 401(k) plan, and paid annual leave. High-level senior accountants may receive additional benefits, such as the use of a company car and an expense account.
Information on accredited accounting programs can be obtained from:
- AACSB International—Association to Advance Collegiate Schools of Business, 777 South Harbour Island Blvd., Suite 750, Tampa FL 33602. Internet: http://www.aacsb.edu/accreditation/AccreditedMembers.asp
Information about careers in certified public accounting and CPA standards and examinations may be obtained from:
- American Institute of Certified Public Accountants, 1211 Avenue of the Americas, New York, NY 10036. Internet: http://www.aicpa.org
- AICPA Examinations Team, Parkway Corporate Center, 1230 Parkway Ave., Suite 311, Ewing, NJ 08628-3018. Internet: http://www.cpa-exam.org
Information on CPA licensure requirements by State may be obtained from:
- National Association of State Boards of Accountancy, 150 Fourth Ave. North, Suite 700, Nashville, TN 37219-2417. Internet: http://www.nasba.org
Information on careers in management accounting and the CMA designation may be obtained from:
- Institute of Management Accountants, 10 Paragon Dr., Montvale, NJ 07645-1718. Internet: http://www.imanet.org
Information on careers in internal auditing and the CIA designation may be obtained from:
- The Institute of Internal Auditors, 247 Maitland Ave., Altamonte Springs, FL 32701-4201. Internet: http://www.theiia.org
Information on careers in information systems auditing and the CISA designation may be obtained from:
- ISACA, 3701 Algonquin Rd., Suite 1010, Rolling Meadows, IL 60008. Internet: http://www.isaca.org
Information on obtaining Auditor Specialist positions with the Federal Government is available from the Office of Personnel Management through USAJOBS, the Federal Government's official employment information system. This resource for locating and applying for job opportunities can be accessed through the Internet at http://www.usajobs.gov or through an interactive voice response telephone system at (703) 724–1850 or (703) 724–1850 or TDD (978) 461–8404 and (978) 461–8404. These numbers are not toll free, and charges may result. For advice on how to find and apply for Federal jobs, download the Insider's Guide to the Federal Hiring Process” online here.