What auditing and accounting are all about

Daniel Muinde is a student of Banking and Finance at The Co-operative University of Kenya and a public speaker.

Auditing and accounting are financial genres that are usually confused and intermingled, yet a separation of the two is important in getting a clear understanding of the principles and how they work.

An auditor is a specialist who reviews the accounts of companies and organizations to ensure the validity and legality of the financial records.

To some degree, auditing may seem abstract. Where do we draw the line between accounting and auditing? In Accounting, accountants prepare financial statements, while auditors examine the reports to check for accuracy and ensure fairness.

Exploring The Essential Career Guide by KUCCPS, it is crystal clear that you require a Bachelor’s degree in accounting or any related field so that it can give you a foundation for auditing. Some of the prerequisite degree courses to auditing are: Accounting, Banking, Finance, Marketing, and Economics, just to mention a few. Basically, any business-related course goes.

There are two different categories of auditors: Internal and External. The internal auditor works directly for the organization they audit. They work directly as part of an organization’s accounting team. Hence, they are expected to improve the efficiency of business and identify where processes are not working as they should. For an external auditor, they either work for a third-party organization or work independently. They work with firms of chartered and certified accountants.

Ipso facto, there are other kinds of auditors within the two categories; information technology auditors who examine an organization’s computer systems, and tax auditors who check that organizations are in compliance with tax laws. Yet a third category is forensic auditors, who search and analyse financial records for evidence of financial crime that can be used in court.

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An auditor is competent having studied the following: Foundations of Accounting, Accounting for Equities, Accounting for Assets, Principles of Management, Business Mathematics, Tax Management, Risk Management, Finance, Micro-economics, Macro-economics, and Marketing.

Roles of an auditor include inspecting financial records for discrepancies, providing suggestions on improving financial record keeping, analysing risk management procedures and giving suggestions for improvement, and investigating any potential fraud within an organization.

They also prepare tax returns, making sure the organization is following finance and tax laws, besides advising the organization on how they can be more financially efficient. In addition, they undertake reviews of wages, and collate, check and analyse spreadsheet data.

What skills should an auditor have then? Communication skills; an auditor should be able to make good presentations to clients to accompany their reports. Organization skills; due to immense pressure from different clients to hit deadlines, an auditor should be able to plan their time well. Analytical thinking; numeracy skills and a strong aptitude for mathematics will help in making sense of figures.

They must also have practical levels of problem solving skills.

By Daniel Muinde

muindedan30@gmail.com 0723882891

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