What Is an Internal Auditor: Roles, Responsibilities & Career Path

Key Takeaways

• What is the role of the internal auditor? An internal auditor evaluates risks, controls, compliance and business processes.
• What qualifications help to become an internal auditor? ACCA, CIA, CISA, CFE and relevant accounting qualifications can support an internal audit career.
• What is the career scope of an internal auditor? Internal auditors work across finance, banking, technology, healthcare, manufacturing and other industries.

Comprehensive Summary on Internal Auditor

Internal Audit Definition

The internal audit definition covers a systematic process of evaluating whether an organisation’s operations, controls, reporting and risk management systems are working effectively.

Types of Internal Audits

Internal audits can cover areas such as financial reporting, regulatory compliance, operations, IT systems and organisational performance, depending on the audit objective.

Internal Auditor Responsibilities

Internal auditor responsibilities include assessing risks, testing controls, reviewing compliance, checking financial information, identifying potential fraud and communicating findings to management.

ACCA Certification

ACCA certification provides knowledge in financial reporting, audit, taxation, governance, risk and financial management, making it relevant for professionals planning careers involving internal audit.

Skills required for an internal auditor 

Internal auditors need knowledge of accounting, risk management, internal controls and data analysis, along with communication, critical thinking and attention to detail.

What Is an Internal Auditor?

An internal auditor is a professional who examines an organisation’s internal processes, controls, risks and governance systems. The purpose is not simply to find mistakes but to determine whether processes are operating as intended and whether risks are being managed appropriately.

The internal audit definition therefore extends beyond checking financial records. Modern internal audit can cover technology, cybersecurity, regulatory compliance, operational efficiency, fraud risks and strategic processes.

Understanding what is internal audit is important because internal audit provides management and boards with independent insights into areas that could affect organisational performance or objectives.

Wondering Which Certification Is Right for an Internal Auditor?

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What Does an Internal Auditor Do? Key Roles and Responsibilities?

The work of an internal auditor varies according to the organisation and industry, but several core internal auditor responsibilities apply across most roles.

Risk Assessment and Management

An internal auditor identifies financial, operational, technological, regulatory and strategic risks. Auditors assess whether management has appropriate processes for identifying and mitigating these risks.

Evaluating Internal Controls

Internal auditors may test controls meant to prevent mistakes, unauthorised transactions, loss of data and other types of risks. Such testing may include testing of approval systems, segregation of duties, access controls and reconciliation controls.

Ensuring Regulatory Compliance

The purpose of compliance audit is to evaluate if the organisation adheres to the relevant rules and regulations, policies and procedures. This is especially crucial for organisations operating in regulated industries, such as the financial sector, insurance industry and healthcare industry.

Reviewing Operational Efficiency

An internal auditor may evaluate processes used by an organisation and see whether they use resources efficiently. Suggestions for improvement may range from elimination of duplications to process improvement or control strengthening.

Verifying Financial Reporting Accuracy

Internal auditors may examine processes used to support financial information to detect control weaknesses and inconsistencies.

Fraud Detection and Prevention

Some of the internal auditor duties related to fraud may include detection of suspicious transactions, testing of fraud controls and evaluation of fraud indicators.

Advisory and Consulting Function

Modern internal audit can also provide advisory insights on controls, risk management and new processes while maintaining appropriate independence.

Confused About How to Become an Internal Auditor?

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What Are the Types of Internal Audits?

The answer to what is internal audit differs depending on the objective and area being examined.

Financial Audit

A financial audit performed internally reviews financial processes, transactions, reconciliations and controls supporting financial reporting.

Compliance Audit

The compliance audit looks at whether the company complies with laws and regulations.

Operational Audit

The operational audit examines the efficiency, effectiveness, productivity, and performance of processes.

IT / Information Systems Audit

An IT audit checks technology controls, cybersecurity, access controls, data confidentiality, system reliability and information security.

Performance Audit

The performance audit is done to see if programmes, departments or processes meet their objectives and use resources efficiently.

What Is the Difference Between an Internal Auditor and an External Auditor?

The main difference is the purpose for which they work and the relationship they have with the organisation.

Professional scepticism and gathering of evidence are common characteristics that both of these positions demand.

What Is the Internal Audit Process: Step by Step?

Understanding what is internal audit also requires understanding how an audit is performed.

Step 1: Audit Planning

The internal auditor defines the audit objective, scope, timeline, resources and areas of risk.

Step 2: Preliminary Survey

The auditor acquires knowledge regarding the department and process, as well as the controls and systems that exist.

Step 3: Fieldwork and Evidence Collection

Auditors conduct tests on transactions, document examination, interviews, data analysis, and collecting sufficient evidence.

Step 4: Analysis and Evaluation

This entails analysing the evidence collected against the policies, control procedures, and other expectations.

Step 5: Reporting

The report will document the findings relating to the problem, risk, or impact and recommend corrective action.

Step 6: Follow-Up and Monitoring

The internal auditor verifies if the management has taken corrective action on the issues discussed.

What Skills Are Required to Become an Internal Auditor?

Strong internal auditor responsibilities require a combination of technical knowledge and professional skills.

Technical (Hard) Skills

Key technical skills that one needs include:

• Accounting and financial reporting
• Risk assessment
• Internal controls
• Audit procedures
• Data analysis
• Regulatory knowledge
• Excel and audit software
• IT and cybersecurity fundamentals

Soft Skills

An internal auditor should also develop communication, critical thinking, professional scepticism, problem-solving, attention to detail and report-writing skills.

What Education and Certifications Are Required for Internal Auditors?

One needs to obtain an educational qualification in accounting, finance, business, economics or any other relevant area. Professional qualifications can add value to the technical knowledge base.

Educational Requirements

Employers commonly look for candidates with degrees in accounting, finance, business administration or related disciplines. Relevant work experience and professional certifications can also be important.

ACCA

What is ACCA? ACCA, or the Association of Chartered Certified Accountants, is a global professional accounting body offering a qualification covering financial accounting, management accounting, taxation, audit, financial management and related areas.

ACCA certification is particularly relevant to internal auditing because the qualification develops knowledge in financial reporting, audit and assurance, governance, risk and professional ethics.

For candidates interested in internal audit, ACCA can provide a broader accounting and assurance foundation rather than limiting learning to audit procedures alone. ACCA Global also provides resources and professional guidance relevant to accounting and finance careers.

ACCA can therefore be useful for candidates targeting internal audit, risk, compliance, financial control and broader finance careers.

Certified Internal Auditor (CIA): The Gold Standard

The CIA is a specialised internal audit certification administered by The Institute of Internal Auditors. It focuses specifically on internal auditing, risk management, governance and internal control.

Certified Information Systems Auditor (CISA)

CISA is particularly relevant for professionals working with IT audit, information systems controls, cybersecurity and technology risks.

Certified Fraud Examiner (CFE)

CFE is relevant for professionals interested in fraud prevention, detection and investigation.

CPA and Other Relevant Credentials

CPA, CMA, CFA and other professional certifications can assist in pursuing careers as internal auditors depending upon the specific target position. CFA certification can be more relevant for investment analysis and portfolio-related jobs, whereas ACCA and CIA are more relevant to accounting, assurance, controls and audit jobs.

What Is the Internal Auditor Salary and Career Outlook?

Internal auditor salaries depend on experience, location, industry, qualification and employer.

Indicative annual salary ranges in India can be:

These are market ranges but not exact salaries. Specialists having specific technology, risk, financial services or regulatory compliance competencies will have different remuneration levels.

What Is the Internal Auditor Career Path and Progression?

The career path starts with an Internal Audit Associate or Internal Audit Analyst position, proceeds with Senior Internal Auditor, Audit Manager, Senior Audit Manager, and finally goes to Head of Internal Audit or Chief Audit Executive.

Certifications such as ACCA or CIA along with experience in risk, control and technology can allow advancing into senior positions.

Which Industries Hire Internal Auditors?

The reason why internal auditors work in various industries is that businesses of different sizes require risk management and internal control.

Exact salary depends on experience, specialisation, location, role, company size, etc.

How Are AI and Technology Transforming Internal Auditing?

Technologies and AI change internal auditors’ approach to identifying risks and working with huge amounts of transactions.

In general, technologies can help to:

• Analyse large datasets quickly
• Identify unusual transactions
• Monitor controls continuously
• Automate repetitive testing
• Detect patterns associated with fraud
• Improve audit documentation
• Support risk-based audit planning

However, professional judgement is also very important since technological output needs analysis, validation, and investigation.

Is Internal Auditing a Good Career Choice?

Working in internal auditing allows being exposed to many business units rather than to a particular department. An internal auditor will deal with finance, operations, technology, compliance, procurement, and senior management.

The career will suit people interested in accounting, risk management, solving problems, investigation, and business processes. Moreover, increased involvement of technology opens the way to a career for people who have both knowledge of audits and data analytics/IT skills.

What Are the Benefits of Having an Internal Auditor in an Organisation?

Internal audit can help an organisation to achieve the following benefits:

• Identify and manage risks
• Strengthen internal controls
• Improve operational efficiency
• Support regulatory compliance
• Reduce opportunities for fraud
• Improve governance
• Identify process weaknesses
• Provide independent insights to management and the board

This is because, apart from identifying potential issues and risks in the business, an internal auditor’s role involves helping the company address them and improve the processes.

Conclusion

An internal auditor helps an organisation analyse its controls, risks, compliance, operations, and governance. The internal auditor definition is broader nowadays and includes such components as technology, cybersecurity, fraud risks, and operation efficiency, among others.

Those who want to pursue their careers in internal auditing should obtain education in accounting and finance in order to get a background in the field. The most appropriate choice would be the ACCA certification, as it covers a wide range of topics, including accounting, audit, assurance, financial reporting and more.

Specialist qualifications, such as CIA, CISA, and CFE, will allow you to align your career path with a particular internal audit area.

FAQs on Internal Auditor

What is the difference between an internal auditor and an external auditor?

An internal auditor evaluates an organisation’s risks, controls, governance and processes, while an external auditor independently examines financial statements and provides an audit opinion.

What qualifications do you need to become an internal auditor?

A degree in accounting, finance or a related field can provide the foundation. ACCA, CIA, CISA, CFE, CPA and other relevant credentials can strengthen professional opportunities.

Is a CPA required to be an internal auditor?

No, CPA is not universally required. The qualification requirements depend on the employer, role and jurisdiction. Other qualifications such as ACCA or CIA may also be relevant.

What are the three main types of internal audits?

Three common types are financial, compliance and operational audits. Organisations may also conduct IT, performance, fraud and other specialised audits.

What is the average salary of an internal auditor?

In India, an entry-level internal auditor may earn approximately ₹3.5-6 LPA, while experienced and managerial professionals can earn ₹10-30+ LPA depending on role, industry, location and qualifications.

Current Role

Co-Founder & CEO at Zell Education

Education

• ACCA – Association of Chartered Certified Accountants, Finance (2011 – 2014)
• Bachelor of Commerce (BCom), Financial Markets from H.R. College Of Commerce & Economics (2010 – 2013)

Location

Mumbai, India

Expertise

ACCA Certified