What should the internal auditor be skilled in to explain the importance of various components of the audit?

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Performed by professionals with an in-depth understanding of the business culture, systems, and processes, the internal audit activity provides assurance that internal controls in place are adequate to mitigate the risks, governance processes are effective and efficient, and organizational goals and objectives are met.

Evaluating emerging technologies. Analyzing opportunities. Examining global issues. Assessing risks, controls, ethics, quality, economy, and efficiency. Assuring that controls in place are adequate to mitigate the risks. Communicating information and opinions with clarity and accuracy. Such diversity gives internal auditors a broad perspective on the organization. And that, in turn, makes internal auditors a valuable resource to executive management and boards of directors in accomplishing overall goals and objectives, as well as in strengthening internal controls and organizational governance.

Seems like a lot to ask from one resource? Maybe for some, but for internal auditors — it’s all in a day’s work.

Definition of Internal Auditing

According to the Definition of Internal Auditing in The IIA's International Professional Practices Framework (IPPF), internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Internal Audit Profession Resources

For newcomers to the profession of internal auditing as well as experienced practitioners who want to promote the profession and its role in the success of an organization, the following resources are ideal for elevating the profession, enhancing professionalism, and building awareness.

For more information, contact .

Downloads and Links

The Basics

All in a Day's Work
A look at the varied roles of internal auditors

Adding Value Across the Board
How internal auditing contributes to strong corporate governance

Frequently Asked Questions About the Internal Audit Profession

For Governing Bodies

Value Proposition: Internal Auditing's Value to Stakeholders

The Value of Internal Auditing for Stakeholders
How internal auditing provides assurance, insight, and objectivity to audit committees and boards of directors

The Audit Committee: Internal Audit Oversight
Implementing best practices and high standards

Standards and Professionalism

Authoritative Guidance
Overview of the IPPF and its mandatory and strongly recommended components

What Does it Take to Be a Professional?
Internal auditing related to professionalism in ethics, standards, and certification

When it comes to financial statements and reports, accuracy and legality are key factors. Businesses and individuals alike know the importance of keeping their financial records straight and in order for the sake of internal and external audits, among other reasons. But, what audit skills are required to ensure this is the case?

The range of audit skills required to fill an auditors role efficiently consists of a long list of hard and soft skills. Today, there are technology solutions like automation software that help to improve an auditor’s efficiency.

Let’s take a look at the skills of an auditor, external audit vs. internal audit, and how automation tools can help.

Coming Up

1. What Does an Auditor Do?

2. Who Employs Auditors?

3. What are the Types of Audit?

4. What are the Skills Needed for Auditing?

5. How to Improve Auditing Skills?

6. How Automation Helps Auditing?

7. Wrap Up

What Does an Auditor Do?

An auditor is a specialist that is tasked with reviewing the accounts of companies to ensure that they are valid and legal. In some instances, an auditor may also serve in an advisory role to make recommendations about cost savings and risk aversion measures.

Auditors day-to-day tasks will vary, but some of their key responsibilities include:

Analysing data
Reviewing accounts and financial control systems
Ensuring financial reports are accurate
Identifying where processes have inefficiencies
Recommending updates for process improvement
Preparing financial statements and reports
Communicating with stakeholders and managers to review their findings
Reviewing wages
Evaluating levels of financial risk
Review financial reports to make sure are in line with accounting standards

After performing an audit, an auditor will present action items and recommendations to the organisation using their key audit skills. They may recommend amendments to internal control systems, reporting procedures, or processes with the goal of optimising a company’s performance and reducing costs.

Who Employs Auditors?

Auditors have many options for where they wish to work. They can either be employed within the accounting departments of organisations, or they can work with independent and certified firms.

Internal auditors can work in-house within the accounting department of an organisation, for an outsourced professional firm, or for large companies and charities. Internal auditors are typically found in private businesses and have the main goal of optimising processes or in large public or regulated companies.

Besides working on financial documentation and reviewing processes, internal auditors may be involved with reviewing a company’s ethical policies, environmental sustainability measures, reputation, and more.

External auditors can also work for private accounting firms or government agencies to execute mandatory audits for the public sector and governmental bodies. They may also need to review the finances of private businesses.

What are the Types of Audit?

There are more than a handful of types of audits in existence. Let’s take a look at some of them, as each relies on possessing audit skills to perform.

1. Internal audit

An internal audit is performed by someone within an organisation to help stakeholders and executives get a clear picture of the company’s financial status. Internal audits are typically commissioned to review: policy and legal compliance, operations, processes, and financing accounting, for example.

2. External audit

External audits are carried out by third parties where they review an organisation’s financial statements and reports to ensure they are in line with accounting standards and laws. In most instances, external audits are more complex to execute than internal audits.

If your organisation uses an automation solution, it can greatly alleviate an auditor’s burden by easily providing an audit trail and review of internal controls inherent in the system. Additionally, software solutions can process reconciliations and automate processes in an effort to streamline, achieve efficiency, and reduce errors.

3. Financial audit

A financial audit is focused on the financial status of a business. Auditors will review records, from expenses to investments to assets and revenue. These audits are typically performed to provide a review for investors and shareholders.

4. Operational audit

An operational audit is aimed at reviewing an organisation’s operations, including goals, culture, policies, and procedures. The goal is to spot inefficiency and areas ripe for process improvement. For example, automation tools can improve approval processes and remove key person dependency.

At the same time, solutions with advanced analytics can help to pinpoint areas that can be improved or steps within the process that can be removed.

Additional audits include: compliance audit, information system audit, pay audits, forensic audit, payroll audit, statutory audit, tax audit, and more.

What are the Skills Needed for Auditing?

Auditors need to possess a wide range of hard and soft skills, regardless of where they are employed. The nature of the job demands high attention to detail, financial and business acumen, and immense integrity.

Let’s review some of the necessary skills of an auditor.

1. Communication skills

As with any job, communication skills are a must. When it comes to auditing, this skill sits near the top of the list because an auditor must be able to succinctly convey their thoughts, suggestions, and ideas to stakeholders, employees, investors, and the like.

Not only do auditors get to make suggestions that can reshape an organisation, but they must also be able to present their findings in an easily understandable manner. That’s why communication skills are ranked almost as highly as technological skills in this realm.

2. Critical thinking

Critical thinking can be thought of as the use of logic to find solutions. When auditors review a company’s records and statements, they have to be able to understand what the full picture is. Since their solutions and recommendations can be used to transform a business for the better, critical thinking plays a key part in their work.

3. Analytical skills

Luckily for auditors, technology has made analytics easier than ever. They are many software tools that can perform advanced analytics and provide visual insights at the click of a button.

However, that’s not to disregard the need for human analysis, as well. Auditors can draw conclusions and review automated reports to aid in improving a business’ processes.

Rather than having to dig through a variety of disconnected systems and tools, auditors can benefit from the power of automation tools that connects all systems together, including legacy systems.

This makes it possible to pull together data, run reports, and gain greater insights with the use of advanced analytics (which can help companies spot and remedy risks sooner).

4. Organization

The job of an auditor is replete with data and small details. As such, it’s important to keep everything organized and easy to find. Organizational skills also play a role in time management, which is key for an auditor as there are often deadlines involved in their work.

5. Integrity

Given the fact that auditors deal with sensitive data, including a review of a company’s financial health, it’s common for there to be pushback or disagreements within the process. A must-have quality for auditors is integrity.

They have to remain objective even when dealing with people whose emotions may be heightened given unfavorable audit opinions. In order to remain honest and stand their ground, auditors have to possess resilience and integrity.

6. Teamwork

Auditors don’t always work independently. In many instances, they’ll have to work with teams or other financial professionals, so a collaborative mindset is useful.

If they are external auditors, they’ll also have to work with various teams and individuals within the client’s organisation.

7. Business acumen

Auditors have to have a strong hold on the overall business environment that a company operates within, as well as a strong grasp on accounting standards and regulations. They need to be able to understand complex and highly technical processes, document them and identify any associated risks.

8. Curiosity

Auditors work best when they have a certain level of professional skepticism, which means that they are inclined to ask questions. For example, if an auditor notices financial fraud, then they’ll have to dig into how the culprit could have gotten past the company’s internal controls. They’ll also need to be creative in finding solutions to protect an organisation from future threats.

9. Empathy

Although it’s a bit less obvious than the aforementioned skills, empathy is a key trait for auditors. Many in finance are already bogged down with the tasks that are already on their plate.

As such, being audited adds extra work to a finance team that already is lacking time. An automation tool can relieve much of this pressure because it automatically provides audit trails, streamlines approval processes, and connects data from various systems.

With an automation tool in tow, an auditor can simply receive the documentation they need, and the finance team can carry on with their high-level tasks. All the while, the best auditors are able to understand their client’s emotions while they objectively carry out their responsibilities.

10. Initiative

Auditors, especially internal auditors, should have a high level of initiative. They should always be looking for ways to improve a company’s operations and financial success. There’s also the option to continue expanding one’s professional skills through certifications and professional development programs.

How to Improve Auditing Skills?

Even if you’re already working as an auditor, there are always opportunities to enhance your skills. Some ideas to improve your audit skills include:

Read trade publications: Subscribe for industry news and updates

Be an active listener: Concentrate on what the other person is saying rather than thinking about what you are going to say next

Question your own perspective: Think of the big picture, rather than thinking of small solutions at each step

Volunteer for leadership roles: Take on more tasks and step into leadership roles within or outside of your job

Obtain certifications: Professional certifications can boost your resume and increase salary potential

Enroll in professional development programs: There are online or in-person options to do so

Utilise automation solutions: Get comfortable using financial automation systems as most organisations have implemented automation

How Automation Helps Auditing?

Automation solutions make internal and external audits significantly easier and less time consuming for finance and the company as a whole. Automation software can connect data from many systems and analyse massive amounts of data in seconds, removing the need for manual checks and tedious work.

This reduces the auditor’s time with a more streamlined audit and reduces the finance team's time so it can be spent on analytical tasks rather than low-level and repetitive data tasks and reducing auditors questions.

Additionally, automation solutions can provide advanced analytics to review internal processes and help spot inefficiencies. The software can be programmed to generate reports and automatically send them to relevant parties, thereby removing the responsibility of doing so from the auditor’s hands.

Through the use of automation solutions, human errors are prevented and the overall accuracy of the audit is greatly improved. Some use cases include: financial reconciliations, invoice processing, entering data, running payroll, onboarding customers, and more.

As you can see, audit skills are wide-ranging. The role of an auditor is extremely pivotal in big and small organisations alike, and for public companies, audits are regulated and recurring. The importance of accurate financial data cannot go overlooked.

Financial automation solutions can improve the audit process, save time, improve data accuracy, and reduce process risk. Ultimately it ensures that your company’s data and financial reports are in line with accounting standards, accurate, and reliable.

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Account reconciliation is a mandatory business process. While every business has its procedures, it follows a pretty standard process of matching transactions across ledgers and bank statements to ensure financial accuracy of accounts. Reconciliation tools help teams maximise their productivity and save time in what would otherwise be a very timely process of account reconciliation.

But, how do you find the tool that is right for your business? It begins by understanding what account reconciliation software is and then comparing the features/pricing of the best tools on the market. This guide aims to help you cover all the bases!

1. What is Account Reconciliation Software?

2. What Features Should Be Included?

3. Making a Choice: 5 Best Reconciliation Tools

4. Benefits of Automation Reconciliation Software

5. Wrapping Up

What is Account Reconciliation Software?

Bank account reconciliation software centralises the financial close process and automates it for businesses. The software pulls data from the general ledger and compares it to bank statements and invoices to quickly reconcile accounts. Then, the software allows the preparer to electronically sign off upon completion and send it over to the approver for a final review. Once it’s approved, the software stores the data in the centralised database and provides your business with a secure audit trail.

Most software systems allow for teams to upload supporting documents, view company policies, electronically sign off on reconciliations and leave comments, if needed. It also allows for controls to be set up so that processes are gated between employees for audit and compliance requirements. Additionally, the tool may provide users with a dashboard or a visual representation of current financial standing.

What Features Should Be Included?

When looking for reconciliation software tools, you’ll want to make sure the following features are included:

Reporting: A statement can be produced to highlight any records that are unmatched between the GL and bank statement. The system should also be able to compare financial reports from previous historical periods in time.

Issue management: If there’s an issue, the tool should identify the exception and be able to roll the forward problems into subsequent periods until it’s been resolved. You can also leverage a clean-up method to resolve issues manually.

Transaction matching: This is the crux of the tool. Here, the data can be pulled from various sources, compared and matched. You can establish matching rules for each account separately or create company-wide matching policies. You should also be able to define tolerance levels for a variance.

Classification: Records should be able to be classified and attributed to their type classes during the matching process. This could be performed manually or automatically.

Making a Choice: The 5 Best Reconciliation Tools

Choosing the right reconciliation tool means considering both the upsides and the downsides. Let’s take a look at what some of the best tools on the market have to offer.

SolveXia:

SolveXia is a Digital Work Platform for Finance Automation. Many organisations use SolveXia to automate their account reconciliations, with a critical benefit being significant (10x) gains in team productivity. SolveXia’s enterprise-grade automation suite provides data processing, reporting, data persistence, audit trails and more. It can pull information from your general ledger and disparate data sources like banks, suppliers and more to reconcile your accounts quickly.

SolveXia is powerful with an ability to ingest data in any format and perform complex data matching. Your team can instead spend their time analysing and investigating exceptions rather than manually preparing data for the reconciliation. The software will also provide alerts and notifications for variances and exceptions and allow for workflow for staff, to correct and adjust for exceptions.

SolveXia runs securely on the cloud and can seamlessly integrate into your current set-up. The software can be up and running fast, in less than 30 minutes, with the ability to add new users instantaneously, and can be managed and updated without tech support or coding. If you need to run SolveXia in-house and host it internally, that is also an option, but not a necessity. Furthermore, SolveXia is uniquely extensible, with an ability to automate any data-intensive Finance task or workflow.

What sets SolveXia apart most from other tools is it is more extensible than financial close vendors because it has data transformation and enrichment capabilities. You go beyond just your GL or Bank data and produce analytics using more integrated data, for example, overlap with rebates and commission calculations or management dashboards.

You can request a free SolveXia demo and get a customised quote to meet your business needs.

Xero:

Xero’s online accounting software allows you to see your cash flow in real-time through an easy-to-use interface. Some of its features include bank reconciliation, online accounting, invoicing, tracking inventory and paying bills. It also provides your team with reporting and links to all transactions. Xero can be accessed from anywhere with an internet connection and uses encryption to secure your data.

The tool is well-made for mid to large-sized businesses. One of its most significant advantages is that it has unlimited users on every plan. In contrast, many other software tools will require a minimum amount of users and can cap maximums. Users can try Xero with a free trial and begin paying for a plan for as low as $27.50 a month.

Blackline:

Blackline is a cloud financial close software system that aids in supporting continuous improvement in your business. Blackline has features that cover: financial close process management, including reconciliations and accounting automation. You can set up approval and review processes to ensure that your global company’s financials are accurate across different currencies and geographies.

Blackline has helped businesses comply with industry regulations because of its capability to hold a massive amount of data and store information in various formats. To learn more about pricing, you have to get in touch with their team.

Bank Rec:

Treasury Software’s product Bank Rec reconciles accounts automatically through transaction management. You can set up matching rules and allow the system to do the work so your team can focus on human analytical tasks and decision-making. Unmatched records will get rolled forward until they find their match. Some of the tool’s features include: identifying, tracking and resolving matches, recording type classification, importing and automation and high-speed matching of accounts.

With Bank Rec, there are no set-up fees, and the product can be paid for monthly through a subscription model starting at $99.95/month or purchased entirely upfront. Either way, you can include five users.

ReconArt:

Like SolveXia, ReconArt is entirely web-based and can be hosted on-site, if desired. ReconArt is reconciliation software that helps businesses with bank reconciliation, credit card reconciliation, balance sheet reconciliation, financial close, accounts reconciliation, variance analysis, journal entry and intercompany reconciliation.

You can purchase ReconArt with five minimum users starting at $1,500 a month. Unlike SolveXia, ReconArt is a software system designed for the single solution of reconciliation. SolveXia offers more automation benefits beyond reconciliation.

Benefits of Automation Reconciliation Software

Account reconciliation software saves your team time. More than saving time, it offers many necessary businesses like providing consistency, accuracy and clarity plus it reduces compliance risk, which can ultimately save you money, prevent fraud and maintain your entire company’s reputation.

Here’s a look at some of the significant benefits of account reconciliation software.

Fully automated and fast: One of the essential benefits of reconciliation software like SolveXia is that it is fully automated. This makes it easy to complete the financial close process in no time. Many finance teams spend the majority of their time inputting data, trying to understand variances and wasting time on manual and repetitive tasks. With account reconciliation software, the process is managed automatically, freeing up your team to focus on high-level work, while improving accuracy and insights while improving controls and reducing audit risks.

Uniform approach / standardised process: The reconciliation process should happen monthly. At the very least, it will take place quarterly, so it helps to standardise the process to ensure its accuracy. With account reconciliation software, the system will run reconciliations according to the automated process the same way, every time. This is particularly useful if your reconciliations take data from different systems, and there is complex and varied mapping and data cleansing involved. Reconciliation software removes automated this process, saving time and improving accuracy.

Reduce errors & enhance internal controls: Reconciliation software allows for enhanced internal controls because leaders and stakeholders can see how the process is functioning and rest assured that it’s running smoothly every time. It also prevents any actions outside the process, while alerts can also be set-up for any unusual variances or activities. By reducing manual human inputs, and with automatic mapping, you are also able to reduce errors. The software is trained to be accurate, which will prevent many potentially costly mistakes from occurring, while alerts will help identify problems as they happen in real-time.

Recorded history: The software stores all data history and reconciliations. This is useful not only for audit trails and compliance but also for historical information. You can check in on how much something costs in the past and help to forecast future expenses. This way, you can better budget and manage financials in your business.

Delegated responsibilities: With account software, you can assign roles and manage access controls. In this way, every person on your team is aware of their position and responsibilities. When reconciliation needs to go through an approval process, then the system will automatically assign the next step to the approver as required.

Ultimately, any business will have to perform financial close and account reconciliations. As a public company, these processes are highly regulated, and if done incorrectly, could cost you your business. For small and large companies alike, performing accurate reconciliations can reduce fraudulent charges and help identify mistakes in financial processes. Having an up-to-date view of your business’ cash flow is directly correlated to making wise business decisions.

All in all, using an account reconciliation tool will save your team time, allow every person to understand their role and responsibility better, and provide you with a convenient and secure location to store recorded financial history.