A Day in the Life of an Internal Auditor

As companies are forced to tighten their belts financially and legislation forces them to tighten their accounting procedures, internal auditors are more important than ever. In the field of management accounting, internal auditors are employees of a company that:

  • Monitor and analyze financial controls
  • Review and confirm compliance with the company's policies and the law
  • Assure corporate boards and upper management that procedures are in place for sound accounting
  • Recommend and enhance processes and policies

An internal auditor will work closely with the external auditors reviewing the corporate policies and procedures and providing the auditors with the information to conduct their audit.

Let's take a look at the daily calendar of an internal auditor, we'll call her Sharon, and she's the Manager of the Internal Audit Department of a mid-sized retail company that sells sneakers.

9:00 a.m.: Meeting with Jane to discuss expense reports.

Sharon recently audited the expense reports of the sales department to make sure they followed company guidelines. She noticed that many sales people were spending quite a bit of money on meals with their clients. She reviewed the company policy with Jane, which only gave the term "reasonable" as a guideline for a lunch expense. Together, they decided that $20 per person was a reasonable cost, and they revised the policy to be more specific.

10:00 a.m.: Review recent store audits with management.

Sharon's department has three internal auditors that travel to the retail stores. They review the financial records of each store and ensure that the reporting is proper and procedures are being followed. Sharon noticed that in a recent audit, one retail location seems to be coming up short by $10-$20 in the register on a regular basis. Sharon needs to speak with the District Manager to find out if there is a chance of employee theft.

11:00 a.m.: Meeting with the Chief Financial Officer to discuss an upcoming external audit.

While Sharon's internal audit department has plenty of financial oversight within the company, she works for a publicly-traded company.

Publicly-traded companies must be audited by independent auditors, a firm or a person who has no stake in the company. Sharon will work closely with the external auditors reviewing the corporate policies and procedures and providing the auditors with the information to conduct their audit.

1:00 p.m.: Email Review

Sharon notices that sales reports are not being reviewed on a timely basis. The company has a computerized accounting system that managers should be using to review reports. To document that that this task is being done, the manager must go into the computer system and provide an electronic signature to assure that they are reviewing this important information. Sharon composes an email to all managers stating that their sales reports must be reviewed on a weekly basis and they must document their review properly. She also copies several members of upper management to make sure they know this issue has come up.

2:00 p.m.: Accounts Receivable Audit

Sharon and one of her staff will be auditing the accounts receivable department of the company. They are going to sit with a staff member in that department and walk through the procedure of receiving a payment from a customer from the time it arrives in the mail until it is deposited in the bank. They want to make sure procedures and controls are in place to properly handle payments.

At the End of the Day...

Obviously, Sharon and her staff spend much of their time working with numbers, but as you can see, communication and people skills play a huge role in the job of an internal auditor.