As a company sells products or performs services, you enter transactions into its general ledger. Because a company uses financial records to secure loans or attract investors, people on the outside need to be able to trust the numbers you enter. Financial auditors check the accuracy of financial records. They typically have a checklist of items to go through to ensure the accounting records are correct. They perform a number of tests to see if all transactions have been recorded, if the dollar amounts recorded are correct, and if the company they’re looking at has strong internal controls.
A financial auditor might be asked to perform a few different levels of service. First, they might compile accounting records into a set of financial statements. Second, they might review accounting records to give a high-level approval of those records. Third, they may do a full audit. This is the most comprehensive service; the auditor ends up digging into transactions, pulling year-long bank statements, and performing internal questionnaires.
Some financial auditors can actually be hired by the company they’re overseeing. An internal financial auditor works for one company and only analyzes that company’s records. An external financial auditor works with many clients and is typically part of an accounting firm. Only external auditors can review or audit financial statements, but an internal auditor has a better understanding of how a specific company operates.
As an accountant, it’s your role to enter the numbers. If your client wants those numbers to be professionally verified, it should turn to a financial auditor. The auditor’s seal of approval on a set of financial statements is often relied on to make business decisions, secure loans, or comply with regulations.