Meaning of an Auditor
Auditors are professional who are authorized to check accuracy of financial books of accounts of business. They are financial experts who review the financial records of business and ensure whether they comply with required laws. These professionals are independent to organization and perform audit without any prejudice.
Auditor after verifying all the accounting books present their findings in the form of audit reports. These reports determine accuracy and provide transparency to business owners regarding the workings of their business.
It assists them in avoiding all frauds by detecting all discrepancies in the books of account. For performing the process of audit, an individual should be qualified to act as an auditor by regulatory authority of auditing and accounting.
Auditors are classified into two categories: Internal auditor and External auditor. Independent auditors are employed by the organization in which they perform audit. They evaluate day to day operations of organization for checking out any frauds or mismanagement of funds. External auditors are hired by organization for a short-term on a contractual basis. They are external to organizations and do not work for it.
Characteristics of an Auditor
Auditors are independent person to an organization where they perform audit. They do not have any stake or interest in organization while evaluating the book of accounts.
Detect Frauds or Discrepancies
They are the professionals who are hired by owner of companies to detect frauds or errors. Auditor checks the accuracy of financial books of accounts of business and provide transparency in its workings.
Prepare Audit Report
Auditor after verifying all accounts presents their findings in the form of audit report. This report contains conclusions made by auditor regarding fairness and accuracy of records maintained by business.
Auditor is not only concerned with account evaluation but also instruct business for better performance. He is the one who checks and monitors internal operations for finding out any inefficiency. Auditor tells management the ways of optimum utilization of funds for attaining greater efficiency.
Challenges of an Auditor
Non-cooperation by Management
Auditors many times do not get proper cooperation from management team and working staff of organization while performing audit. They may try to hide information or do not reveal true facts about workings of organization.
In Availability of Audit Evidence
Another major issue faced by auditors is absence of proper evidences for examining accounts. Irregularity in maintaining accounts by business makes it quite difficult for auditors to collect proper evidences.
Issues in Selecting Sample
Choosing the right sample from large amount of information is another difficult task for auditors. Many big organizations have large number of complex transactions that too of unique nature, selecting the accurate sample for checking accounts remains a major challenge before auditors.
Auditor sometimes is unable to evaluate the accounts of business which are of technical nature. With their limited expertise, they are unable to do accurate valuation of technical goods or expenses associated with that for auditing purposes.
Location of Stock
Many businesses perform their operations and store their goods at unfavorable locations. Oil and mining companies process their product in mines at far distant places which is inconvenient for auditors to go and evaluate. The accuracy of financial records of business cannot be verified by them.