Different Types of Auditors | Auditing Course

In this video, I discuss the different types of auditors.
✔️Accounting students and CPA Exam candidates, check my website for additional resources: https://farhatlectures.com/
📧Connect with me on social media: https://linktr.ee/farhatlectures

#cpaexam #accountingstudent #auditcourse

Certified Public Accounting Firms
Certified public accounting firms are responsible for auditing the historical financial statements of all publicly traded companies, most other reasonably large companies, and many smaller companies and noncommercial organizations. Because of the widespread use of audited financial statements in the U.S. economy, as well as businesspersons’ and other users’ familiarity with these statements, it is common to use the terms auditor and CPA firm synonymously, even though several different types of auditors exist. The title certified public accounting firm reflects the fact that auditors who express audit opinions on financial statements must be licensed as CPAs. CPA firms are often called external auditors or independent auditors to distinguish them from internal auditors.

Government Accountability Office Auditors
A government accountability office auditor is an auditor working for the U.S. Government Accountability Office (GAO), a nonpartisan agency in the legislative branch of the federal government. Headed by the Comptroller General, the GAO reports to and is responsible solely to Congress.

The GAO’s primary responsibility is to perform the audit function for Congress, and it has many of the same audit responsibilities as a CPA firm. The GAO audits much of the financial information prepared by various federal government agencies before it is submitted to Congress. Because the authority for expenditures and receipts of governmental agencies is defined by law, there is considerable emphasis on compliance in these audits.

An increasing portion of the GAO’s audit efforts are devoted to evaluating the operational efficiency and effectiveness of various federal programs. Also, because of the immense size of many federal agencies and the similarity of their operations, the GAO has made significant advances in developing better methods of auditing through the widespread use of highly sophisticated statistical sampling and computer risk assessment techniques.

Internal Revenue Agents
The IRS, under the direction of the Commissioner of Internal Revenue, is responsible for enforcing the federal tax laws as they have been defined by Congress and interpreted by the courts. A major responsibility of the IRS is to audit taxpayers’ returns to determine whether they have complied with the tax laws. These audits are solely compliance audits. The auditors who perform these examinations are called internal revenue agents.

Internal Auditors
Internal auditors are employed by all types of organizations to audit for management with oversight by the board of directors, much as the GAO does for Congress. Internal auditors’ responsibilities vary considerably, depending on the employer. Some internal audit staffs consist of only one or two employees doing routine compliance auditing. Other internal audit staffs may have more than 100 employees who have diverse responsibilities, including many outside the accounting area. Many internal auditors are involved in operational auditing or have expertise in evaluating computer systems.

To maintain independence from other business functions, the internal audit group typically reports directly to the president, another high executive officer, or the audit committee of the board of directors. However, internal auditors cannot be entirely independent of the entity as long as an employer–employee relationship exists. Users from outside the entity are unlikely to want to rely on information verified solely by internal auditors because of their lack of independence. This lack of independence is the major difference between internal auditors and CPA firms.