4 Types of Auditors – What do they do?

At the end of each financial year, every company is required to get its accounts and books audited. During an audit, your auditor inspects and accumulates all your financial data regarding business transactions that occurred throughout the year and evaluates the information gathered for accuracy and genuineness.

It requires a great deal of knowledge regarding tax and accounting standards and abundant experience to become an auditor.

However, not all auditors aim at verifying the authenticity of your financial position. Yes, you guessed it right! There are a variety of auditors that your company may require as follows:

1) External Auditor:

A person usually needs to have a Certified Public Accountant (CPA) license to get hired in a public accounting firm (which is usually certified by a government body) as an external auditor.

External auditors perform the usual statutory audit, also known as financial, external, or statutory audits.

An external auditor’s job is to form an opinion on whether the books of accounts have been maintained properly and whether the annual financial statements portray a true and fair view of the entity’s financial position.

An external auditor’s report is of utmost importance as it contains the auditor’s opinion regarding your company’s honesty. Your annual financial statements, along with the auditor’s report, are published to all the stakeholders, including the public.

The external auditor is an independent body with no connections to its clients whatsoever! They are hired by the shareholders of the company rather than the management.

An external auditor’s opinion is impartial and solely for the users of financial statements on whether the company is true to its shareholders or not.

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2) Internal Auditor:

A person requires at least a bachelor’s degree in accounting or finance to qualify as an entry-level internal auditor.

Internal auditors, as the name suggests, are internally employed by entities for keeping close tabs on the accounts and finance department of the business. An internal auditor is hired to identify flaws in the reporting system and is responsible for getting them fixed before the external audit.

An internal auditor carries out extensive audits by evaluating the financial statements, the internal controls, the books of accounts, performing inventory valuation, reconciling statements, etc.

The internal auditor then prepares a report, pointing out the problems and suggesting the solutions to it.

The company’s management hires internal auditors as their employees and hence, are not considered independent auditors.

3) Forensic Auditor:

Forensic auditing involves an audit of financial records and transactions that may relate to fraud or criminal activities. Forensic auditors are also required to read their findings in court, sometimes during legal proceedings.

To become a forensic auditor, a person is required to have a bachelor’s degree in accounting as well as coursework from investigative or criminal law.

So, if you suspect fraud in your company, it’s high time you hire a forensic auditor. He will not only investigate all your accounting procedures and books of accounts but will also put up new measures to avoid fraud, embezzlement, and financial disputes.

4) Tax Auditor:

A tax auditor verifies whether your financial statements are eligible as per the tax laws or not. A tax audit is conducted to check the accuracy of the income tax returns filed by your company.

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Tax auditor also ensures that you haven’t underestimated your tax liability or missed out on any important tax breaks.

Also, a person needs to have a bachelor’s degree and a license of CPA to practice tax audit.


There are several types of auditors that you may need for different aspects of your organization. Each auditor specializes in a particular major and aims for a particular profession to add value to your organization separately!