Are you unsure of what an accountant is for something, or perhaps confuse the term accountant with an accounting consultant as many do?
This article goes through the concept of an accountant in a little more detail. Here is therefore a description of what an auditor is, what task he has, what categories of auditors exist, what it takes to become an auditor and other related issues!
What is an accountant?
An auditor is a qualified person who reviews and verifies that the accounting is correct and ensures that companies and other organizations comply with applicable tax legislation.
Auditors try to protect companies from fraud, point out inaccuracies in accounting and work as an independent party trying to find ways to increase the efficiency of a business. Auditors are usually available in all conceivable organizational forms and in many different industries.
There are different types of auditors, including internal employees of a company, and those who work for an external auditing firm.
An auditor’s main task:
The auditor normally examines the accounts and administration of a business, and seeks to control how the board manages the business they represent. In addition, he evaluates whether the financial information gives a true and fair view of the results and position – and whether the organization complies with applicable laws.
Based on the auditor’s observations, he can also give good advice on better routines, and financial issues in general. An auditor must be independent and autonomous and must not jeopardize his role through his advice.
The auditor’s main task is to determine whether the financial reports follow good accounting practice (the Annual Accounts Act, K2, K3 and other laws and recommendations).
Auditors’ inspections supervise all approved and authorized public accountants, and carry out regular audits of auditors. The authority’s task is to ensure that auditors comply with the Auditing Act and have sufficient audit documentation in accordance with good auditing practice.
The responsible auditor makes his final assessment in an audit report that is submitted to the Annual General Meeting and thereafter often supplements with an audit memorandum to the board of observations and improvement proposals.
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There are a number of different categories of auditors and the most common are:
Internal auditors – available in many different organizations and produce internal, independent and objective audits of financial and operational business activities, including organizational governance. The internal auditors report their results to the management, together with tips on how the business can be run better.
External auditors – usually work at private auditing firms. The external auditors provide objective reports on the annual accounts or a specific project of an organization, and whether the reports give a true and fair view of the financial position of an organization.
Public accountants – these audit authorities covered by government regulations. The government usually appoints auditors whose task is to ensure that the authorities receive and spend tax revenues in accordance with laws and regulations. They also review embezzlement and fraud, analyze government accounting controls and evaluate risk management.
What does an accountant need for qualifications?
All external auditors who work at an auditing firm and are approved by the Australian Auditing Inspectorate need to be approved or authorized. To obtain the certification from the Auditor’s Inspectorate, the auditor must have passed an auditor’s exam with a passing grade, and also have at least three years’ work at an auditing firm. In addition, a bachelor’s degree in economics from a college or university is required.
The requirements for public accountants vary, but the most common qualifications are two years’ professional experience in public accounting.
There are no legal rules or equivalent regarding the qualifications of internal auditors. Education is not always compulsory, but appropriate experience and skills determine here.
Other auditing issues
Auditors are not responsible for errors that have occurred after they have submitted the audit report. Nor are they responsible for detecting all cases of irregularities or incorrect figures; because an auditor does not guarantee in his audit report that all figures are without error. So the possible errors or shortcomings are instead the responsibility of the management.
The main purpose of an audit is to determine whether the organization’s reports are “reasonably reported” based on a risk and materiality criterion. In other words, audits will not always identify fraud and irregularities. A “pure” audit report thus does not guarantee that the accounts are completely without errors.
So what can an accountant help with?
- Review an annual report.
- Check that the board’s administration is managed in accordance with laws and regulations.
- Audit various projects or grants and submit an audit report or independent auditor’s report.
- Perform other audit services, such as a general audit or audit by special agreement.
- Prepare an auditor’s certificate for mortgages, state aid or when an owner is to contribute non-cash assets as share capital.
The auditor can also consult on:
- Improved routines
- Financial issues and tax advice.
- Positive benefits of having an accountant
- An accountant is a bridge between the organization and all its stakeholders. Potential investors, suppliers or banks read the company’s reports – and if you have an auditor, these reports become more credible. The audit provides a generally accepted quality stamp to third parties.
The audit also creates security and credibility within the company and with the board and owners. Through its review and advice, the auditor helps to control risks and make suggestions for improvement, as well as make significant observations.
When are there requirements to have an auditor?
By law, some businesses must have an auditor or an authorized / approved auditor. Most often, a limited company must have an auditor, even if it has been possible for a couple of years now to decide that the company should be without an auditor. However, public limited companies, financial companies, and limited companies with a special dividend limitation must always have an auditor.
Many companies that are not required to have an accountant hire an accountant anyway, because they see many benefits from it.
Difference between approved and authorized public accountant
Only authorized and approved auditors can perform statutory audits. In order to become an authorized or approved auditor, the requirements of the Australian Auditing Act regarding, among other things, education, experience and integrity must be met.
To become a certified public accountant, both theoretical and practical training is thus required. The theoretical education consists of at least one bachelor’s degree in any subject with studies in compulsory subject areas. In addition, practical training is required for at least three years with an authorized or approved auditor as supervisor.
The Auditors’ Inspectorate is the authority that examines applications for authorization. Today, all new auditors who pass the exam are authorized, previously you had to write two exams to first become an approved auditor and then authorized. An authorization as an auditor is valid for five years and then needs to be renewed. The auditor must be active in his service during these five years and audit a certain minimum number of organizations during that time.