External Auditor Job Description: A Detailed Guide to the Role, Responsibilities, and Skills

What does an external auditor do? This is one question that is often asked: by those  interested in the field of auditing.  

Trust and transparency are some of the backbone in the unnavigated realm of finance and business. 

Accurate and reliable financial data is crucial for an organization as it directly affects decision making, attracts investors, and ensures compliance with regulations. 

However, the financial integrity of an organization is the responsibility of External Auditors, independent entities who provide an objective evaluation of an organization’s financial statements. 

In case you are thinking of pursuing a career in this critical area of finance or your organization is trying to find a qualified External Auditor, it is important to have a full understanding of the detailed job description of an External Auditor. 

This guide will focus on the myriad responsibilities, relevant skills, requisite qualifications, and the noticeable influence an External Auditor has in Nigeria’s economy in particular and global economy in general.

Also read: Senior Accountant Job Description (Skills, Qualifications, Responsibilities)

What’s an External Auditor? 

An external auditor’s job involves working independently to evaluate the finances of a company or organization. In this role, one needs to make sure the financial report is as it should be, accurate, fair and in accordance with the standards of accounting and regulations. 

As part of impartial assessment, the auditor ensures that the compliance and financial reports are given trust by stakeholders. 

External auditors usually belong to audit firms in the form of clients on contract basis or in some other consulting capacity. 

They make sure that all financial statements held are correct with the aim of helping the most investors and regulators as well as the public to make decisions based on financial data that can be depended on. 

Key Responsibilities of an External Auditor

An External Auditor is tasked with various responsibilities directed towards determining the financial fitness of an organization, independently and objectively. 

These responsibilities can be summarized into a few categories:

1. Conducting Planning and Execution of Audit Engagements 

• Understanding the Client Business: Comprehension of the client’s industry, business, internal control, and accounting divisions is required. 
• Developing Audit Plans: Each client comes with their own issues and intricacies. For such clients, audit plans with clearly stated scope, goals, procedures, and methods for achieving the objectives have to be developed. 
• Performing Audit Steps: The various steps involved vary significantly from client to client some of them including reviewing accounting files, analyzing accounting data, carrying out transactions, and obtaining the necessary documentation. 
• Testing Internal Controls: In determining possible internal control weaknesses, the client’s internal control system must first be assessed as to its ability to manage the identified risks and evaluate the potential material misstatement risk. 

2. Relating to Financial Statements or Financial Records

• Reviewing Financial Statements: Examining the equity statement, cash movements statement, income statement, balance sheet and scrutinizing them to ensure all are presented fairly and free of bias. 
• Verifying Account Balances: Examining and verifying the accuracy of various account balances, such as cash, receivables, inventory, payables, and investments.
• Testing Transactions: Examining a sample of transactions to ensure they are properly recorded, authorized, and supported by appropriate documentation.
• Assessing Accounting Policies: Evaluating the appropriateness and consistent application of the client’s accounting policies.   

3. Identifying and Assessing Risks:

• Risk Assessment: Identifying the risk of material misstatement within financial statements such as fraud and errors.  
• Evaluating materiality: Deciding the level of materiality in the audit engagement in order to direct more attention towards significant items.  
• Evaluating the evidence: Judging the audit evidence gathered in order to determine the conclusions reached.  

4. Report and Communication:  

• Preparing reports: Writing accounts of the audit, highlighting the opinion regarding the fairness of the financial statements and outlining the material weaknesses found in internal controls or other significant findings.  
• Communicating with the management: Reporting audit results, recommendations along with important matters to the client’s management and the audit committee.  
• Presenting findings: Reporting audit results along with recommendations to the client’s management and other stakeholders.  

5. Compliance and Ethics:  

• Professional standards’ compliance: Following set auditing standards: codes of ethics and legal boundaries that are relevant in Nigeria such as the Companies and Allied Matters Act.  
• Independence and objectivity: Remaining independent of the client and having an objective view of the audit process.

Essential Skills and Qualities of an External Auditor:

Achieving a career as an External Auditor requires a strong blend of personal attributes and the following essential skills:  

• Analytical and Critical Thinking: Renders complex financial data analyzable to evaluate trends and information, gauge risk, and draw financial conclusions.  
• Attention to Detail: Demonstrates care and precision when reviewing financial documents, records, and conducting audits.  
• Strong Knowledge of Accounting Principles: Knowledgeable about accounting guidelines (IFRS) and principles related to financial reporting.  
• Understanding of Auditing Standards: Proficient in the various auditing standards and procedures.  
• Problem-Solving Skills: Possesses the capability to resolve different challenges in accounting and in reporting financial statements.  
• Communication Skills: The ability to relay audit findings and presented to clients with clear and concise written and verbal recommendations.  
• Interpersonal Skills: Capable of nurturing professional working relationships with clients and other employees.  
• Integrity and Ethics: Maintenance of high ethical qualities and professionalism through independence and objectivity.  
• Time Management and Organization: Highly effective in tracking deadlines and managing multiple engagements for audits.  
• Proficiency in Audit Software: Knowledge of pertinent technology and the audit software.  

Qualifications and Education Requirements.  

An External Auditor typically possesses the following qualifications: 

Educational Background: 

A Bachelor’s degree in Accounting, Finance, Economics or any related field is typically required, while some positions may prefer a Master’s degree. 

Professional Certifications: 

Professional accounting certifications are often preferred and in most cases, mandatory for practicing as an External Auditor. 

Some of the commonly accepted ones are: 

• ICAN (Institute of Chartered Accountants of Nigeria): A well respected professional accounting credential in Nigeria. 
• ACCA (Association of Chartered Certified Accountants): One more globally recognized accounting qualification. 
• CPA (Certified Public Accountant): An additional internationally acknowledged accountancy qualification.
• Certified Internal Auditor (CIA)
• Certified Information Systems Auditor (CISA)

Relevant Experience: 

• Usually there is a requirement for some level of prior experience in auditing, accounting, or a similar specialty. 
• The amount of experience required depends on the level of the position. 

Knowledge of Nigerian Regulations:

•  Having knowledge about the compliance with Nigerian rules for accounting and financial reporting and the Companies and Allied Matters Act. 

Career Outlook for External Auditors in Nigeria: 

The need for trained External Auditors in Nigeria and the world at large is persistently high due to the need for business transparency and compliance. 

There are opportunities in:  

• Audit Firms: These include the Big Four (Deloitte, PwC, EY, KPMG) as well as other national and regional audit firms with representations in Nigeria.  
• Government Agencies: Such as regulatory authorities and government audit offices.  
• Corporates: Internal audit divisions of large companies in Nigeria across various industries.  
• Non-Governmental Organizations (NGOs): Institutions that seek external audits for compliance and accountability to their donors.  

The career ladder for External Auditors includes progression into senior audit positions, management of audits and partnerships in the auditing firms.  

Conclusion on External Auditor Job Description

An external auditor’s job is important for maintaining honesty and openness in an organization’s financial reporting. By performing independent audits, assessing internal controls, pinpointing risks, and providing useful suggestions, external auditors help companies maintain proper financial documentation and compliance with legal requirements.  

The external auditors accomplish their work successfully if they have technical accounting, analytical skills, and ethical behavioral traits. 

These professions can expect great career advancement along with high earning potential, now and in the future, and make a difference to the economic health of companies around the world if they have the right qualifications and work experience.