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Auditor — a professional who reviews the precision of financial records and their compliance with the tax legislation. They ensure the quality of the working procedures, consult the managers and help to increase the operational efficacy of the business. To do so, they examine the financial records, accounting data, and other important documentation.

As for the public companies, auditors check if the financial statements correspond to the accounting principles. Auditors inspect the financial records and fix each step of this work. Such a process is called an audit trail. 

After the completion of this procedure, the auditor summarizes the findings and draws up an audit report. He provides this report to the management or to the governmental body. 


Types of Auditors

External Auditor — an independent consultant who examines the financial papers of the firm including the invoices, payslips, reports of completions, reconciliation reports, tax paid certificates, lists of inventory, and other significant documents. The external auditor checks the documents to find if there are any frauds, mistakes, wasteful spending, or discrepancies.

Often, the companies hire external auditors to get an impartial assessment of their financial state. As the external auditors aren't related to the companies they review, they assess records without bias. The Securities and Exchange Commission (SEC) demands that all firms get the assessment from external auditors.

Internal Auditor — an employee of a company assigned to conduct an audit. Usually, this is an accountant or a member of the audit department. His functions are similar to the ones of an external auditor. 

The internal auditors have an advantage — the possibility to see the work of a company “from the inside” during the processes of risk management, decision-making, and organization of work processes. Also, the internal auditors help to identify the inner problems before the external audits.   

Forensic Auditor — a professional that performs the audit of a suspect during the assize. The main task of a forensic auditor is to identify fraud, wasteful spending, or unlawful enrichment during the trial.        

Forensic audits are carried out by Certified Fraud Examiners (CFE), or accountants who work in the sphere of forensic accounting. Also, the forensic auditors may perform audits that are not related to financial fraud (child custody, bankruptcy, business closure). 

Government Auditor — a professional that carries out the audit of government agencies or the companies that are engaged in governmental regulations. They perform both compliance audits and financial audits.

Auditor’s opinions

Auditor’s opinion — a certification concerning the financial statement of a firm. It is created after an audit of the records and working procedures. The auditor's opinion says if there are any material misstatements in a financial statement. 

Unqualified Opinion – Clean Report. This opinion means a clean report. Such an opinion has no adverse comments or disclaimers. A clean report means that the auditor hasn't found any problems in the financial documentation. Auditor confirms that the company doesn’t break the governance principles

Qualified Opinion – Qualified Report. This report specifies that the auditor has doubts concerning several transactions, or can’t provide a clean report. Auditors draw up such an opinion the same way as an unqualified opinion, but they also indicate the reason why they can’t give an unqualified opinion. Investors don’t like the qualified opinions because it shows financial instability.

Disclaimer of Opinion – Disclaimer Report. This disclaimer means that the auditor refuses to provide the assessment related to the financial documents. This usually happens when the company limits the auditor or doesn’t answer the auditor’s questions. Also, this happens when the auditor can’t find enough evidence for a clean report or sees some incomprehensible transactions.

Adverse Opinion – Adverse Audit Report. This report means that the auditor has found various misstatements in the reports and documents. This opinion signalizes the investors that the financial papers haven’t been drawn up well, or the company has problems with fraud. Financial institutions avoid such companies.

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