Become a Bank Auditor
As mentioned, a bank’s internal auditors serve many purposes, depending on the size of the bank, the number of business units, and the number of auditors on the team.
The most common function an auditor serves is auditing a company’s financial information, to make sure its accounting practices meet federal regulation and high ethical standards. Many companies, including banks, now hire outside accounting firms to perform these audits, to reduce the perception of bias that an “inside” employer might have. Still, some auditors will perform their own audits throughout the year so that when the accounting firm steps in, all documentation and information are in place and correct.
The next most common function the internal auditor performs is the risk assessment of each business unit, from individual branches, to customer service, trust, investments and wealth management, to security and technology. The bank develops recommended procedures which minimize its risk and exposure, and auditors travel to the specific business unit and audit every aspect of its business practices to make sure they are performing them according to those procedures. The business unit usually has advance notice of the audit, so they can have everything ready that the auditors need as soon as they arrive. It also gives the business unit time to compare their practices against recommended procedures and correct any that practices that are not in line.
Once the auditors are in place they will examine the business unit’s records for a specified time period, perform audit interviews with supervisors and managers, and observe normal operations. For example, at a branch, the auditor may request to see all cash drawer balancing documents for the previous month, interview the head teller about balancing procedures, and then observe the tellers balancing their drawers each day while they are there. This gives them an accurate picture of how that branch balances their teller drawers each day, and if there are tellers who do not understand or are not following recommended balancing procedures. Not only can correcting these procedures minimize risk for the bank and the employee, it can also improve the bank’s efficiencies.
Once the audit has been completed, the auditors will return to their offices and compile the information gathered and create an audit report which is delivered to the person in charge of the business unit, as well as that person’s immediate supervisor. It will let the department know what changes, if any, need to be made. If there are serious issues, the regional manager may take steps to correct these immediately. With minor infractions, the business unit will be given a specified time frame to make corrections. In most cases, the auditors do not make follow up visits to ensure that all changes have taken place. Managers are expected to make them. Occasionally, however, if the unit is at major risk, auditors may return to ensure that corrections have been made.
If you are a detail-oriented person, appreciate accounting, risk management, and good business practices, this may be a great career choice for you. Working conditions are good. However, some travel may be involved.
Overall, the US Bureau of Labor Statistics projects that the need for accountants and auditors will increase greatly over the next several years. In fact, it cites a 22 percent growth rate over the average by the year 2018. This includes accountants and auditors in all business segments, not just those at financial institutions. However, given the increasing desire for accounting transparency and risk reduction, this is a growing career field at most banks.
Internal auditors will need to have a bachelor’s degree in accounting or business. Some banks prefer Certified Public Accountants or those holding related certifications. Some banks, especially for advanced positions, may require auditors to possess or earn a master’s degree in business administration.
Any auditor who files a report to the US Securities and Exchange Commission is required to be a CPA. Depending on the auditor’s state, CPAs are required to have a certain number of years of education plus on the job experience. To maintain the CPA certification, auditors will be required to attend continuing education classes every year.
Auditors can earn additional certifications, according to the US Bureau of Labor Statistics. The Institute of Internal Auditors offers the Certified Internal Auditor (CIA) designation to college graduates who have worked for two years as internal auditors and have passed a four-part examination. The same organization also offers the designations of Certified in Control Self-Assessment (CCSA), Certified Government Auditing Professional (CGAP), and Certified Financial Services Auditor (CFSA). To obtain these certifications, auditors must pass the exams and meet educational and experience requirements.
ISACA confers the Certified Information Systems Auditor (CISA) designation upon candidates who pass an examination and have five years of experience auditing information systems. Information systems experience, financial or operational auditing experience, or related college credit hours can be substituted for up to two years of information systems auditing, control or security experience.
Knowledge, Skills, and Abilities
The most important knowledge for most internal auditors to possess is the knowledge of standard business accounting practices as published by the SEC and other government agencies. In the United States accounting associations have also published acceptable, ethical accounting guidelines and procedures which their members are expected to adhere to.
The internal auditor responsible for auditing a company’s accounting procedures needs to have extensive knowledge and understanding of all of these standards and guidelines, as well as how the particular company operated and manages its financial resources. Auditors need to be very familiar with the government’s accounting regulations and IRS tax reporting guidelines. Additionally auditors will need to know the bank’s own accounting policies and procedures.
Internal auditors must be sticklers for details. No detail can be overlooked or omitted. The internal auditor needs to be thorough, organized, and systematic. Since internal auditors need to work with different people in different business units, they should also have very strong communication skills, including strong writing skills. They should be comfortable working as a team. They should also be comfortable delivering less than favorable information to business units when the occasion arises.
Internal auditors working for large banking institutions can earn a higher average salary than auditors working for accounting firms, government agencies, and smaller banks. According to the U.S. Bureau of Labor Statistics, accountants and auditors earn an average of approximately $59,000 per year. That is not specific to internal auditors at banks and includes accountants and auditors at every level in an organization. More senior auditors can earn as much as approximately $85,000 per year, or more, depending on the location of the bank, according to Salary.com. Here’s the latest salary information:
Potential Career Paths
Internal auditors are poised for upward mobility within a company for several reasons. First, they must learn and communicate sound, ethical, and best business practices for their company. Secondly, they become intimately familiar with the company’s business practices and become valuable because of this knowledge. Improving a company’s practices through its internal audit structure can have a noticeable impact on its profitability. All of this often leads auditors to substantial careers in their industries, and the banking industry is no exception.
Internal auditors start out in entry level positions, which can lead to more advanced and senior positions. From there, successful auditors can become managers and executives, sometimes of the accounting and/or auditing departments.