What Internal Auditors Do—And How Much They Make

An internal auditing position within a company is a vital part of a company’s infrastructure to help ensure smooth operations and compliance with laws and regulations.

The job market for internal auditors continues to flourish with healthy demand for the profession. The Bureau of Labor Statistics predicts accountant and auditor positions to grow by 6% between 2023 and 2003, which is faster than average. With plenty of demand, internal auditing is an attractive career choice for those with a natural inclination toward math.

What Does an Internal Auditor Do?

The role of the internal auditor is that of an impartial watchdog, continuously making sure the company is in compliance with laws and regulations, as well as working to ensure that departments and employees follow proper procedures. An internal auditor audits fiscal statements, expense reports, inventory, and pretty much anything else that needs to be impeccable in case of an external audit by the Securities and Exchange Commission (SEC) or any other governmental regulatory body. Additionally, internal auditors help companies eliminate waste and increase efficiency. They deliver reports and analysis to management to present their findings and recommendations.

Another key aspect of the job is asset protection through risk management. These risks can range from fraud and legal exposure to internal policy lapses and mismanagement. Internal auditors create risk assessments for each department, using a master plan with a set schedule down to the most minuscule details to ensure nothing falls by the wayside.

They build checklists and supervise audit work schedules. It also falls on the internal auditor to continuously check the internal accounting procedures and operating systems. An internal auditor is not personally engaged in any department and is, thus, expected to approach each area impartially and objectively.

Important

In publicly-traded companies, an internal auditor should directly report to an audit committee rather than the CEO or CFO to maintain objectivity and independence.

What Salary Do Internal Auditors Make?

The national average salary was $66,043 in September 2024, according to PayScale. Internal auditors report receiving bonuses that reach $2,100 on average.

The salary for internal auditors varies greatly depending on location and experience. Premier cities, many of them located on the coast, such as New York City, Los Angeles, Seattle, Boston, and San Francisco, tend to have significantly higher average salaries. However, the cost of living is also more in these locations.

The average nationwide starting salary for entry-level auditors with less than one year of experience is $57,000. Those with one to four years experience earn an average of $65,000, and those with five to nine years experience have an average salary of $71,000.

Key Takeaways

• Experienced internal auditors have many career path options. 
• Internal auditors have an average salary of $57,000 during the first year on the job, and an overall average salary of $66,043.
• Internal auditors help a company remain complaint with financial regulations, contribute to risk management, and help increase efficiency.

What Type of Education Is Most Common?

A bachelor’s degree in accounting or finance is the most common job requirement. In rare cases, people with lower education have earned the position by starting in a junior accounting position and growing into the role through experience.

Master’s and doctorate degrees are mostly found among those who are aiming to move into management. Business- and math-related fields dominate this type of degree.

What Certifications Are Required?

While it’s not a requirement to be an internal auditor, many internal auditors find that achieving CPA status significantly helps their careers and salary prospects. It is also a requirement to file reports with the SEC. The CPA requirements vary by state, but the common minimum requirement is a 150 college credit hours, and passing the CPA exam.

The Certified Internal Auditor (CIA) designation is granted by the Institute of Internal Auditors (IIA) after passing a three-part test. The CIA has multiple degree and work experience requirement combinations to choose from: a bachelor’s degree and two years of working experience as an internal auditor, a master’s degree and one year of experience, or five years of experience for those with no degree.

The IIA also offers the more specialized Certification in Risk Management Assurance. This will help those interested in gaining the necessary skills to be their company’s risk management specialist in internal auditing.

The Certified Management Accountant (CMA) designation is conferred by the Institute of Management Accountants (IMA) and focuses on financial statement analysis, valuation, and capital structure.

What Skills Does an Internal Auditor Need?

The most important quality of the internal auditor is great attention to detail. A significant part of the job is meticulously following detailed checklists and spending hours upon hours scanning numbers to catch anything that stands out. Being naturally proficient in math is an obvious advantage in this task.

Integrity is another must for the job, as the company and its owners rely on the auditor to catch everything suspicious or amiss. The auditor’s primary allegiance is to hard facts and numbers rather than a manager.

Sound judgment and common sense are of great importance, as it is the auditor’s job to find a healthy balance between risk and flexibility. The ability to understand the underlying business processes makes the control of policies a fluid part of the workflow rather than a bottleneck.

The ability to effectively communicate is also important. Despite the job being largely centered on numbers, the auditor also needs to communicate the findings and conclusions so it can be easily understood. Certain diplomacy and people skills come in handy when implementing new business controls and procedures.

A good grasp of generally accepted accounting principles (GAAP) is absolutely needed as well. Knowledge of the Sarbanes-Oxley Act is also needed.

What Is a Typical Career Path?

After some years as an internal auditor, the natural, and most common, the next step is to become a senior internal auditor. This position has an average salary of $86,345 as of September 19, 2024 and shifts the focus more onto policy creation rather than policy enforcement.

The next step in the job level is an internal audit manager with an average salary of $106,165 as of August 29, 2024. This job focuses on managing the audit team and to act as a liaison with external auditors. Larger firms also offer the position of senior auditing manager, which has an average salary of $133,674 as of August 12, 2024, or internal audit director, which has an average salary of $140,654 as of June 21, 2024. The final step is to become chief financial officer. Other titles such as vice president and senior vice president are likely the last steps before C-level positions.

Another path from the job of an internal auditor is to first make a largely lateral move to senior accountant with an average salary of $75,155 as of September 19, 2024, and then go for the position of financial controller which has an average salary of $94,359 as of September 17, 2024. Even at later stages in a person’s career, the field has a fairly-even gender balance with a slight majority of women working at the entry-level.

The Bottom Line

A job in internal auditing offers many opportunities to those interested in compliance and oversight, and with a background in mathematics. As the need for internal auditors continues to grow, there are a plethora of opportunities for job advancement in this field.

Read the original article on Investopedia.