External Auditor Certification

The external auditor certification process helps audit professionals learn about a variety of accounting, audit and tax topics needed to be competent and productive. This process includes educational requirements, a comprehensive exam, experience criteria, continuing education and ethical considerations. Regulations require an external auditor engaged in reviewing or auditing activities to be certified.

The external auditor certification process prepares an auditor to understand important tools and techniques used in the auditing practice. This process also teaches an external auditor generally accepted accounting standards (GAAS) and how to apply them to a review of corporate procedures and mechanisms.

An external auditor who seeks certification must have a four-year college degree in accounting, audit or tax. An undergraduate candidate with a liberal arts (e.g., sociology or geography) background also may meet education criteria if at least 24 semester hours are in auditing, accounting or tax.

The four-part certified public accountant (CPA) exam tests an external auditor's knowledge of business processes, audit, accounting and tax. "Auditing and Attestation" tests a candidate's knowledge of GAAS and audit technology tools. "Business Environments and Concepts" ensures that a candidate understands general business topics such as economics, financial management, corporate strategy and market competition. The "Financial Accounting and Reporting" section covers generally accepted accounting principles (GAAS) and how they apply to a corporation's financial statements. "Regulation" tests an applicant's knowledge of federal, state and local fiscal rules as well as broad business laws such as contracts and legal standards for accountants.

An external auditor seeking certification must work for two years under the direction of a CPA with an active license. To meet experience guidelines, tasks must be in accounting, auditing or tax activities. An accounting or audit scholar may meet requirements by substituting teaching with practical experience. For example, an accounting professor in Georgia may receive a license after 5 years of teaching experience.

Continuing Education
An external auditor seeking certification must take a minimum of continuing professional education (CPE) hours every year. CPE requirements vary by state. For example, a New York-based external auditor must take 40 hours of business studies or 24 hours in auditing, tax or accounting.

A certified external auditor must always hold ethical values when performing an audit or a review of a corporation. Ethical values require a certified external auditor to reveal conflicts of interest as well as illegal or fraudulent activities to a superior, a client, regulators or law enforcement. For example, a certified external auditor may disclose to the top management of a company that the cash receipts clerk is stealing cash via a secret bank account.