When a company is experiencing difficulty controlling their accounting functions, hiring an internal auditor may alleviate some of the problems. Internal auditors may perform a variety of services including operational audits, compliance audits, and financial statement audits. Additionally, an internal auditor can assist in development of internal controls and evaluate the effectiveness of computer systems (Arens, Elder, & Beasley, 2006). A company must evaluate the experience and educational background of a potential internal auditor before making a decision to ensure the auditor is capable of meeting the company’s needs.Benefits of Internal Auditor Operational auditing is perhaps the most beneficial use of an internal auditor for a company experiencing difficulty controlling accounting functions.

Operational auditing focuses on making recommendations on efficient use of resources, achievement of business objectives, and compliance with company policies (Louwers, Ramsay, Sinason, & Strawser, 2007). An operational audit gives a three dimensional perspective of a company. Financial statements can highlight a problem, but it cannot show how the problem began.The internal auditor can conduct interviews with essential personal to determine what changes are necessary.

Additionally, an operational audit may uncover future problems while reviewing the effectiveness of current policies. Operational audits are beneficial because it can uncover problems early and fix them before they cause significant damage to the company’s financial health (Vos, 2001). The operational audit process lends itself to developing internal controls and evaluating the effectiveness of computer systems.Compliance audits focus on determining whether the company is following applicable rules and regulations.

The rules may be either company policy or external laws and regulations. Internal auditors generally conduct a compliance audit before an external audit to detect and correct problems in advance. If the auditor discovers any violations, they will recommend ways to prevent future violations. External auditors may take into account management’s efforts to correct noncompliance issues when issuing their report (Encyclopedia of Business, 2nd ed.

, 2010).Financial statement audits conducted by internal auditors use the same rules as those conducted by external auditors. This can be beneficial to the company because it may reduce the cost of external audits if the external auditor chooses to use some of the internal auditor’s working papers. External auditors should assess the independence and competence of an internal auditor.

If independence and competence is demonstrated, SAS 65 allows internal auditor to assist in external audits under the supervision of an independent audit team (Louwers et al, 2007).Internal Auditor Education and Experience An internal auditor has many responsibilities and must have the appropriate educational background and work experience. Although many accounting certifications are available, the certified public accountant (CPA) designation is generally regarded as the highest mark of distinction. The education, examination, and work experience requirements needed to earn a CPA designation provides an internal auditor with credibility (Louwers et al, 2007). The education requirement varies across certifying organizations.However, most states require a CPA candidate to complete 150 semester hours of college education with a concentration in accounting before sitting for the examination.

The examination covers auditing and attestation, financial accounting and reporting, regulation, and business environment and concepts. After certification, CPAs must obtain continuing education to keep their license current (Louwers et al, 2007). A CPA candidate must also complete a specified number of hours working under a practicing CPA before becoming certified themselves.The number of hours varies across states but the most common requirement is two years for a candidate with a bachelor’s degree and one year for a candidate with a master’s degree. Most states accept experience obtained working in areas such as internal auditing, preparing income taxes, and working for public accounting firms (Louwers et al, 2007).

Hiring an internal auditor with a CPA license will be beneficial to the company because they are required to have some familiarity with the four main aspects of accounting.Although no one person is knowledgeable in all areas of accounting, an experienced CPA will be familiar with conducting research using authoritative sources. Additionally, they will have experience with the types of internal controls needed to streamline company processes. Conclusion When a company is experiencing difficulty controlling their accounting functions, hiring an internal auditor may alleviate some of the problems.

An internal auditor can conduct an operational audit, which focuses on making recommendations on the efficient use of resources, compliance with company policies, and achievement of company objectives.Additionally, operational audits are helpful in developing internal controls and evaluating computer systems. Compliance audits focus on ensuring the company if following applicable rules and regulations. Financial statement audits conducted by internal auditors follow the same procedures used by external auditors, who may use the internal auditor’s working papers if they are deemed independent and competent. An internal auditor with a CPA license will have the needed credibility because of the educational and experience background required to become certified.