Certified Internal Auditors

Why Become an Internal Auditor?


Becoming a certified internal auditor (CIA) will make it easier for you to work in the governance of your employer’s financial operations or even to work as a consultant for various businesses. A large part of your job will be mitigating risk stemming from financial decisions and actions made either by the company’s officers or others who have control over the organization’s money.


Looking back at Lehman Brothers and Bear Stearns in 2007, it’s easy to apply hindsight to their actions regarding customers’ money and the eventual collapse of both companies. If a team of certified internal auditors looked at their books, they should have issued a warning to the stockholders, board, and company officers about changing their accounting practices.


To become an internal auditor, you need to meet educational requirements and take certification exams. Before you take the exams, you’ll need to dedicate time to studying the materials you find or buy. The CIA exam is considered a relatively difficult one to pass.


What is an Internal Auditor?


To understand what an internal auditor is, you need to know what their role in a company is. In a few words: an internal auditor “provides an independent, objective reporting that gives value to the company’s operations.” The internal auditor ensures that the company meets its goals with a disciplined evaluation plan to reduce risk and improve the control and governance processes. They make sure everything is running smoothly and verify all information that is tracked by the controller and other accounting specialists.


What Does an Internal Auditor Do?


An internal auditor is responsible for studying about and learning the business operations of an organization; increasing protections against internal fraud which puts the company’s assets at risk; going through all of the organization’s accounting to verify that it is in compliance with current federal statutes and laws; and, after developing a picture of the organization’s assets and debts, they offer recommendations intended to strengthen the internal goals of the company, as well as the processes it uses to govern itself.


Two statutes dating from 1934 and 2002 define the role of internal auditors using a legal basis. These statutes are the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002.


After the Great Recession of 2007-2008, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law in 2010 by President Obama. This law works to strengthen the US economy by increasing transparency inside the financial service sector. Accountability is a vital part of this law as well.


Requirements to Become an Internal Auditor


  1. Degree Necessary


Most employers require a minimum of a bachelor’s degree in accounting, finance, or some other related field. Requirements may increase as you apply to larger businesses. Some employers prefer to hire someone who holds a master’s degree; the key word here is prefer, which means that this may be negotiable.


Your university coursework should include business communications, financial accounting, business law, auditing, and taxation. Some universities offer a degree program focusing specifically on internal auditing, but others will not have this and instead will offer general accounting degrees. However, you may be able to find a minor or take electives to focus your academic career. Be aware of this when looking for a college program.


Some states do require internal auditors to go beyond a bachelor’s degree in accounting. If you earn a graduate degree in a related field, you’ll be in a more competitive position.


  1. Subject Focus


The focus of the Certified Internal Auditor (CIA) exam is actually divided among several components. As long as you have an educational foundation from the associate degree level and up, along with five years of work experience in internal auditing that can be verified, you will be allowed to register to take the exam. If you don’t have the college education, but you do have at least seven years of internal auditing experience that can be verified, you will still be able to register for the exam.


Even if you already hold a bachelor’s degree, this won’t be sufficient on its own to register for the exam—you must also have at least two years of experience working as an internal auditor or in another, similar position. And, if you have a master’s degree, you still need to have one year of professional experience as an internal auditor or in another related area.


  1. Exams


Before you take your Certified Internal Auditor (CIA) exam, you really should study and take practice tests so you know that you are likely to succeed.


You’ll want to focus completely on your studies - log off all social media while you’re studying and shut down all other windows on your computer. You should also take regular breaks. Give yourself time to relax so your mind can refresh itself. Go for a bike ride or hiking with your family. Even one day per week can help. Study for at least 15 hours per week for Part 1; if you don’t want to study so intensely, you can plan to study for 10 hours per week. With this schedule, you’ll be working on studying and passing your exam for three to seven months.


The CIA exam is divided into three parts. Part 1 takes 2.5 hours with 125 questions; Part 2 takes two hours with 100 questions and Part 3 takes two hours with 100 questions.


How is the Certified Internal Auditor Exam Scored?


For each part of the exam, a raw score, or the number of questions you answered correctly, is converted to a scaled score. This change was introduced in 2013. This ranges from 250 points up to 750 points. A minimum of 600 points is required to pass the exam. That is, you have to answer 75 percent of the exam questions correctly to pass. Why scaled scoring? Scaled scoring takes into account the difficulty of the questions that have been answered correctly. This can actually reward you. If you answer the more difficult problems correctly while other people have problems with them, then your score will reflect that, even if you got the same number correct as the other test taker, you answered more of the difficult questions correctly.


Pretest questions are sprinkled throughout the CIA exam. These don’t count toward your final score, but they are used to figure out if your knowledge of some topics is sufficient. When you read your exam questions, you likely won’t be able to pick out which questions are pretest or not, so you should answer every question as if they are all scored the same way.


Your score, or passing the test, relies on the difficulty of the questions you answer; this means the number of correct answers you need to have may differ in Parts 1, 2, or 3.


Study Resources and Preparation for the Internal Auditor Exam


You should consider reviewing study plans that can be found online so that you know you have created a realistic study plan for yourself. Look for and make note of any sections that give you trouble so you can slow down. Keep careful track of your progress all the way up to the day of your exam.


You might want to consider buying all the study materials you need at one time, rather than buying as you go, so that you will be able to make regular progress throughout your study sessions. Before you order them, make sure your experience and education satisfy any prerequisites listed. For instance, the “CIA Exam Preparation - Part 1: Essentials of Internal Auditing” is a good choice if you are looking for professional development or if you are a student.


The Institute of Internal Auditors


Part 2 is the Practice of Internal Auditing. Because it is a live, instructor-led prep course, you need to keep up with your studies so you can keep abreast of the instruction given. This course strengthens your knowledge as an internal auditor and makes topics clearer. It is appropriate for CIA candidates, students of business, finance and accounting, and internal auditors who want professional development.


The Institute of Internal Auditors


Part 3 of this series exposes you to subject matter experts and your professional peers. As with Parts 1 and 2, it’s appropriate for CIA candidates, students, and internal auditors who want more professional development. This part of the CIA exam focuses on business knowledge you’ll need. This course provides helpful study tips to prepare you for the CIA exam.


The Institute of Internal Auditors


  1. Difficulty


Before you take the first part of the CIA exam, you need to know that it isn’t adaptive. That is, the questions’ difficulty level won’t change because of your earlier answers. Every question receives the same weight and is scored as such in the raw score, though it will be scaled for the final score. Part 2 is more difficult than Part 1, and Part 3 is more difficult than Part 2.


This exam is difficult. However, those questions on Parts 2 and 3 that are found to be more difficult require you to only answer 70% correctly to achieve a passing score. You’ll receive a scaled score (600 is equal to a 75% score).


  1. Cost


Of course, it isn’t free for you to take the CIA exam. First, you pay an application fee, which ranges from a little more than $200 up to around $350 (member, non-member, and student rates apply, here).


Part 1 fees run from a little more than $200 up to almost $400 (again, member, non-member, and student). Part 2 fees are a little less than $200 up to almost $350. Part 3 fees are the same as the fees for Part 2. Fees for the CIA exam vary from country to country and students receive discounted exam rates.


Certified internal auditors (CIAs) function within a company such as federal government divisions or private businesses to take a look at monetary records for precision as well as mismanagement. Other types of work performed by CIAs, as provided by the Association of Certified Fraudulence Examiners, include: observing industry trends making effectiveness recommendations offering financial planning recommendations to upper management. One certain branch of internal bookkeeping remains in infotech. Accountants in these positions will incorporate their history experience in bookkeeping and computer technology to assess IT monitorings dangers and safety and security. They examine controls for an organization's financial computer system documents systems, evaluating and assessing financial information as well as guaranteeing it is gathered from reliable computer system resources. Infotech internal auditors also regularly analyze computer system security regarding financial document maintaining.


Like lots of careers in accounting, the minimum education demand for certified internal auditors is an undergraduate degree in bookkeeping, money or business management. Internal auditing is an accounting major that a number of universities now offer as well as may supply a benefit for job candidates over applicants with a general audit degree. Individuals looking for development may likewise take into consideration making a graduate degree in finance or audit. Several companies call for an MBA for management-level monetary positions. Additionally, employers have a tendency to look positively upon task candidates with an MBA based on the training this level calls for.


Licensing as a Certified Public Accountant (Certified Public Accountant) is not required for a lot of internal auditor positions. Numerous employers, however, favor Certified Public Accountant accreditation, given that it needs passing four strenuous examinations. Certification to sit for the Certified Public Accountant examination requires added education past the common undergraduate audit level. Additionally, Certified Public Accountant qualification calls for continuing education. Additionally, The Institute of Internal Auditors (IIA) offers innovative qualification for auditors. To receive the Certified Internal Auditor, candidates must graduate from a certified college or university, have 2 years of work experience as an internal auditor as well as have to pass a four-part test. Other forms of certification offered by the IIA include:


  • Certified Federal Government Auditing Professional

  • Certification in Control Self-Assessment

  • Certified Financial Services Auditor


For accounting auditors focusing on information technology, the Details Solution Audit as well as Control Association (ISACA) supplies qualification as a Certified Information Equipment Auditor (CISA). Prospects for this certification should have 5 years of experience in auditing information systems and also pass an exam. Experience economic, operational bookkeeping or information systems and related university credit scores can be substituted for no more than two years of job experience in the field of info systems security, control or auditing.


Numerous entry level certified internal auditors advance in their task positions within one to two years. Progressing better into senior internal auditor placements frequently takes place within five years for accounting professionals that do well. People that move right into elderly monitoring settings can end up being managers, managers or partners in an audit company. They might additionally make a decision to open their very own public audit company or consulting organization. For people that intend to advance in the bookkeeping field, gaining an MBA provides opportunities to relocate into greater management settings. According to the Bureau of Labor Stats, people with an MBA can possibly relocate right into magnate positions.


According to accounting career details from the BLS, beginning certified internal auditors can expect to make an ordinary income of around $71,000 per year. People with extensive work experience and training can gain well over beginning incomes. For individuals that have actually gained an MBA in bookkeeping or money, incomes potential can significantly boost and also be in unwanted of $110,000 annually. Those employed in leading degree executive placements frequently make a yearly earnings of more than $130,000 a year and also higher.If you are thinking about occupations in audit, gaining an undergraduate degree in bookkeeping, financing or auditing is a significant initial stepping rock in your career. Coming to be certified as a CPA as well as Certified Internal Auditor will give you even more employment opportunities and also options for advancement, as will gaining an MBA.


The financial auditor is a person who chooses regarding another entity's financial practicality. He or she aids an organization choose about lending or various other kinds of service in which a firm's financial background is essential. The auditor is also in charge of making a determination of whether or not a financial background is exact as well as real to avoid deceptive or unsuitable dealings. Auditors comply with the requirements of the nationwide bookkeeping market in order to make the fairest recommendation for various elements of organisation. An auditor may deal with a team of people within an organization in order to complete these examinations.


All newly-hired auditors need to be overseen by a specialist with experience as well as the appropriate qualifications. Audit as well as auditing firms position new hires with a skilled employee for a training period. Before a certificate can be renewed, a lot of states call for accounting professionals and also auditors to complete a certain variety of proceeding education hours. Many expert organizations use proceeding education talks, courses, and also seminars.


A financial audit is the examination of your service' financial declarations and also accompanying documents as well as procedures, as well as is executed by a person that is independent of your organization. These often-annual occasions penetrate your company's economic placement: They look at your accounting documents, internal control policies, and also accounts based on industry-accepted bookkeeping standards. This process can look as if somebody is inspecting your sensitive data, looking for mistakes as well as misstatements.


While outside audits assess financial dangers and also statements, internal audits go even more as well as consider your business' growth, influence on the setting, staff member culture, as well as reputation. Internal auditors report to your board as well as elderly management within your governance framework as well as, rather than simply offering reasonable guarantees to your stakeholders as well as outsiders, they provide ways to boost your firm on the whole. Executing regular internal audits additionally reveals to the exterior auditors that your business has a way to boost your internal controls as well as thereby manage your company properly.


There are several sorts of lists available for economic audits. Whether you are an auditor, or you possess a business and also want to prepare for an audit, you can make use of a list to get ready. The United States Federal Government Responsibility Workplace (United States GAO) also produces checklists for government auditing. Furthermore, there are self-assessment lists you can evaluate before your audit, whether your organisation is public, exclusive, or nonprofit.


Certified Internal Auditor (CIA) is an official certification awarded to accountants that conduct audits of corporations and other organizations for compliance with federal, state, and local laws and regulations. The Certified Internal Auditor certification is given by the Institute of Internal Audit (IIA) and is recognized around the world.


The IIA offers two methods of how you can become a certified internal auditor, and those are online training courses and onsite audits. Both of these options are effective and can provide you with the information necessary to pass the exam.


Online training courses are available at a variety of locations. You will need to find a reputable program, and they will offer you both a classroom-based course and an online learning option. You will need to ensure that the online training course offers an adequate amount of information, so that you have everything you need in order to pass the exam.


Onsite audits will be conducted by auditing companies that are located near where you work. They will conduct the actual audit of the organization, allowing you to have hands-on experience. If this is not something you prefer to do, they will perform a number of different tasks during the audit that you will need to know about. These include recording any records that are being improperly documented, gathering information from all systems in the organization, and determining any fraud or mismanagement that may have occurred.


There are some things to consider when you are studying for your Certified Internal Auditor Certification Exam. There are a number of different exams to choose from, and they will be graded on different levels of quality.


Each exam will be graded on a certain scale based on its content, so you will want to make sure that you pay attention to the material before taking the test. You should make sure that you are familiar with the subjects that you are covering and also that you understand what your score will be based on.


You will find that there are four different types of exams that you can take. You can either take the entire exam in one sitting, take a part of it over the weekend, take the test in two parts, or take just the section that is written.


Each of the three types of exams will offer you the knowledge that you need in order to pass the Certified Internal Audit onsite Audit. There is no minimum score, and you will not be able to take the exam to advance your certifications if you have a poor score. So you need to take your time, research the subject matter thoroughly, and practice on a regular basis to get ready for your exam.


The first exam you will be required to take is the Certified Practicing Internal Auditor. This exam will be the most difficult of the four exams. It is designed to determine whether you have the ability to be a qualified and well-trained Certified Internal Auditor. This exam is also offered on a multiple choice basis, and you will need to answer nine questions in order to receive your score.


The next exam that you will be required to take is the Certified Practicing Internal Auditor Exam. This exam will give you a good understanding of what your certification entails and will help you understand what type of questions are on the actual exam.


The Certified Practicing Internal Audit Examination requires that you answer ten or more questions about the specific area that you are studying. The exam will also measure your ability to answer questions and to create a plan of action.


The final exam to take will be the Certified Practicing Internal Auditor Practice Test. This exam is designed to give you a basic understanding of the process and what is involved with becoming a Certified Internal Auditor. You will be asked questions to test your ability to understand the types of questions that will be asked on the actual exam and to identify areas that you need to improve on.


Career & Salary


  1. Where Might You Work?


You can expect to be able to find work within a for-profit organization, a non-profit organization, or even a government agency. Each of these types of organizations have accounting and internal audit departments to examine their finances and ensure that they are working within the existing state and federal laws and regulations.


You are obligated to work within a specified Code of Ethics, which holds accountants to a high standard. However, an internal auditor’s average salary is around $59,000 in the US. Their average early-career salary for a CIA is $57,700 and their average late-career salary $66,900. However, this depends on your location and the company you work for. There are senior internal auditors who earn as much as $113,000.


  1. Career Outlook


The employment of auditors (including internal) is expected to grow about 6%, which is about average for every occupation. This growth is projected to take place between 2018 and 2028, though you should be aware that, after the Lehman Brothers implosion, internal auditors are held to a much higher standard as they monitor the financial transactions of large and small businesses.


The growth of employment for auditors tracks closely to the strength of the economy; in a growing economy, internal auditors are needed to keep an eye on all financial transactions. And, as companies go public, internal auditors are necessary so they can review the financial documentation required by the federal government.


As businesses continue expanding throughout the globe, they will need expert internal auditors who will be able to view all documents that relate to all international transactions: mergers, trade, and acquisitions.


Technology has also had a large impact on the roles of internal auditors. As companies move more and more of their documentation into the cloud, internal auditors will need to become familiar with technology. However, tasks such as analyzing financial transactions and the advice they give will not be affected by increasing technology. Internal auditors who have earned their certifications and a master’s degree, such as an MBA, will be even more in demand as the complexity of global business increases.


  1. Jobs


As you begin your job search, you may want to focus on corporations. From your early-career and into your mid-career, you’ll be able to find open positions by scanning online websites and job boards. If you are actively seeking an internal auditor’s position, keep these key phrases in mind:


  • Operations

  • Corporate Governance

  • Internal Control

  • Fraud Detection/Prevention

  • Risk Management


Each one of the above descriptors is vital to internal auditing. You may work for a publicly traded company, government agency, or even a non-profit organization that has a board of directors. Every publicly traded company is required to conduct periodic internal audits. The Securities and Exchange Commission (SEC) oversees compliance with this requirement. Even the New York Stock Exchange has weighed in on this, posting in their Listed Company Manual that companies selling shares to the public are required to carry out regular audits. These include an assessment of their internal controls.