Auditor

Auditor Meanings

When someone is an auditor, he is doing it professionally on the one hand and holding a public office on the other. As the term auditor suggests, one of the tasks is the auditing. An auditor controls the proper accounting of companies and checks the annual financial statements, the consolidated financial statements and the management report in accordance with the relevant regulations.

The story of the accountant

The auditor as a profession has existed since the end of December 1931. It came into being with the first implementing ordinance for the “Ordinance of the Reich President on stock corporation law, banking supervision and tax amnesty”. An auditor had to be publicly appointed on the one hand and registered in audit firms on the other. In 1931, twelve examination and licensing offices for auditors were created. From the beginning of 1932, around 280 auditors were appointed in the Federal Republic and 32 auditing firms were known.

What is an audit?

There are two different definitions of terms for auditing. On the one hand, this includes all activities of an auditor, which are thus referred to as “auditing”. In purely functional terms, auditing is an audit activity in which an auditor in the company carries out audits and audits. An external auditor who is not employed by the company to be audited is commissioned to carry out the audit.

Such a check can only be carried out by impartial third parties due to a possible conflict of interest. In addition, certain knowledge is required in order to carry out the tests carefully and legally correct. This includes the extensive specialist knowledge that the auditors have acquired.

The basic length of the auditing is based on laws and ordinances as well as various standards that the appointed auditor must then observe in his work. For this he is commissioned by the company with a work contract.

The company can commission the auditor to carry out all kinds of tests that do not necessarily have a legal background. But there are also the legally required audits that have to be carried out regularly (annual financial statements, custody account audits or mandatory cooperative audits) as well as legally necessary special audits.

These take place irregularly and are, for example, necessary under the Stock Corporation Act for the formation audit or other special audits under stock corporation law, capital increases or undervaluations. In addition, there is an audit of the annual financial statements if a stock corporation is to be dissolved. Likewise when society transforms (merges or divides). It is also necessary to check the final balance sheet of the transferring company in accordance with the Transformation Act.

What does an auditor do?

The auditor’s primary task is to audit. He conducts business audits, whereby the reservation task is very important. This is a statutory audit of management reports and annual financial statements and the group management report and consolidated financial statements. In addition, confirmation features relating to the performance and the results of these tests must be failed or issued. This also includes audits that relate to consolidated and annual financial statements. Auditors also carry out other mandatory audits, such as special audits in accordance with the German Stock Corporation Act.

Because of their special qualifications, the auditor also receives other business examinations at regular intervals, for example embezzlement examinations. He carries out various activities.

Areas of activity

Appraiser & expert

Working as an expert or appraiser in all areas of economic management is also part of the job description of auditors. In addition, the company valuation is part of it.

Company valuation

The company valuation is particularly common because a company has to be valued before a planned purchase or sale, but also when important financing decisions are pending. In addition, the value of a company is important in litigation or other disputes. It is also the basis for all kinds of corporate transformations.

Legal advice

The auditor is also authorized to provide legal advice. However, he does not have the same powers as a lawyer. He may only provide legal advice in matters with which he is also professionally involved and which are directly related to his activity and tasks. In other words, in the areas of law that he must master in order to be able to carry out his work correctly.

Tax advice

The auditor provides unlimited help in tax matters. He is also allowed to represent his clients in court and before the tax authorities.

Business consulting

As already mentioned, the auditor also advises on economic and corporate matters. This includes, for example, support with mergers or takeovers of companies. The auditor checks the financial statements of the companies involved and evaluates them. In this way he can also support the price negotiations. The business consultants also advise companies in other areas such as strategy, organization and implementation. If you have specialist knowledge, also in the area of ​​EDP / IT.

Examination activity

This is the main task of the auditor. He mainly audits the financial statements of public companies and very large corporations. The test is always mandatory for companies if it meets two of the three following criteria:

  • More than € 4,840,000 total assets
  • Over € 9,680,000 annual turnover
  • More than 50 employees

The first audit may also be carried out by a sworn auditor (up to a balance sheet total of € 19.25 million or an annual turnover of € 38.5 million).

The audit obligations include the annually recurring final audits as well as various special audits: due diligence , custody account, formation, creditworthiness, embezzlement, merger, impairment and profitability audits.

Fiduciary administration

An auditor may also take on asset and bankruptcy or settlement administration for his clients on the basis of his swearing in. In addition, there is the emergency management as well as the administration of the estate and the execution of wills.

Overall judgment

If the auditor has carried out a proper audit, he finally confirms with the so-called auditor’s report that the annual financial statements and the bookkeeping comply with all legal requirements. This auditor’s report is the final overall assessment.

Advising clients

Due to his wide range of knowledge, the auditor can also advise his clients on all matters that he is allowed to audit. In addition, thanks to his previous training, he can also support his clients in special areas of corporate management, but also with legal advice and even represent them in court.

The professional duties of an auditor

Since an auditor has a special responsibility, he has to fulfill some professional duties, for example:

  • professional behavior
  • individual responsibility
  • conscientiousness
  • independence
  • impartiality
  • impartiality
  • secrecy

Difference between tax advisors and auditors

Both have a very similar background and mostly have a business or economics degree behind them – of course with the main content of taxation and tax law. But their areas of activity differ significantly from each other.

The tax advisor has the same tax competencies as the auditor, but is not allowed to take on the economic audit functions. Thus, the tax advisor takes care of the advice on all tax matters and participates in the preparation of the tax returns.

The auditor may of course also do this, but he has other, higher-value tasks. He is allowed to check annual financial statements, write reports or act as an expert. The auditor is one step above the tax advisor on the career ladder. And so it can also happen that a tax advisor later increases and develops into an auditor.

Becoming an auditor – these are the requirements

Those who want to be admitted to the position of auditor need a corresponding state examination. Admission is granted to anyone who has completed a university degree or has worked for years and has worked for an auditing company or similar for at least three years, whereby they must have worked for at least two years, primarily in the field of final examinations. There are other requirements, which are personal:

  • Property liability insurance
  • The right to serve in public office
  • Orderly financial circumstances
  • Behavior in conformity with professional obligations
  • health aptitude

The approval procedure is carried out nationwide by the Chamber of Public Accountants. If the degree is successful, the candidate can be appointed as an auditor. There are four main pillars of content that appear in the auditing exam:

  • Company valuation, economic auditing and professional law
  • Economics and applied business administration
  • Commercial law
  • Tax law

It becomes clear how extensive the knowledge must be before the exam. An examination always consists of a written and an oral part; there are two examination dates per year.

Which degree should a prospective auditor have completed?

There is no field of study that is compulsory to become a certified public accountant. However, a business degree is of course a good option. This is because the job of auditor requires a broad knowledge of business administration; This is underlined by the fact that 84% of all auditors have chosen this field of study for themselves. However, there are also auditors from other fields: around 6% have a law exam and around 5% have a degree in economics.

Contents of the course

Since there is no special course of study, it is recommended to focus on additional topics that at least go in this direction. Apart from law, business administration or economics, an auditor needs, of course, in the best case scenario, a degree in economics. The following courses are helpful:

  • Corporate taxation
  • Tax law
  • Auditing
  • Accounting, tax and business law
  • Tax administration
  • Tax law
  • Law, Financial Management and Taxes

Apart from the well-chosen course content, the right university (university or technical college) also plays a role. Many offer a master’s course according to § 8a WPO, courses according to § 8 WPO or § 13 WPO are also possible .

The courses of study according to § 8 and § 8a WPO differ in the process through the different integration of practical experience or practical activity. The training according to § 8 WPO then ends with the auditing examination, which according to § 8a WPO contains a shortened exam. However, this must be followed by at least 2 ½ years of practical experience before you can be appointed as a WP by the Wirtschaftsprüfungskammer.

When studying according to § 13b WPO, the individual examinations for the exam are already recognized. This is also shortened and then leads to the order as a WP.

By the way, § 13 WPO provides for a shortened examination for tax consultants and § 13 a WPO a shortened examination for sworn auditors.

What professional and personal skills should an applicant have?

The classic approach, as just mentioned, is after studying business administration, with the focus on auditing and accounting . But graduates specializing in law, taxation or controlling also have a good chance of a successful start; Many do not know that specializing in very specific industries such as insurance or banking opens up very interesting career opportunities. In addition, insurance or business mathematicians as well as computer scientists are welcome.

Anyone who would like to become an auditor definitely needs a willingness to learn. Analytical thinking, a good understanding of numbers, communication skills, independent work and mobility are also important. A sense of responsibility, the ability to work in a team and good language skills should also be part of an applicant for the profession of auditor.

The future prospects as an auditor

The auditor is a profession that has a bright future with great certainty. Anyone who takes up the profession can look forward to a wide range of applications, which on the one hand includes the examination of consolidated financial statements and annual financial statements and a number of other tests. It also includes advisory, expert and fiduciary work. As an auditor, you are just as much in demand from the public sector as from medium-sized family businesses or listed companies. It doesn’t matter which industry it is.

The career and development opportunities in auditing are ideal for performance-minded individuals.

How many auditors are there in Germany?

The Chamber of Public Accountants has over 21,000 members nationwide. It regularly publishes statistics on its members, including qualifications, age structure and previous education. The statistics were last put online as a pdf in July 2019 . According to this, there are currently 2,995 auditing firms and 14,739 auditors in Germany.

Where do you work as an auditor?

The following employers are looking for auditors:

  • Accounting firm
  • Chamber of Auditors
  • cooperative auditing associations
  • Tax consultancy
  • from the audit offices of the savings and giro associations

Here, above all, they carry out the statutory and voluntary company audits, act as corporate consultants in the area of ​​financial strategy, act as tax advisors, appraisers and trustee administrators.

There are definitely opportunities for advancement, because in the large auditing companies you can move up from auditing assistant to senior to manager and then to partner.

What do you earn as an auditor?

Your salary depends on various factors, such as the size of your employer, but also your location and of course your work experience. As a young professional, you can expect an average starting salary of around 3,300 – 4,500 euros gross. As an auditing assistant, around 3,000 – 3,250 euros are possible.

However, there are no fixed salaries that you can almost certainly count on. It depends on too many factors. What is certain, however, is that the salary increases with increasing experience and responsibility. There are also bonus payments. This means that an annual income in the six-figure range is quite possible.

Where are auditing firms based?

In fact, many accounting firms have offices in more exotic locations like the Caribbean. Cyprus is a very popular location within the EU. The four major auditing firms, which are based in Cyprus, have around 2,500 employees.

Are Accountants More Powerful Than Tax Officials?

Tax offices determine how taxes are levied. You have difficulties to come up against the powerful auditors, because while some positions in offices have been cut in recent years, the number of tax advisors has increased significantly. There are also more and more tax lawyers.

Conclusion: The path to becoming an auditor is long, but it can be worthwhile

Anyone who would like to become an auditor must meet a number of requirements. These relate on the one hand to the previous professional career and on the other hand to the personality of potential applicants. The road to the exam is long, and the exam itself is difficult. However, if you have made it, you can look forward to many opportunities for further development. Last but not least, a very attractive salary is effective. The knowledge of auditors is enormous. To be able to count yourself among them is a great privilege. There are few jobs in which such extensive knowledge has to be available. It was correspondingly extensive to explain the many tasks, rights and obligations of the auditors. This text is there to provide a little insight and to bring a little light into the darkness.

Auditor