Looking inward to find career potential

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Internal audit is thriving and can be an attractive career pathway for AAT members.

Words Santhie Goundar 

The audit profession has come under scrutiny due to episodes like the collapse of Carillion and the record £14m fine handed to KPMG. But internal audit is a vastly different world. Not only is it in better shape, it offers attractive carer pathways for AAT members.

The role of internal audit

Internal audit has “a broader scope” than external audit, explains Fehzan Mehdi FMAAT, internal audit manager at a large retailer. “In an external audit, your main focus is on ensuring the financial statements are free from material misstatement,” he says. “Internal audit, however, will cover areas of risk outside of finance – for example, reviewing health and safety procedures, which may not have an impact on the financial statements, but carry legal or reputational risk.” 

The stakeholders, too, are different: “In an external audit, your key stakeholders and responsibilities are to the shareholders or members of that organisation. You’ll typically perform an annual audit and leave management with any recommendations – whereas in internal audit, your reporting line is to the board or audit committee, and you’ll work more closely with management,” Mehdi says. 

The aim of the internal audit function, according to Allnex senior internal auditor Rebecca Pope FMAAT, is “to objectively evaluate a company’s risk management, governance and internal controls”. She adds that the work is “heavily based on a company’s internal control systems rather than the statutory accounts”.  

Pope believes an internal auditor’s work “should be conducted with a business partnering mindset, rather than a ‘policing’ mindset”. It’s important, she says, that internal auditors “build trust with auditees in order to improve business practices”. 

Paul Reynolds FMAAT, founder of Fair Account, a small firm providing internal audits for councils, agrees. In the local government sector his firm operates in – from small parish and town councils up to large-sized county councils across South and Southwest England – his work is vital, with public money at stake. “The internal auditor is not there to ‘catch an organisation out’ – you’re there to help improve its processes  so they can do a better job, and save money by streamlining certain things.” 

“Internal audit will cover areas of risk outside of finance – for example, reviewing health and safety procedures.”- Fehzan Mehdi FMAAT 

Providing a ‘professional safeguard’ to firms 

Internal audit “provides independent assurance that risk, governance, and controls are being managed effectively”, Fehzan Mehdi FMAAT, internal audit manager at a major retailer, says.  

“Typically, internal audit reports to the board or audit committee, which ensures that the internal audit function remains unbiased and free from management pressure.” An internal audit role can cover a range of areas, typically involving periodic reviews on controls and risk management, but “it’s also very likely you’ll be working on ad hoc projects outside of finance as directed by the board or audit committee,” Mehdi says.  

“As a result of this, internal auditors must have a wide range of skills, qualifications, and experience to draw on.” 

The role “acts as a professional safeguard”, Lindenmeyer International finance executive Andy Murray MAAT says, partnering with various departments “to ensure internal controls work, but also that they are fit for purpose – internal audit can test these internal processes and procedures, and provide feedback on any inefficiencies and any improvements that are required”. 

The internal controls of an organisation, he explains, should assist the business with risk mitigation, regulatory compliance and governance: “Internal audit also has a role to play in helping services to ensure operational effectiveness in emerging issues.” 

You can learn “so much more about a business than purely finance and accounting,” says Rebecca Pope FMAAT, senior internal auditor at Allnex. “It creates further opportunities to work with so many more people within the business – outside of finance – to really add value, especially partnering other functions.” 

‘Lucrative’ career opportunities in internal audit for AAT members 

“There are many lucrative opportunities” for AAT members interested in moving into internal audit, explains Paul Reynolds FMAAT, founder of Fair Account, which audits local councils in the south of England. “The newly-brought-in AATQB for qualified bookkeepers would be able to take on a council’s responsible financial officer role and work their way up, but MAAT or FMAAT licence-holders would be able to carry out and sign off the internal audit,” he adds. “There are a number of AAT people now working for local authorities – a lot used to work just for the big councils, but I’m finding now that when I pick up some new parish and town councils, fellow AAT members are working in those too. It’s encouraging – but there certainly could be more.”  

For some industries, internal audit manager Fehzan Mehdi recommends taking additional qualifications on top of MAAT: “In a lot of instances, experienced internal auditors will be chartered accountants, or members of the Chartered Institute of Internal Auditors (IIA), so for those interested in internal audit, I would recommend choosing the External Auditing module at AAT Level 4, as this will give you an introduction to risk and controls,” he says. Although internal audit has a large scope, Mehdi says “teams tend to be fairly small”, which can sometimes mean fewer opportunities than occur in external audit. 

“A common entry route is at the internal auditor level suitable for newly-qualified chartered accountants,” Mehdi adds. Senior internal auditor Rebecca Pope confirms: “I found that the External Auditing exam option (AAT) plus the Advanced Audit and Assurance exam option (ACCA), despite being more external audit-focused, helped me gain a good understanding of the principles of audit, which I was able to utilise when I moved into an internal audit role.”  

Finance executive Andy Murray MAAT says moving into internal audit can open AAT members up to the wider business world: “While it is rooted in financial thinking, the methodology can be applied to any business function,” he notes.   

“MAAT or FMAAT licence-holders would be able to carry out and sign off internal audits.”- Paul Reynolds FMAAT 

AAT requirements 

An organisation may carry out an internal audit to assess the effectiveness of management, financial controls and governance processes with a view to improvement. The person(s) who undertakes the internal audit may be: 

  • an employee of the organisation (larger organisations may have an internal audit department); or 
  • a suitably qualified external accountant engaged on a consultancy basis. 

AAT Licensed Accountants must use the whole phrase ‘internal audit’ and must not drop the word ‘internal’ in order to suggest they are qualified to undertake ‘audits’, as this can be construed as misrepresentation. 

David Nunn is a former Content Manager at AAT.

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