auditor

noun
au·​di·​tor | \ˈȯ-də-tər \

Definition of auditor 

1 : a person authorized to examine and verify accounts

2 : one who hears or listens especially : one who is a member of an audience

3 : a person who audits a course of study

4 : a person who hears something (such as a court case) in the capacity of judge

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Did You Know?

The auditing of a company's financial records by independent examiners on a regular basis is necessary to prevent "cooking the books", and thus to keep the company honest. We don't normally think of auditors as listening, since looking at and adding up numbers is their basic line of work, but auditors do have to listen to people's explanations, and perhaps that's the historical link. Hearing is more obviously part of another meaning of audit, the kind that college students do when they sit in on a class without taking exams or receiving an official grade.

Examples of auditor in a Sentence

Recent Examples on the Web

His campaign for state auditor emphasized cultural issues. Janet Hook, WSJ, "What the Midterm Election Shows: America’s Two Parties Live In Divergent Worlds," 7 Nov. 2018 Even though Trump won Montana by 20 percentage points in 2016, Tester managed to defeat his Republican opponent, state auditor Matt Rosendale. Andrew Prokop, Vox, "Jon Tester reelected to US Senate, holding on to Montana seat for Democrats," 7 Nov. 2018 In 2016, Missouri state auditor Nicole Galloway began examining the finances of several rural hospitals in her state. CBS News, "Auditor "shocked" by massive billing schemes at rural hospitals," 16 May 2018 There is an independent report that was published today, actually, from AV-Test, which is a German security auditor. Eric Johnson, Recode, "Nobody trusts Facebook anymore. Here’s one way it could change that.," 15 Oct. 2018 Meanwhile, a series of SEC filings has shown that the company is posting huge quarterly losses, leading to auditors suggesting its model is financially unsustainable. Tasha Robinson, The Verge, "The new MoviePass plan has arrived, and it’s weird," 16 Aug. 2018 Crowe Horwath LLP, which acted as Colonial’s internal auditor and which last month changed its name to Crowe LLP, settled FDIC claims in April for $60 million. Michael Rapoport, WSJ, "Judge Rules PricewaterhouseCoopers Must Pay $625.3 Million in Damages," 3 July 2018 At Waste Management, Huizenga’s duties included selecting auditors and interviewing attorneys. Bob Goldsborough, chicagotribune.com, "Peter H. Huizenga, Waste Management executive and philanthropist, dies at 79," 13 May 2018 For example, in 2015, Morningstar found that 37 percent of doctors, 33 percent of lawyers and 63 percent of accountants and auditors were women. Jeff Sommer, New York Times, "Who Runs Mutual Funds? Very Few Women," 4 May 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'auditor.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of auditor

14th century, in the meaning defined at sense 1

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Last Updated

7 Dec 2018

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The first known use of auditor was in the 14th century

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More Definitions for auditor

auditor

noun

Financial Definition of auditor

What It Is

In the accounting world, an auditor is a professional who examines and verifies a company's financial statements and records and in the United States examines a company's compliance with Generally Accepted Accounting Principles (GAAP). In conversation, when people refer to "the auditor," they are sometimes referring to the entire accounting firm for which an individual auditor works (rather than to the single person tasked with doing the audit).

How It Works

Accounting professionals, usually Certified Public Accountants (CPAs), can be auditors. They must be independent, unbiased and qualified to provide an auditor's report (also called an opinion).

Auditors are responsible for four things:

Defining the terms of the engagement between the auditor and the client
Planning the scope and conduct of the audit
Compiling the audited information
Reporting the results of the audit

Quite often the company's audit committee (primarily composed of board members) selects the auditor and reviews the auditor's work.

One of the auditor's primary goals is to find and correct any material misstatements, which are statements that are wrong, missing or incomplete whether made deliberately or accidentally. This is why auditors must be able to drill down to the source of each piece of data (this is called the audit trail). To compile the information necessary to do this, an auditor does many things. For example, the auditor tests the transactions and account balances that make up the financial statements as well as the design and operation of the systems that generated those statements.

Auditors also employ sampling techniques, whereby they evaluate less than 100% of the items within an account or class of transactions as a way to understand the nature of the entire account or class of transactions. For example, an auditor usually will not check every expense report in a large company to make sure each has receipts attached; rather, the auditor will pull a random sample of the reports, examine those and draw conclusions about the quality of the information and controls related to expense reports. Auditors also analyze significant trends or ratios and question changes or variances from predicted amounts. Further, they investigate the reasonableness of management's accounting estimates of uncertain events or events that are likely to occur (such as the outcome of litigation).

Auditors perform their audit procedures in accordance with the International Auditing and Assurance Standards Board (IAASB), which is a committee of the International Federation of Accountants (IFAC). The IAASB develops standards and guidance that are considered best practices for auditors. The IFAC also sets ethical and independence standards for auditors and in particular emphasizes that auditors should be, and be seen to be, free from any influence that might jeopardize their independence. The Securities and Exchange Commission (SEC) and other regulatory bodies determine which types of entities are subject to audit as well as the kind of information on which the auditor should report. Further, the Public Company Accounting Oversight Board (PCAOB), which was created through the Sarbanes-Oxley Act of 2002, oversees auditors to make sure they prepare "informative, fair, and independent audit reports." The PCAOB regularly inspects public accounting firms for compliance with the Sarbanes-Oxley Act, PCAOB rules, SEC rules and other professional audit standards. The PCAOB also disciplines accounting firms found to be in violation of these rules.

When the audit is complete, the auditor publishes the audit findings in the auditor's report, which prefaces the financial statements in the company's public reports and filings. This report is usually the only public document available about the audit process, but the auditor often issues private reports to the company's management or audit committee as well as to regulatory authorities. The auditor keeps extensive written records, called working papers, which provide the basis and support for each of its opinions.

When an auditor feels that a company's financial statements are fair and accurate, the auditor issues an unqualified opinion and does so using a standard reporting template (this is why many opinions read the same way). An audit report also includes a statement that the audit was conducted in accordance with GAAP. When the auditor cannot give an unqualified opinion, it issues a qualified opinion, which lists the reasons for the auditor's concern about the company's financial statements and controls and the possible effects on the financial statements. The auditor is not responsible for auditing transactions that occur after the date of the audit report.

Why It Matters

The auditor's job is to form an opinion of the trueness and fairness of a company's financial statements. This is done for the sake of the shareholders, regulatory authorities, lenders and other people with an interest in the health of the company.

There is always a chance that an auditor gives an unqualified opinion when in fact the financial statements are materially misstated. This is called audit risk, and the auditor must use his or her judgment about how much is acceptable and what errors are material enough to warrant the restatement of the financials. In these situations, the definition of the word material becomes especially important, because shareholders, lenders and other interested parties make crucial decisions based on the quality of the information in a company's financial statements.

It is very important to understand that auditors are not responsible for detecting all instances of fraud or financial misrepresentation. This is the responsibility of the management of the company. However, the auditor should conduct the audit in a manner that would reasonably detect at least some material misstatements caused by fraud or error. In those cases, the auditor should probe the issue and pursue the audit trail for questionable transactions. To mitigate these errors and problems, companies often have employees (internal auditors) who perform ongoing audit functions. These internal auditors review not only the company's financial statements but also the company's control practices and other critical operations and systems. Internal auditors are often, but not always, accountants.

Source: Investing Answers

auditor

noun

English Language Learners Definition of auditor

: a person who checks the financial records of a company or person to make sure they are accurate : a person who audits accounts

auditor

noun
au·​di·​tor | \ˈȯ-də-tər \

Kids Definition of auditor

: a person who checks the accuracy of business accounts

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auditor

noun
au·​di·​tor | \ˈȯ-də-tər \

Legal Definition of auditor 

1 : a person qualified and authorized to examine and verify financial records

2 : a referee appointed by a court in a civil action especially : one designated to prepare an account for the court — see also master

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More from Merriam-Webster on auditor

Spanish Central: Translation of auditor

Nglish: Translation of auditor for Spanish Speakers

Britannica English: Translation of auditor for Arabic Speakers

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