Recommendations For Higher Payment For Internal Auditors Essay


Discuss about the Recommendations for Higher Payment for Auditors.



Organizations rely on auditing for smooth running. The auditing procedure involves employment of both external and internal auditors. These auditors have specific tasks to carry pertaining the organization. The internal auditors are responsible for a number of tasks such as implementation of controls regarding development policies and internal financial reviews. On the other hand, external auditors are responsible for the validation of companies’ financial statement, and connecting the organization with foreign stake holders and investors (Arena, 2009). Compensation extended to auditors, both external and internal is mandatory and should be constantly reviewed for efficiency purposes.

Higher payment for internal auditors.

With respect to each auditor’s functions, need to vary their payments arise. Being a member of the organization's committee, I would recommend higher payment for the internal auditor. This is concerning the research that internal auditors play a much significant role than the external auditors (Ashbaugh-Skaife, 2007). Drawing illustrations from the functions performed by the internal auditors, it is clear that evaluating and monitoring the audit planning and giving a computerized control system, is a heavy and lengthy task.

It requires a highly skill measure in ICT and planning. Comparing with the external auditing, it gives a clear recommendation for higher pay to the internal auditor. This is manifested by the fact that external auditors work on giving assurance of a financial statement from the internal auditors, hence giving a summary of the financial analysis to the outsiders. Referring from internal auditors functions, they engage in giving the management of organization improvement strategies on their operations with an intention to attain steady flow of money as a value to the organization To give these strategies, they engage in detailed research about these improvements and also engage physically in implementing them( Cohen, 2007). Comparing this activity with the external auditor’s function, of testing the given data to give an assurance, It shows that internal auditors are the key determinants of the final display of financial prowess of an organization thereby being recommended for higher pay.

Internal auditors provide consultation services to the management regarding internal and government risk associated with the companies function (Getie Mihret, 2007). For example, they advise the organization not to engage in highly taxed activities by the government and also reduce government experts’ consultations which result to their intervention in organizations. Internal auditors also identify and recommend on the internal risks that are likely to happen in the organization. (Liu, 2012).

By following their orders, the organizations can evade financial losses regarding this emergency risks. Comparing this function with that of external auditors about the organization's environment, the research shows that external auditors do not provide ideas regarding the organization's operations rather they specialize in assessing the external client's environment( Goodwin?Stewart, 2006). By observing this, it is evident that the survival of the organization in the legal compliance genre is highly dependent on internal auditors. In addition to this, the remedy to the challenge of the risk associated with the organization's financial operations is found to be their function too. There by recommending higher pay for internal auditors.

Internal auditors provide analysis and regular reports to the auditing committee and its management concerning their operations and monetary terms. These reports are an added aid to the organization and contain relevant advice concerning controls and implementation of the stipulated analysis. It is found to be an extra function since the internal auditors are specifically entailed to give monetary analysis. Referring to external auditing, they are found to specialize on external environment validating organizations financial statements. When a misleading financial statement is found, they engage third party sources such as bank and lenders to intervene and suit the client’s information. Comparing this two functions, I would recommend higher pay for the internal auditors since they perform multiple roles when compared to external auditors (Gramling, 2006).

For every success in business, there are bonus benefits which are celebrated. Research shows that these bonuses are as a result of strategies implemented by the internal auditors being the t primary consultants. In addition to this, the internal auditors form the managerial team in realizing the set goals of an organization, while the external auditors don't engage in joint ventures with the organization. They only specialize in external affairs concerning the organization. This gives a recommendation for higher payment of the internal audit (Hanim Fadzil, 2005).

Internal auditors also engage in administrative activities. That is appointing new finance officers, setting a standard for office layouts and promoting the existing ones. This activity calls for a greater sacrifice for the internal auditors in that they multitask in the organization making sure that all procedures put in place are working according to the standard manner. When compared with the external auditors it can be seen that their engagement on organizations daily operations is higher (Hao, 2013). External auditors work in ensuring accounting information is in order and valid they hardly engage in daily operations of the organizations. I would, therefore, recommend higher pay to the internal auditors for the extra work they perform regardless of their specialization.

When it comes to the question of internal staff health insurance, the internal auditors are factored in making sure that these health facilities are abundant to all staffs. This involves creating interfaces with external health insurance companies thereby creating another extra task to the internal auditors.

They are highly faced with a lot of ambush from side to side needs of the running of the organization. For example, an annual financial report may be required the same time with the permit documents regarding purchase and delivery for goods. This calls for the auditing team to sacrifice for more time and even higher specialized workforce to meet all these demands. When we reflect on the work of external auditors towards this, they are only interested in verifying the credibility of this documents and preparing a financial statement (Sarens, 2006). Following the great amount of work imposed on internal auditors, I recommend higher payments for them.


Maintaining the interaction between the internal staffs the secretariat and the external auditors is the work imposed on internal auditors. They do this by preparing circulars and letters to this parties notifying them on progress and adjustments made. This creates accountability in the organization and enhances coordination between internal and external auditor since this is an extra task mandated to the internal auditors I recommend higher payments to them. The work of internal auditors outweighs that of external auditors and hence supporting a recommendation for higher pay. The auditing practice needs to be upheld to maintain efficiency, hence increase accuracy in organization financial statements.


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Ashbaugh-Skaife, H. C. (2007). The discovery and reporting of internal control deficiencies prior to SOX-mandated audits. Journal of Accounting and Economics, 44(1), 166-192.

Cohen, J. G. (2007). Auditor communications with the audit committee and the board of directors: Policy recommendations and opportunities for future research. Accounting Horizons, 21(2), 165-187.

Getie Mihret, D. &. (2007). Internal audit effectiveness: an Ethiopian public sector case study. Managerial Auditing Journal, 22(5), 470-484.

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Gramling, A. A. (2006). Internal auditing's role in ERM: as organizations lay their enterprise risk groundwork, many auditors are taking on management's oversight responsibilities, new research finds. finds. Internal Auditor, 63(2), 52-58.

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Hao, Z. L. (2013). The Research on the Improvement of Internal Control Quality Through the Enterprise Informatization. International Conference on the Modern Development of Humanities and Social Science, 67-453:67.

Liu, J. (2012). The enterprise risk management and the risk oriented internal audit. iBusiness, 4(03), 287.

Sarens, G. &. (2006). Internal auditors' perception about their role in risk management: A comparison between US and Belgian companies. Managerial Auditing Journal, 21(1), 63-80.

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