Certified Internal Auditor

Key Takeaways

• CIAs conduct internal audits and are certified by the Institute of Internal Auditors (IIA).
• The CIA designation is globally recognized, unlike the more U.S.-focused CPA credential.
• CIAs typically work in audit departments of government, financial institutions, and corporations.
• The role of CIAs is crucial for maintaining ethical standards and enhanced internal controls.
• The demand for CIAs is increasing due to evolving legislation and company accountability needs.

What Is a Certified Internal Auditor (CIA)?

Certified Internal Auditor (CIA) is an internationally recognized certification for accountants who conduct internal audits. The CIA designation is awarded by the Institute of Internal Auditors (IIA). To become a CIA, accountants need a bachelor's degree and relevant work experience. Certified internal auditors must adhere to a strict code of ethics and maintain high standards for internal accounting.

The Foreign Corrupt Practices Act heightened the need for internal controls. The demand for CIAs is growing due to changes in financial regulations and reporting.

Key Differences Between CIA and CPA Designations

Certified public accountants (CPAs) are also trained in auditing and can perform many of the same functions as a CIA; however, the professional with a CIA designation will have a more micro-focused skill set.

One important difference is that the CPA credential is often recognized only within the United States, whereas the CIA is an internationally recognized designation. While CPAs can be employed directly by a company in an auditor role, it is far more common for them to come into a company from the outside (external) to perform auditing functions. CIAs are thus more likely to be employed directly by a company. Although it is not very common, an accountant can pursue and hold both a CPA and a CIA designation.

Internal auditors are typically subject to a code of ethics. An example of internal auditors not adhering to that code is the Lehman Brothers scandal in 2008. Executives received high salaries despite the financial challenges the company experienced.1 In addition, inadequate internal controls allowed the accounting system to be manipulated by the reporting of fabricated numbers in the balance sheets.2 The actions were illegal, unethical, biased, unprofessional, and violated the CIA code of ethics.

Steps to Becoming a Certified Internal Auditor (CIA)

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1. Obtain a bachelor's degree in a related field.2. Accumulate at least two years of relevant work experience in internal auditing.3. Secure a character reference and proof of identification.4. Pass the required exams administered by the Institute of Internal Auditors (IIA).5. Meet continuing education requirements of 40 hours per year to maintain certification.

Accountants seeking the CIA certification are required to get a bachelor’s degree and have no less than two years of work experience in a field related to internal auditing, such as internal control, compliance, and quality assurance. Other requirements include a character reference and proof of identification.3 If you become a CIA, you will also have to meet continuing education (CE) requirements of 40 hours per year to maintain certification.4

Certified auditors have a wide range of career options. A CIA can move into an executive position, such as vice president, chief audit executive, or director. A CIA can specialize as an internal auditor, an audit manager, a compliance auditor, or in investigation auditing and information technology auditing. CPAs tend to earn slightly higher salaries than CIAs, but it will depend on the individual CIA’s job title and role.

Evolution and Regulatory Role of Internal Auditors

The IIA launched in 1941 and solidified the internal audit practice as a profession. In 1950, Congress required that each executive agency include internal audits in the agency's system of internal controls.5 Internal auditing emerged as a separate accounting function in the middle of the 20th century.6

In 1977, the Foreign Corrupt Practices Act completely overhauled the internal auditing industry. The act prevented companies from hiding funds and conducting bribery. The act required companies to keep adequate systems of internal control and keep complete and correct financial records, increasing the demand for internal auditors.7

The first CIA exam was conducted in 1974, and as of the end of 2021, there are over 178,000 CIAs.8

Future Demand and Opportunities for CIAs

The hiring of auditors is projected to increase. Due to changes in legislation regarding financial reporting, corporate taxes, and mergers and acquisitions, an increase in the demand for auditors and a need for increased accountability to protect organizations and their stakeholders is certain. The role of auditors continues to change, which is going to drive job growth in the industry. In addition, succession planning, retirement, and employee turnover will produce new job openings in the industry.9

Companies and government agencies will continue to hire internal auditors to strengthen internal controls. Because accounting scandals and financial improprieties are still a real problem that investors and analysts must be made aware of, CIAs' roles will remain important for the foreseeable future.