How do internal and external auditors differ?
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Difference Between Internal Audit vs External AuditAn audit is the process of independent examination and evaluation of the various books of accounts or financial statements or reports of an organization or individual to make sure that they are accurate and in the manner as per applicable laws and regulations. The Financial Report includes the balance sheet, income statement, cash flow statement, etc. The purpose of an audit is to review the information presented in a financial report is actually matching with the financial position of an organization at a given date or not. The auditor reviews the financial report of the organization, as per the auditing standard set by the government body. In the tax, world audit is referred to the review of a taxpayer’s tax return for accuracy. Auditors predict the future of an organization by analyzing the past accounting period. An auditor does not judge what will happen in the future they can predict and provide suggestions to the organization. The main purpose of an audit is to form an opinion on the information in a financial report. An Auditor should comply with codes of ethics and should conduct an audit by the international standard on auditing or laws and regulation set up by the government body. Some of the important auditing principles as listed below in the diagram. General Audit is divided into two types based on an object –
Let discuss these two types in detail. Internal AuditInternal Audit examines the effectiveness of an organization’s internal controls, and it is the accounting process. Internal auditors work for the organization as an internal employee. An objective of the internal auditor is to add value and improve organization operations and making sure that an organization complies with laws and regulations set by the government body. Generally, internal auditors collect all required information on how the organization is operating and use that information to show where it is doing well and where it can improve. The purpose of an internal audit is to evaluating organization performance periodically and identifying the loopholes to improve in the future, which keeps the company big or small. Planned internal audits are important for organizations in a wide range of industries. Responsibility of Internal Auditor
External AuditThe external audit is an independent evolution of the financial statements prepared by an organization. The external audit is performed by an outside organization an independent person. An external audit provides both business and government with a valuable check of organization accounting. In an external audit, a conflict of interest is less likely to happen as compared to an internal audit. External auditor plays a critical role in validating organization finances. The purpose of an external audit is to review the company accounts to show that they are accurate and complete. Sometimes the organization hires an external auditor for investigating fraud. Responsibilities of External Auditor
The below diagram shows the general audit procedure which the auditor or organization follows during the audit. Audit Process Head To Head Comparison Between Internal Audit vs External Audit (Infographics)Below is the top 7 difference between Internal Audit vs External Audit Key Differences Between Internal Audit vs External AuditBoth Internal Audit vs External Audit are popular market choices; let us discuss some of the major Differences
Internal Audit vs External Audit Comparison TableBelow is the 7 topmost comparison between Internal Audit vs External Audit
ConclusionSo by and large, both Internal Audit vs External Audit is important for every organization, to assess the overall work. Internal and External audit plays a vital role in the effectiveness of the organization and which gives a true and fair view of the financial statement of the organization. The role of the external auditor is very important and critical as it’s certifying the integrity of the financial statement of the organization. External auditor checks work of internal auditor as a part of the process so that they can reassure the reliability of internal control for an organization. Internal auditors are salaried employees of the organization and are considered to be independent, whereas external auditors are an independent body that carries out the audit for the organization. In short, we can say that internal and external audit is not opposite to each other; instead, they are the supplement to each other. Recommended ArticleThis has been a guide to the top difference between Internal Audit vs External Audit. Here we also discuss the Internal Audit vs External Audit key differences with infographics, and comparison table. You may also have a look at the following articles to learn more:
How do external auditors differ from internal auditors how does an external audit differ from an internal audit How are the two types of audits similar?One of the key differences between internal and external auditor is that internal auditors are employees of the company working to serve the company's goals. External auditors tend to be public accountants working as independent auditors to assess a company's internal control systems and accounting practices.
What's the biggest difference between the professions of internal auditors vs external auditors?Internal auditors take a holistic view of their organization's governance, risk, and control systems (in other words, primarily non-financial information), while external auditors are either concerned with the accuracy of business accounts and the organization's financial condition or, in some industries, the ...
What is the difference between an internal auditor and an external auditor quizlet?External auditors represent the interests of third party stakeholders, while internal auditors serve as an independent appraisal function within the organization. Internal auditors often perform tasks, which can reduce external audit fees and help to achieve audit efficiency and reduce audit fees.
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