What are the difference between Internal Audit & External Audit?
- The role of internal auditing is determined by management and its objectives differ from those of the external auditor who is appointed to report independently of the financial statements. The internal audit function’s objective vary according to management’s requirements. The external auditor’s primary concern is whether the financial statements are free of material misstatements. Despite of some common characteristics, following are the primary differences between these two functions;
External Audit Internal Audit Reporting Shareholders or members who are outside the organizations governance structure. The board and senior management who are within the organizations governance structure. Objectives Add credibility and reliability to financial reports from the organization to its stakeholders by giving opinion on the report Evaluate and improve the effectiveness of governance, risk management and control processes. This provides members of the boards and senior management with assurance that helps them fulfil their duties to the organization and its stakeholders. Responsibility for improvement None, however there is a duty to report problems. Improvement is fundamental to the purpose of internal auditing. But it is done by advising, coaching and facilitating in order to not undermine the responsibility of management.