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Differences between internal and external audit - Essay Example
Finance & Accounting
Pages 12 (3012 words)
“Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations.
It helps an organization accomplish its objectives by bringing a systematic approach to evaluate the effectiveness of risk management control” …
Differences between internal and external audit Internal and external audit differs in terms of objectives, scope, level of independence of the auditor, and methodology. Objectives The internal auditor’s objective is to ensure that sound risk management and control systems are in place to prevent errors and fraud from occurring. The external auditor’s objective on the other hand is to ensure that the accounts show a true and fair view. Therefore the necessary tests should be carried out to ensure that the financial statements can be relied upon to give a true and fair view. Scope of Work The scope of the internal auditors work is dependent on the management and directors of the organization. It is normal that less emphasis is placed on materiality considerations. The scope of the external auditor’s role is laid down in the state. Their primary concern is to ensure that the financial statements are free from material misstatements. Independence The internal auditor’s is employed by the organisation and the internal audit function is determined by management. ...
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