Key differences between Internal and External Audit?

Key differences between Internal and External Audit?

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Created By Admin Last Updated Sat, 01-Aug-2020

Key differences between Internal and External Audit?

Chartered Accountants play a key role in performing Internal as well as external audits. It is interesting for a fresher/student to understand the basic difference between these two broad categories of audit:

 

Particulars

Internal audit

External audit

Meaning

Internal Audit refers to an ongoing audit function performed within an organization by either in-house internal auditing department or by an external consultant.

External Audit is an audit function performed by an independent body which is not a part of the organization.

Objective

To review the internal controls of the organization in order to ensure the processes and policies are in line with the Company’s overall objectives.

To analyze and verify the financial statement of the company based on defined criteria as per the relevant statute.

The auditor is appointed by

Management

Members/Shareholders

Users of the Report

Management

Stakeholders

Opinion

The opinion is provided on the design of processes, operational effectiveness and limitations of the organization.

The opinion is provided on the truthfulness and fairness of the financial statement of the company.

Scope

Formalized by the management of the entity. For example- Procure to pay audit, Order to Cash review etc.

As per the statute. For example- company law, Income tax etc.

Period

Continuous Process

Once in a financial year