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INTERNAL AUDITING vs EXTERNAL AUDITING (Benefits (Ensuring compliance with…
INTERNAL AUDITING vs EXTERNAL AUDITING
Internal auditing
An independent examination of the financial statements prepared by the organisation
System and data backup and recovery controls
Benefits
Ensuring compliance with laws and statutory regulations
Increasing financial reliability and integrity
Improving efficiency in operations
Establishing monitoring procedures
Helping protect assets and reduce the possibility of fraud
External auditing
An independent examination of the financial statements prepared by the organisation
It is usually conducted for statutory purposes because the law requires it
Benefits
Verifying adherence to organizationally defined policies, procedures and standards
Preparing for or shadowing anticipated external audit
Support corporate IT governance, risk management and compliance program
Adding formally to or increasing the rigor of self-assessment processes and activities
Differences
Internal auditors are company employees, while external auditors work for an outside audit firm
Internal auditors are hired by the company, while external auditors are appointed by a shareholder vote
Internal auditors can issue their findings in any type of report format, while external auditors must use specific formats for their audit opinions and management letters
Internal auditors are responsible to management, while external auditors are responsible to the shareholders
Internal audits are conducted throughout the year, while external auditors conduct a single annual audit. If a client is publicly-held, external auditors will also provide review services three times per year