Q:

What is the difference between internal and external audit?

A:

Quick Answer

CareersinAudit.com explains that internal auditors work within an organization and report to the firm's audit committee and/or directors, while external auditors are independent of the company they audit and report to its shareholders. Their appointment, objectives and responsibilities are the key differences between internal and external auditors.

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Full Answer

Internal auditors help design organizing systems and develop risk management policies, according to CareersinAudit.com. They ensure the smooth operation of policies implemented for risk management, and they usually have continuous work that's based on a company's internal control systems. Internal auditors are typically employees of the company they are auditing. Moreover, their objectives are often set by management, and they have to focus on certain areas specified by the management. They are solely responsible to the senior management.

External auditors are hired by a company's shareholders and are appointed by a separate company independent of their own, says CareersinAudit.com. They provide expert opinion on the veracity of a firm's financial statements, and they work on a test basis. Their objectives are often defined by statute, and they are usually allowed to assess every aspect of the system in place. They are responsible to company management, which can be the owners, the shareholders, the government or the general public.

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