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.Continue Reading
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.Learn more about Accounting
A qualified audit opinion is a written statement in an auditor's report indicating specific areas of noncompliance in an otherwise acceptable financial statement, explains Marty Schmidt of Solution Matrix Ltd. Among other reasons, qualified audit opinions may be the result of misplaced accounting entries that lead to erroneous results.Full Answer >
Writing an audit memorandum consists of outlining the company's finances; listing the physical items in the company's possession; and comparing book inventory with physical inventory and noting discrepancies, according to Danny Donahue for the Houston Chronicle. The audit memorandum also details the company's contracts and labor productivity.Full Answer >
A forensic audit is the evaluation and examination of the financial records of a company or individual for use as evidence in a court of law. The forensic audit is usually carried out to prosecute the accused party for financial crimes such as embezzlement of funds, fraud and bribery.Full Answer >
Financial leverage is important because it allows a company to maximize the profits earned by shareholders as compared to profits earned from equity operations. Companies that demonstrate the ability to manage leverage by repaying debts on time increase their chances of getting loans at better interest rates.Full Answer >