What Is the Difference Between Internal and External Auditors?

Internal auditors work within an organization to help improve financial and non-financial operations, while external auditors examine financial statements to ensure the documentation meets generally accepted accounting guidelines and accurately represents the financial position of the organization. Internal auditor positions are set up voluntarily by companies, according to industry experts, Internal Auditor. External auditors are often brought in to conduct mandatory audit reports.

Internal auditors are hired by a company's senior management and report to an audit committee or senior level manager. They evaluate current risks and recommend risk management strategies that ensure effective operations, and continuously work at analyzing and improving internal business control systems, according to Careers in Audit. For example, a medium-size company struggling to break out in its industry hires an internal auditor to take a closer look at business operations to find weak spots, and the auditor creates a report pinpointing some key issues that need fixing.

Careers in Audit explains that external auditors are focused mainly on an organization's financial dealings. Many government and private organizations operate under specific financial regulations, and all financial transactions must be done with proper documentation. Some organizations are required to have an external auditor periodically do an extensive check of financial records to ensure the organization is meeting legal requirements. The auditors are given complete access to all financial information to produce an audit report.