Compare the Difference Between Similar Terms

Difference Between

Home / Business / Finance / Difference Between Internal Audit and External Audit

Difference Between Internal Audit and External Audit

May 25, 2011 Posted by Olivia

Internal Audit vs External Audit

An audit is a formal process of evaluation of an organization mainly from the point of view of its financial performance. However, an audit may encompass evaluation of anything from personnel to systems to processes involved in an organization. There are even energy audits, project management audits and quality audits that help in overall efficiency and productivity of an organization. Basically, audits are classified as internal audits and external audits. There are similarities in objectives of both types of audits though there are differences also that ill be highlighted in this article.

The most notable difference between internal and external audit is the fact that while internal audit is conducted by a separate departments that still is inside an organization, external audit is conducted by an independent body that resides outside the organization that it audits. Internal audit is more or less a routine procedure that can be initiated anytime on the orders of the management of the organization and covers specific areas or departments that are requested by the management. Internal audits can be both financial as well as non financial and are performed by auditors that are employees of the company though they report directly to the management. Internal audits try to find out the risks faced by a company and the steps being taken to manage these risks.

External audits are requested by a company and are undertaken by public accounting firms. These are exercises that are performed in the most professional manner and are seen as significant from the point of view of all stakeholders in a company. These audits bring to light the financial condition of a company in a most unbiased manner and reflect a fair assessment of the financial standing of a company.

A major point of difference between these two audit types is the fact that while internal audits are more concerned with risk management, external audits remain confined to final accounts of a company and if data has been presented in a fair and transparent manner in the financial statements or not.

In brief:

Internal Audit vs External Audit

• Internal audits are exercises conducted by employees of a company while external audits are performed by external agencies that are not employees of the company.

• Internal audits can be quite broad and cover any area of operation. They are initiated anytime that management deems fit. On the other hand, external audits are mainly concerned with evaluating the financial condition of a company from the point of view of all stakeholders.

• Internal audits play an important role in preparing a company for a fair assessment through external audits.

Related posts:

Difference Between Audit and Evaluation Difference Between Loan of Credit and Line of CreditDifference Between Loan of Credit and Line of Credit Difference Between Microfinance and Microcredit Difference Between PayPal Personal and Premier and Business Accounts Difference Between Finance and Leasing

Filed Under: Finance Tagged With: Audit, External audit, external audits, Internal audit, internal audits, purpose of external audit, purpose of internal audit

About the Author: Olivia

Olivia is a Graduate in Electronic Engineering with HR, Training & Development background and has over 15 years of field experience.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Request Article

Featured Posts

Difference Between Coronavirus and Cold Symptoms

Difference Between Coronavirus and Cold Symptoms

Difference Between Coronavirus and SARS

Difference Between Coronavirus and SARS

Difference Between Coronavirus and Influenza

Difference Between Coronavirus and Influenza

Difference Between Coronavirus and Covid 19

Difference Between Coronavirus and Covid 19

You May Like

Difference Between Glockenspiel and Xylophone

Difference Between Firefox 4 and Chrome 11

Difference Between Stratford Before Olympics and After Olympics 2012

Difference Between Stratford Before Olympics and After Olympics 2012

Difference Between German Shepherd and Alsatian

What is the Difference Between Gallstones and Cholecystitis

What is the Difference Between Gallstones and Cholecystitis

Latest Posts

  • What is the Difference Between Venlafaxine and Sertraline
  • What is the Difference Between Malate-Aspartate Shuttle and Glycerol-3-Phosphate Shuttle
  • What is the Difference Between Dysphonia and Dysarthria
  • What is the Difference Between Chilblains and Frostbite
  • What is the Difference Between Blood Blister and Melanoma
  • What is the Difference Between Calcitriol and Cholecalciferol
  • Home
  • Vacancies
  • About
  • Request Article
  • Contact Us

Copyright © 2010-2018 Difference Between. All rights reserved. Terms of Use and Privacy Policy: Legal.