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1. Difference in Tabular Form
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3. Brief Difference
| Basis For Comparison | Internal Audit | External Audit |
|---|
| 1. Meaning
| An Internal Audit is a verification of a department or an organization done by the company’s auditing committee. This committee is part of an organization.
| An external Audit is the verification of a department or an organization performed by an independent body. This is not a part of an organization.
| | 2. Objective
| To review the financial statement, and routine activities and provides suggestions to improve.
| To validate the material accuracy of financial reports provided by the organization.
| | 3. Audit conducted By
| This audit is done by the auditing employees of the company.
| This is done by a third party or Independent Accountant.
| | 4. Remuneration ( Payment )
| In this audit, employees get remuneration in form of salary
| Independent accountant gets a fee or commission for auditing.
| | 5. Obligation to perform
| Internal audit is not mandatory. Companies do this audit to review the company before the external audit.
| External Audit is mandatory to perform by the Indian Companies Act, 1956.
| | 6. Period
| Internal audit is a continuous process.
| The external audit is done once a year.
| | 7. Auditor appointed by
| The internal auditor is the employee of a company so it is appointed by the Management of a company.
| An external auditor appointed by the shareholder
| | 8. Users
| Internal audit reports are used by management
| External audit reports are used by stakeholders such as investors, creditors, government, and lenders.
| | 9. Check and Opinion
| The opinion is provided on the effectiveness of the operational activities of the organization.
| The opinion is provided on the truthfulness and fairness of the financial statement of the company.
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Social Accounting and Social Auditing Brief Difference Between Internal and External Audit1. Meaning An Internal Audit is a verification of an organization done by the company’s auditing committee. This committee is part of an organization. Basically, Internal auditors are company employees.
An External Audit is the verification of a department or an organization performed by an independent body. This is not a part of an
organization. External auditors work for an outside audit firm i.e. Public accountant. 2. Objective The objective of an Internal Audit is to review the financial statement, and routine activities and provides suggestions to improve.
The objective of an External Audit is to validate the material accuracy of financial reports provided by the organization. 3. Audit conducted By Internal audit is done by the auditing employees of the
company.
The external audit is done by a third party or Independent Accountant. The company invites a Chartered accountant to review the statement as it is mandatory by the government 4. Remuneration (Payment) In this Internal audit, employees get remuneration in form of salary
In an external audit, an Independent accountant gets a fee or commission for auditing. 5. Obligation to perform Internal audit is not mandatory. Companies do
this audit to review the company before the external audit.
External Audit is mandatory to perform by the Indian Companies Act, 1956. 6. Period Internal audit is a continuous process. A company always need to audit the company to improve the irregularity.
The external audit is done once a year. 7. Auditor appointed by The internal auditor is the employee of a company so it is appointed by the Management of a
company.
External auditor appointed by shareholder 8. Users Internal audit reports are used by management
External audit reports are used by stakeholders such as investors, creditors, government, and lenders. 9. Check and Opinion
In the Internal Audit, The opinion is provided on the effectiveness of the operational activities of the organization.
In the external Audit, The opinion is provided on the truthfulness and fairness of the
financial statement of the company. _______________________________________________________________________________ Read More- How to get anything you want by doing Manifest ____________________________________________________________________________
Which is better internal auditor or external auditor?
While external audit can sometimes be seen as a “check-the-box” activity required by regulators, bankers or shareholders, internal audit provides a more proactive and consultative approach to evaluating an organization and providing a fresh perspective on operations and controls.
Are auditors internal or external?
Internal Auditors are company employees which is hired by the company, meanwhile the External Auditors work for an outside audit firm and appointed by a shareholder vote. Internal Auditors help to design the company's organising systems and help develop specific risk management policies.
What do internal and external auditors do?
Internal auditors are employed to educate management and staff about how the business can function better. External auditors, on the other hand, have no such obligations. They are responsible for reviewing financial statements to ensure that they are accurate and conform to GAAP.
How do internal and external auditors differ and how should they relate?
the internal auditors focus on future events as a result of their continuous review and evaluation of controls and processes. The primary mission of the external auditors is to provide an independent opinion on the organization's financial statements, annually.
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