The links that are there between internal audit, external audit and in...
There are multiple differences between the internal audit and external audit functions, which are as follows:
- Internal auditors are company employees, while external auditors work for an outside audit firm.
- Internal auditors are hired by the company, while external auditors are appointed by a shareholder vote.
- Internal auditors do not have to be CPAs, while a CPA must direct the activities of the external auditors.
- Internal auditors are responsible to management, while external auditors are responsible to the shareholders.
- Internal auditors can issue their findings in any type of report format, while external auditors must use specific formats for their audit opinions and management letters.
- Internal audit reports are used by management, while external audit reports are used by stakeholders, such as investors, creditors, and lenders.
- Internal auditors can be used to provide advice and other consulting assistance to employees, while external auditors are constrained from supporting an audit client too closely.
- Internal auditors will examine issues related to company business practices and risks, while external auditors examine the financial records and issue an opinion regarding the financial statements of the company.
- Internal audits are conducted throughout the year, while external auditors conduct a single annual audit. If a client is publicly-held, external auditors will also provide review services three times per year.