Audit is basically a process of checking financial records of an establishment, in order to give an opinion on the financial statement. It can be categorized into two groups namely Internal Audit and External Audit. Even though internal audit is an optional thing, business owners still conduct it to review the activities of the organization and get recommendations for any improvement. On the other hand, external audit is a compulsory thing where a third party performs the process of audit and gives opinion on the financial statements of the company.
Listed below are some of the differences between internal and external audit:
After knowing about the differences, it can be said that internal and external audit are not conflicting to each other but they complement each other. External auditor at times can take help of the internal auditor if required. In fact the large scale companies ensure that both internal as well as external audits are conducted to keep their organization at the top.
Since the external Audit services are mandatory in UAE, it is essential that one chooses a team that shows the following skills:
Apart from all these, always ensure that you work with auditors who are highly recognized, as a less known auditor may charge you less but at the end will not perform the best work. Also ensure that the auditor is independent and is not associated with the company.
To conclude, it can be said that it is vital for any business organization to make sure that they hire an auditor who can further ensure accuracy of the company’s transactions and question any components which may pose a risk to the financial and personal reputation of the company.
Listed below are some of the differences between internal and external audit:
- The internal audit is conducted by employees while the external audit is conducted by third party.
- The internal audit provides a customized report on the jeopardies and purposes of the company. It focuses on how to make improvements in the business. On the other hand, the report provided by external audit team is done on the Auditing Standards format. It focuses on providing a factual and impartial view and acts in accordance with legal requirements.
- In case of internal audit, the report is provided to the managers of the company who are required to make the requisite changes accordingly. However, the external audit services are provided to the shareholders or the trustees of the company.
- The internal audit is usually a continuous process; while on the other hand, the external audit is done once in a year. The external audit is usually performed on a yearly basis to provide the annual statutory audit of the financial accounts. This audit is intended to show whether the accounts are correct and where the company sits financially.
After knowing about the differences, it can be said that internal and external audit are not conflicting to each other but they complement each other. External auditor at times can take help of the internal auditor if required. In fact the large scale companies ensure that both internal as well as external audits are conducted to keep their organization at the top.
Since the external Audit services are mandatory in UAE, it is essential that one chooses a team that shows the following skills:
- Provides insightful and on time reports
- Displays suitable ethics, values and attitudes
- Interacts with relevant stakeholders in the right way
- Uses hard audit procedures and quality control processes which comply with regulation, law, and applicable standards
- Has adequate skills, experience, and knowledge
Apart from all these, always ensure that you work with auditors who are highly recognized, as a less known auditor may charge you less but at the end will not perform the best work. Also ensure that the auditor is independent and is not associated with the company.
To conclude, it can be said that it is vital for any business organization to make sure that they hire an auditor who can further ensure accuracy of the company’s transactions and question any components which may pose a risk to the financial and personal reputation of the company.
