What Is The Difference Between External And Internal Auditor?

The simple answer is dependence, as an external auditor is independent of the company. An internal auditor looks at the overall strategic goals of the company and helps them excel in a reliable and ethical manner. They evaluate and improve the company's systems of compliance, control, and risk assessment. With this review, the company can safely carry out its operations with reasonable confidence.

Reviews made to internal control and risk management identify areas that need improvement. Recommendations are made to the proper personelpersonnel to develop better business practices and performances. In these procedures, the storage of information and security is tested for effectiveness.

Though the information gathered for financial statements needs to be transparent, the protection of customer sensitive information must be held in the utmost respect of the company. The internal auditor may make suggestions on how to better safeguard this information from being accessed by persons other than necessary personalpersonnel, and must develop a strong understanding of the company it works for. Levels of experience, training, and education help the auditor assess business situations for better evaluation.

An internal auditor's primary function is to evaluate and improve the company's finances and accounting procedures to ensure safe and ethical practices are conducted within the regulations of the law and related governances. The internal auditors are part of the organization. Their objectives are determined by professional standards, the board, and management. Their primary clients are management and the board.

External auditors are not part of the organization, but are engaged by it, and their primary mission is to provide an independent annual opinion on the organization's financial statements. They provide a statistical analysis on the clarity and effectiveness of the accounting policies put in place by the company. They also help management become aware of evidence that may affect future audits.

They can give advice management through recommendations in their audit notes or discussions. Constructive suggestions can improve the procedures for documentation more efficient, ethical, or fairly presentable.

1.) APPOINTMENT:- External auditor is the auditor which is send by a govt. In organisations for checking of accounts.
Internal auditor is the auditor which is appointed by a company for checking the accounts.
2.) WORK:- External auditor have to do less work because the work have already being done by internal auditor.
Internal auditor has to do so much of work as he is appointed by a company for this purpose only.
3.) SALARY:- External auditor salary is given by govt. Organisation.
Internal auditor salary is given by company.
4.) MEETING:- External auditor has no right to attend the meeting of company.
Internal auditor has the right to attend the meeting.

External auditor's role is to provide opinion on the company's financial statements and provide reasonable assurance that the company's accounts is free from material misstatement caused by either error or fraud. Appointed and report to the Shareholders. It is not the external auditor's job to detect fraud.

Internal auditor is appointed by the Audit Committee of a company and its job is to detect and prevent fraud, to increase efficiency and effectiveness of the resources and to identify/manage risks and to ensure the company's internal control is working properly. Internal Auditor does not have to be a qualified accountant but should be appointed externally (for good practice) to avoid familiarity to the company. Internal auditor report directly to the Board of Director.

Both Internal and External Auditor should be independent.

The difference between internal auditors and external auditors is that internal auditors are hired by the company and they are employees of the company and they also come to work everyday but external auditors come ones or twice a year and they are both independent.

The internal audit is conducted to help the management. The weakness of the management is disclosed. The external audit is conducted to help the shareholder. The rights of owners are protected. The appointment of internal audit is made by the management. The appointment in external audit is made by the shareholders. Internal audit is the part of internal control.

External audit is the not the part of internal control.The internal audit can suggest improvement in internal check system. The external audit can not suggest improvement in internal check system. The internal audit can perform his duties under the terms of appointment. The management can limit the scope of work at any time. The external auditor can perform his work to terms of appointment and other prescribed law. The scope is very wide. Internal audit is an employee of the company. He is not an independent person. External auditor is not an employee of the company.

He is an independent person.The internal audit can check the material and substantive accuracy of business records. The external auditor can check the true and faire view of earning capacity and financial position. The management has power to remove the internal auditor. The shareholders have power to remove the external auditor.