Internal and external audit

Internal audit
External audit
Differences

1. subject: auditing topic: internal audit and external audit submitted by Vedavathi m n 1 ST M.COM.

2. Internal audit A system of examination of books of accounts and financial transactions by employees of the same organization, is know as ‘internal audit’ an internal auditor may not be a qualified auditor . EXTERNAL AUDIT An independent examination of books of account of an enterprise by a qualified professional auditor is known as an external audit. External audit is also known as an independent audit

3. Differences between internal audit and external audit Basis of difference Appointment Legal requirement Qualification Internal audit An internal auditors is appointed by the entity management. Internal audit is the need of management .is required law it is not mandatory Does not require specific qualification as per provisions of law External audit An external auditor is appointed by the share holders in the annual general meeting. Is required by laws. It is mandatory as per legal provisions His qualification is specifically determined. He must be a chartered account.

4. 4. N ature of audit 5. Status 6.Status 4.internal regular in nature. 5.An internal auditor is a regular employee of an organization appointed by the entity management. 6. An internal auditor examines the books of accounts and other activities of an organization regularly. 4.External audit is conducted after the preparation of final account. 5.An external auditor is an independent person. He is appointed by share holders incase of companies. 6. An external auditor examines the books of account and verifies the related documents to check irregularities .

5. 7. Removal 8.remuneration 9. Influence 10. report 7. An internal auditor can be removed by the management at any point of time. 8. AN INTERNAL AUDITORS REMUNERATION IS Determined by the management ,since he is an employee of an organization. 9. An internal auditor is influenced by the management. 10. An internal auditor needs to give advice for improvement in accounting work . He need not prepare any kind of report. 7.An external auditors can be removed by shareholders in the general meeting. 8. An external auditors remuneration is determined by the shareholders . 9. An external auditor work is not influenced the board . 10. An external auditor need to prepare audit report at the end of audit work and present such report to the appointing authority.

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