Internal and external audits are two different types of audits that serve different purposes. Here are the main differences between them:
Internal Audit:
1. Conducted by employees of the organization, specifically the internal audit department.
2. Focuses on measuring current performance and finding areas for improvement.
3. Reviews routine activities and provides suggestions for improvement
4. Is discretionary and ongoing
5. Is forward-looking and proactive
External Audit:
1. Conducted by an independent third party
2. Focuses on proving the accuracy and veracity of financial statements.
3. Analyzes and verifies the financial statements of the company.
4. Is mandatory for public companies and may be required by lenders and other stakeholders
5. Is backward-looking and examines past record-keeping or proof of compliance
Overall, internal audits are conducted by employees of the organization and focus on measuring current performance and finding areas for improvement, while external audits are conducted by an independent third party and focus on proving the accuracy and veracity of financial statements. Internal audits are discretionary and ongoing, while external audits may be mandatory. Internal audits are forward-looking and proactive, while external audits are backward-looking and examine past record-keeping or proof of compliance.
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Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.