AA – Nov 2016 – L2 – Q2d – Internal Audit and Its Relationship with External Audit

Compare and contrast the roles of internal and external auditors.

Question

Compare and contrast the role of internal auditors and external auditors. (4 marks)

Answer

Aspect	Internal Auditors	External Auditors
Objective	Add value and improve an organization’s operations.	Express an opinion on the truth and fairness of financial statements.
Reporting	Reports to the board of directors or audit committee; reports are confidential.	Reports to shareholders or members of the company; publicly available.
Scope	Work relates to the operations of the organization.	Work relates to financial statements.
Relationship with Company	Often employees of the organization (or outsourced).	Independent of the company, usually appointed by shareholders.