There are multiple differences between the Internal Audit and External Audit functions, which are as follows:
Internal auditors are company employees, while external auditors work for an outside audit firm.
Internal auditors are hired by the company, while external auditors are appointed by an Certification Agency.
Internal auditors are responsible to management, while external auditors are responsible to the Certification Agency.
Internal auditors can issue their findings in any type of report format, while external auditors must use specific formats for their audit non-conformance and observations.
Internal audit reports are used by management, while external audit reports are used by Certification Agency for certification procedure.
Internal auditors can be used to provide advice and other consulting assistance to employees, while external auditors are constrained from supporting an audit client too closely.
Internal auditors will examine issues related to company business practices and risks, while external auditors examine the procedures, processes and other relevant records and provide an audit report regarding the operations of the company.
Internal audits can conducted throughout the year, while external auditors conduct a single annual audit. If client changes any activity or process in its operations, external auditor can do a Scope Extension Audit.
The key objective of Internal audit is to analyse the routine process and activities and further provide suggestions wherever there is scope for the improvement whereas the vital objective of External audit is to analyse and verify the operations of the firm or the company.
Conclusion:
Internal Audit and External Audit are not opposed to each other. Instead they complement each other. External Auditor may use the work of the Internal Auditor if he thinks fit, but it does not reduce the responsibility of the External Auditor. Internal audit acts as a check on the activities of the business and assists by advising on various matters to gain operational efficiency.
On
the other hand, External audit is entirely independent in which a third party
is brought to the organization to carry out the procedure. It checks the
accuracy and conformity of the operations of the organisation.
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