Difference Between External Auditor and Internal Auditor
The Difference Between External Auditing and Internal Auditing
Jessica LeGrand
Auditing – ACCT 420
Mrs. Hayes
October 30th, 2012
Auditing was primarily as a method to maintain governmental accountancy and for record-keeping. It wasn’t until the 1800s during the Industrial Revolution that auditing expanded into a fraud detection and financial accountability field. Now audits are performed to manage and confirm the correctness of a company 's accounting procedures. Auditing evolved into a business necessity once it became evident that a standardized form of accountancy must exist to avoid fraud. Today it has developed into a standardized yet complex field that is regarded as an important procedure in the management of business finance.
Financial audits are performed to ascertain the validity and reliability of information. They are a formal examination of an organization or individual 's accounts or financial situation. Audits also provide an assessment of a system’s internal controls. The goal of an audit is to express an opinion of the company in question based on the evidence and tests performed from the audit.
The role of the auditor is the verification of a company’s financial records. They study various situations, check and analyze the company’s bookkeeping and accounting methods, and compare books of different departments within the organization. An audit is a spot check of information, not an exhaustive review of all financial transactions. An auditor’s reports and analyses often help management cut costs, save on taxes, and increase profits. Further, auditors are charged with determining the accuracy of the financial statements only "in all material respects." A clean bill of health from an auditor means that the auditor is convinced that the financial statements do not misrepresent the organization 's financial position in any significant way; it does not guarantee 100 percent accuracy.
There are two types of auditors external and
Jessica LeGrand
Auditing – ACCT 420
Mrs. Hayes
October 30th, 2012
Auditing was primarily as a method to maintain governmental accountancy and for record-keeping. It wasn’t until the 1800s during the Industrial Revolution that auditing expanded into a fraud detection and financial accountability field. Now audits are performed to manage and confirm the correctness of a company 's accounting procedures. Auditing evolved into a business necessity once it became evident that a standardized form of accountancy must exist to avoid fraud. Today it has developed into a standardized yet complex field that is regarded as an important procedure in the management of business finance.
Financial audits are performed to ascertain the validity and reliability of information. They are a formal examination of an organization or individual 's accounts or financial situation. Audits also provide an assessment of a system’s internal controls. The goal of an audit is to express an opinion of the company in question based on the evidence and tests performed from the audit.
The role of the auditor is the verification of a company’s financial records. They study various situations, check and analyze the company’s bookkeeping and accounting methods, and compare books of different departments within the organization. An audit is a spot check of information, not an exhaustive review of all financial transactions. An auditor’s reports and analyses often help management cut costs, save on taxes, and increase profits. Further, auditors are charged with determining the accuracy of the financial statements only "in all material respects." A clean bill of health from an auditor means that the auditor is convinced that the financial statements do not misrepresent the organization 's financial position in any significant way; it does not guarantee 100 percent accuracy.
There are two types of auditors external and
References: Cornell University: University Audit Office. (n.d.). Retrieved from http://www.audit.cornell.edu /faq.html External and Internal Auditing: What’s the Difference? (2009). Articlesbase. Retrieved from http://www.articlesbase.com/careers-articles/external-and-internal-auditing-whats-the-difference-853393.html Khan, Mohammad W. (2010). The “Internal Audit” versus “External Audit” in Details. Retrieved from http://audit.ezinemark.com/the-internal-audit-versus-external-audit-in-details-169ade89a45.html Mayberry, Mark. (2008). CAATTs Ideal for Efficient Audits. American Institute of CPAs, Retrieved from http://www.aicpa.org/interestareas/informationtechnology/community /pages/caatts%20ideal%20for%20efficient%20audits.aspx Porter, Brenda, Haherly, David, and Jon Simon. (2007). Principles of External Auditing. New Jersey: Wiley & Sons, Inc. Purpose. (2009). The Institute of Internal Auditors. Retrieved from https://na.theiia.org/Ontolica Search/Pages/DefaultResults.aspx?k=internal%20auditing%20regulations%20&s=NA Sites&start1=0&ct=Site&cs=The Institute of Internal Auditors North America&ref=ht tps://na.theiia.org&ret=https%3A%2F%2Fna.theiia.org%2FPages%2FIIAHome.aspx Thornton, Grant. (n.d.). Evaluating the Internal and External Audit Function. Retried from http://www.gt.com/staticfiles//GTCom/Audit/Assurancepublications/Audit%20Committee%20Handbook/ACH-Guides_Evaluating-Internal-External-Audit-Function.pdf What are the differences between auditor, internal auditor and external auditor. (n.d.). Retrieved from http://objectguild.com/finance/what-are-the-differences-between-auditor-internal-auditor-and-external-auditor/ Anthony H. Catanach Jr. & J. Edward Ketz. (2011) Grumpy Old aCCOUNTANTS. rETRIEVED FROM http://blogs.smeal.psu.edu/grumpyoldaccountants/archives/384