What are the Differences between the Concepts of Internal and External Audit?
To answer this question, we will dwell in more detail on the notion of internal audit, since the term external audit, we have already defined above.
So, internal audit is organized on the economic entity in the interests of its owners and regulated by its internal documents system of control over compliance with the established procedure for accounting and reliability of the functioning of the internal control system. Civil audit institutions include auditors, audit commissions, internal auditors or groups of internal auditors appointed by the economic entity's owners.
Thus, there is a fundamental difference in the purpose of conducting an external and internal audit. The external review is aimed at confirming the reliability of the financial statements and can use the results of the work of internal auditors in its work, while the purpose of internal audit is to help the employees of the organization effectively perform their functions.
The tasks of the internal auditing consulting services include:
- Ensuring more efficient management of the organization;
- Prompt identification of current problems within a single organization;
- Protection of legitimate interests of the organization and its owners;
- Evaluation of the effectiveness and reliability of the internal control system.
- Checking systems designed to implement tasks, plans, and procedures, legislative acts and instructions, as well as their implementation by employees of the organization;
- Verification of the safety of assets;
- Checking the efficiency of resource use, etc.
Internal auditors must submit reports on the results of their work, containing general information about the facility, analysis, evaluation and recommendations to address the identified shortcomings.
Even though the methods of checking are similar in many cases, however, an external audit will never replace the internal one.
The works carried out by an internal audit are identical to those performed by an external review. The techniques used in both cases are the same. Both focus on issues of internal control and risk assessment to generate reports that contain relatively similar information such as the formulation of suggestions to improve non-conformities, the efficiency of internal control and accounting systems, opinions on personnel control, etc.
The best audit firms in Delhi provides an objective external perspective on the elements of interest of a company or company; they can examine everything in great detail but do not worry about the operation in situ of the company. Internal auditors may have a biased opinion directed by the interests of their employers but are oriented to optimize the processes and tasks to achieve higher efficiency.
It is advisable that the external and internal auditors of the organization have regular meetings. Both and coordination between both performs many routine tasks can avoid redundancy and duplication of efforts to the extent that they can allow a joint work.
Selection of an internal Consultant.
The credibility and success of the entire Administration Plan is based on the quality and usefulness of the data generated by the Audit It is important, therefore, that the Management Team pay careful attention to the process of selecting the consulting service for performing this task.
The selection and hiring of the consulting service will be subject to the same rules established for the recruitment of other types of expert services and, therefore, should be done in the same framework. Generally, competitive proposals from my organization will be accepted. It also requires the participation of financial departments and contractions or ministers.