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What is the Difference Between Internal And External Audits?

Auditing 2021-03-23

Being the best accounting firm in Dubai, We are asked by every client that what is the difference between the internal and external audit. So today, we are writing about the internal and external audit differences and similarities. Before start let’s take a look at what is auditing. 

Auditing is the process of inspection and evaluation of the various accounts, a financial statement, etc. To ensure that all the business management accounts are recorded systematically and accurately in the proper manner of accounting law and regulation. By auditing process, auditors detect fraud, error, etc, and save the management or company from potential loss and harm.

 

Purpose of Auditing

The purpose of the auditing is to review the information is right and accurate or not, that is presented in the accounting books and financial accounting books. The presented information in cash flow, balance sheet, income statement, etc are matching right or not. As per Government accounting standards, the auditor evaluates the financial report of the organization. The main purpose of auditing is to find any mistake, fraud, a loophole. If the accounting system is not working as per government law and management or company policy then have to face any loss, harm, and plenty from the government. Well, the future is uncertain nobody can judge that what will happen next? The auditor do a prediction for the organization by a current and previous financial statement and give the opinion. Now you are thinking one side you are saying future is uncertain and now your saying auditor predict the future of the company by the financial statement. Well, We are 100%  agree future is uncertain but the auditor shares their opinion by evaluating the past and current financial health and give advice for accomplish a company-oriented goal or define a new goal. The auditor’s advice helps the organization to take more control over the work and be more productive effectively.

Auditor suggestion is very important for organizations and single-owner businesses.

  1. It helps in achieving the goal or set a new goal.
  2. More control over the business
  3. Save business from fraud.
  4. Auditor report is very helpful for getting fund from investors, bank, etc.
  5. Save the business from the government plenty and legal action against the business. 

 

Generally, auditing is two types are:-

  1. Internal Audit
  2. External Audit

Internal Audit 

In an internal Audit, the Auditor audit the internal environment of the organization and make sure that all the work is going as per rules and regulations, increase the control over the internal environment and make the production department more effective. The auditor gathers all the information and shows the report that contains how business is going, where is a mistake, error, fraud, risk area, etc, how we can reduce the risk, and how we can be more productive. The internal auditor also makes sure that all the implemented policies are working properly.

External Auditing

External auditing is an independent evaluation of financial statements. External is done by the independent outside person of the organization and plays a critical role. The interest of conflict is less likely to happen as compared to an internal audit. External Audit provides valuable reports for business and government. The purpose of external auditing is to review business account to show that the business account is accurate and complete.

 

Internal V/S External Auditing

 

 

Internal Audit

External Audit

Meaning

It’s a continuous process of weekly, monthly, quarterly, and yearly. Performed by the internal audit team of the organization.

It’s conducted by an independent firm of auditing.

Report

An internal audit report is used by the management.

An External audit report is used by the stakeholders.

Opinion 

The opinion is provided to make operation more effective. 

The opinion is provided on the truthfulness and fairness of the financial statement of the company.

Period

Regular Process

Once in a year.

Obligation

According to the organization’s rules and regulations.

According to the UAE ACT.

Purpose

Review the business activities and control over the business.

Check the validity and accuracy of the financial statement.

Range

Management decides the range of the internal audit.

It’s decided by the as per UAE government laws and rules.

 

 

Your Best Auditing Firm - Risianss Accounting 

Being a leading audit firm in Dubai, we have a special audit team who have 20+ years of working experience. Our auditing team provides support for your business accounting and management solution and cover advice & guidance. It doesn’t matter what is your need relating to auditing and accounting. We aim to provide our client’s full insight into their corporate strategies, business processes, and financial reports and deliver tailor-made solutions. Risians Accounting is a registered auditing firm in Dubai. Our Methodology of auditing will minimize your business routine office work and make work more productive effectively.

 

 

 

 

 

 

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