Differences between internal and external audit Essay

Differences between internal and external audit - Essay Example Differences between internal and external audit Internal and external audit differs in terms of objectives, scope, level of independence of the auditor, and methodology. Objectives The internal auditor’s objective is to ensure that sound risk management and control systems are in place to prevent errors and fraud from occurring. The external auditor’s objective on the other hand is to ensure that the accounts show a true and fair view. Therefore the necessary tests should be carried out to ensure that the financial statements can be relied upon to give a true and fair view. Scope of Work The scope of the internal auditors work is dependent on the management and directors of the organization. It is normal that less emphasis is placed on materiality considerations. The scope of the external auditor’s role is laid down in the state. Their primary concern is to ensure that the financial statements are free from material misstatements. Independence The internal audito r’s is employed by the organisation and the internal audit function is determined by management. ... University The internal audit at a University would report to the University Council through the Audit Committee on the systems of governance, internal control, value for money and the extent to which strategic initiatives that have been undertaken at the University are achieving their goals. The scope of the internal auditors work is wide as it covers non financial areas within the University. It consists of multiple audits in any one year and involves a range of areas in the University’s operations. Internal audit is would be part of the internal control system of the organization. The internal auditor would be required to prepare a risk based plan annually. The work will be performed on the most risky aspects of the University’s operating environment first. External Audit Procedures at a University The external auditor’s procedures which represents a statutory requirement checks whether the University’s accounts present a true and fair view of the finan cial position. A plan is prepared based on an assessment of the University’s operating environment. This activity is normally performed at after the end of the financial year. However, the external auditor may seek to carry out an interim audit during the course of the year so as to lessen the amount of work done at the final year end audit. The interim work normally include risk assessments to determine where weaknesses exists that could result in material misstatements of the financial statements. The external auditor would also evaluate the work of the internal auditor to determine if the external audit work could be reduced (CICA 2010). Similarities between Internal and External Auditors Both internal and external auditors are required to plan their work in relation to their objectives in carrying out

Audit Essay Example | Topics and Well Written Essays - 500 words

Audit - Essay Example It has no intentions of growing thru expansion, enter into new contract (due to limitations of financial capability), or withdraw any line of business it is representing. All the lines it is representing are selling well and have contributed to the revenues earned by the company. Marketing activities of the company are direct and not very excessive. They do it on tradeshows, exhibits, and do lot of announcements thru social media and e-mails. Since company is limited to loyal customers, up-dating them on company products is easily done. Yes, cost-reduction steps can be taken. Cost reduction is implemented by monitoring of monthly operating costs and trying to figure out which expense could be limited. Company practices cost reduction on variable expenses such as travel, representation, energy consumption and miscellaneous expenses. Control procedures of the company are accounting controls, cash control, separation of duties, documentation of all transactions and regular audits. They are adequate controls to ensure that employees are performing their duties honestly and in accordance with company’s objectives. Yes, management performs periodic analysis of operation in all its angles thru the establishment of a performance goal. Here, management and employees sit down and talk how to accomplish the goals and objectives of the company by setting a specific target in a specified time. Each company assigned with different tasks, agree to set a specific goal of accomplishments. Management monitors accomplishments regularly, or as often as monthly. Yes, this also is monitored very closely on a weekly basis. Internal control is established as a process of monitoring marketing costs and its relative profitability. This process is the responsibility of the Accounting