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ACCS4

Internal audit is a continuous examination of accounting records conducted by an organization's own staff, with its scope determined by management. In contrast, external audit is governed by legal requirements, has a separate entity, and aims to provide a fair view of accounting records. Key differences include the scope, objectives, duration, and reporting structure of internal versus external audits.

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34 views1 page

ACCS4

Internal audit is a continuous examination of accounting records conducted by an organization's own staff, with its scope determined by management. In contrast, external audit is governed by legal requirements, has a separate entity, and aims to provide a fair view of accounting records. Key differences include the scope, objectives, duration, and reporting structure of internal versus external audits.

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kazeluwesa
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Principles of Auditing Rooh-Ullah Khan (M.

Com) 0333-8786389 23 QUESTION # 9 What is


meant by Internal Audit? How does it differ from External Audit? ANSWER Internal Audit Internal
audit is a part of internal control system. It is continuous examination of accounting records
throughout the year by the staff of the concern. The scope of internal audit is determined
by management. We can define it as “Internal audit is the continuous process of examining
accounting records of a concern by its own full time salaried persons.” DIFFERENCE BETWEEN
INTERNAL AND EXTERANL AUDIT 1. Scope

(a) The scope of internal audit is determined by the management (b) The scope of external audit is
determined by the law. 2. Change of Scope (a) The scope of internal audit can be changed by the
management at any time (b) The scope of external audit cannot be changed by the management
3. Legal Entity (a) Internal audit is a part of the entity (b) External audit has a separate entity apart
from the organization

4. Objective (a) The main objective of internal audit is to detect and prevent errors and frauds. (b)
The main objective of external audit is to show fair and true view of accounting records

5. Legal Requirement (a) Internal audit does not fulfill the legal requirement of any organization
(b) External audit fulfill the legal requirement of any public Ltd. Company

6. Internal Control (a) Internal audit is a part of internal control (b) External audit is not a part of
internal control 7. Duration (a) Internal audit may continue for the whole year (b) External audit
may be completed within a week or a month 8. Report (a) In internal audit the report is submitted
to the management (b) In external audit the report is submitted to the shareholder

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