Differences between Internal and External Audit

Auditing is like a filter which makes sure that nothing unacceptable in terms of wrong accounting practices passes through and therefore audit makes the financial statements of a company more reliable. Audit may be external audit or internal audit, let’s look at the differences between the two to get a clear idea about both of them –

  1. While internal audit is conducted by the employees of the company itself whereas external audit is conducted by the people who are not the part of the company.
  2. Internal audit is not compulsory, it is at the discretion of the top management of the company whether to undertake internal audit or not while external audit is compulsory for listed companies.
  3. While internal audit helps the company in finding the errors in accounting and therefore it helps the company rectifying the errors before external audit happens, hence internal audit is always done before external audit.
  4. Internal audit is done by the employees of the company and therefore they are not trained to carry out the audit of the company whereas external audit is done by the experts who are trained to carry out the audit of the company.
  5. While the result of internal audit can be seen by the management and employees of the company whereas result of external audit is seen by all other external parties such as creditors, banks etc…

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