Internal audit and internal check are two terms that are often used interchangeably when one talks about the financial working of the company. While both internal audit and internal check are essential components of an organization’s internal control system, they serve different purposes and have different methodologies, scopes, frequencies, and reporting structures. In order to get a better understanding about both concepts one should look at some of the differences between internal audit and internal check –
Internal Audit VS Internal Check
Meaning of Internal Audit and Internal Check
In the case of human being, we go for yearly checkups to ensure that our body is healthy and all the vitals of our body are good in the same way companies have an internal audit done by internal auditors to make sure they are doing things the right way and following all the rules. While the internal check is done by the company themselves in order to check that their work is accurate and follows the rules. In simple words just like in school before submitting any school project we verify two times so as to ensure that there are no mistakes in our project in the same way companies do internal verification of their work.
Goals
The goal of internal audit is to offer a neutral and unbiased evaluation of the company’s operations, financial reporting, and adherence to various legal and regulatory requirements while internal checks are performed to make sure that transactions done by the company during the year are accurate and complete. It also helps in making sure that organizational rules and procedures are being followed while doing financial transactions.
Scope of Internal Audit and Internal Check
The scope of an internal audit is very wide as it is a comprehensive evaluation of the organization’s operations as well as the working of the company while the internal check is more focused and has limited scope in the sense that it concentrates on specific areas of control and not the whole system of the company. In simple words, an internal audit goes deeper into the company’s operations to identify risks and provide recommendations to improve controls while the internal check is more superficial and limited in scope.
Frequency
Internal audit is done periodically which is usually every financial year while in the case of an internal check, it is carried out daily in most of the companies as this is an internal process and hence can be done on a regular basis.
People Involved
In the case of an internal audit, this audit is done by internal auditors who are usually from outside the company and report directly to the audit committee or board of directors of the company while the internal check is carried out by employees within the organization who report their findings to the top management. In simple words just like in the case of movies when the movie is ready for release then producer of the movie screen the movie to his or her friends circle and family members who give internal review about the movie then this is similar to an internal check while the same movie when screened to independent movie reviewers than this is similar to internal audit.
Qualification
Internal audit is responsible for ensuring that the organization’s internal control system is effective, efficient, and in compliance with laws and regulations hence internal audit requires qualified individuals having specialized knowledge and skills in auditing, accounting, and risk management while in case of an internal check, it is responsible for ensuring that transactions are accurate, complete, and in compliance with company’s internal policies and procedures, hence it does not require any major qualification rather it requires a basic understanding of the company’s policies and working style.
As one can see from the above that both internal checks and internal audits are miles apart when it comes to the purpose, meaning, and requirement of both concerned and that is the reason why companies usually go for both internal checks as well internal audits when it comes to checking the transactions and financial statement of the company.