Contrast between the Roles of Internal and External Auditors

by Abby
(Edmonton, Canada )

Original Text: Contrast between the Roles of Internal and External Auditors


Part 1: Background, Subject matter and Purpose of Paper
Internal auditing is defined as “an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.” IIA Website-Standards
External auditors perform an audit on the financial statements of a company, government, individual, or any other legal entity or organization, and they are independent of the entity being audited. The purpose of this paper is to compare the internal auditing procedures to the types of procedures that would be required in a standard external audit.

Method of collecting data will be researching through the
1. IIA Website-Standards: The Institute of Internal Auditors Website provides resources in
- Governance and risk management control
- Independence& objectivity
- Internal Audit Functions
2. Data#3 Limited an Australian Information and Communication Technology (ICT) solutions company.(Reviewing Company’s Audit Committee Charter)
- Agreements that govern the operations of audit committee; this will provide more information about duties and responsibility of an external audit, their scope, communication, independence etc.
3. Arens, Alvin A., et al. Auditing and Other Assurance Services, Canadian 10th ed. Pearson Education Canada Inc., 2006.
- Economic demand for auditing and illustrate why auditing is necessary
Part 2: Supply additional information
Although auditing profession was once dragged in mud due to Enron and Arthur Anderson scandal, Internal and external auditor are still among best jobs listings in newspaper. They are similar but differ in roles and responsibilities and this report will help discover these differences as information gathered from various resources will be analyzed and discussed within the body of the report. As a result of this explanation, I personally will have to put a lot of thought into which type of auditor I would like to become.



This report will cover the planning of auditor’s tasks, role and responsibilities, similarities and differences in their procedures, the advantages of having both audits done in the organization

Summary, Conclusions and Recommendations
As internal auditor monitors the internal function within the organization by designing a system to allow them reach their goals, external auditor audits internal auditors by reviewing and giving an opinion if truly what was presented on financial statement is fair and free from material misstatements. There is a great benefit to an organization as it helps prevent any form of fraud that managements might want to cover up. Although the cost of an external audit could be expensive, but it saves and organization the risk of having false information and creates a better image for people who are looking to invest in the organization.

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Revised Text:

Part 1: Background, Subject matter and Purpose of Paper

Internal auditing is defined as “an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.”

IIA Website-Standards

External auditors perform an audit on the financial statements of a company, government, individual, or any other legal entity or organization, and are independent of the entity being audited. The purpose of this paper is to compare the internal auditing procedures to the types of procedures that would be required in a standard external audit.

Method of collecting data will be by researching the:

1. IIA Website-Standards: The Institute of Internal Auditors Website provides resources in
- Governance and risk management control
- Independence& objectivity
- Internal Audit Functions

2. Data#3 Limited, an Australian Information and Communication Technology (ICT) solutions company.(Reviewing a Company’s Audit Committee Charter)
- Agreements that govern the operations of audit committees; this will provide more information on the duties and responsibility of an external audit, their scope, communication, independence, etc.

3. Arens, Alvin A., et al. Auditing and Other Assurance Services, Canadian 10th ed. Pearson Education Canada Inc., 2006.
- Economic demand for auditing and illustration of why auditing is necessary.

Part 2: Additional information

Although the auditing profession was once dragged through the mud due to the Enron and Arthur Anderson scandal, internal and external auditors are still among the best jobs listings in newspapers.

These are similar but differ in their roles and responsibilities and this report will help discover these differences. Information gathered from various resources will be analyzed and discussed within the body of the report. As a result of this explanation, I will personally have to put a lot of thought into which type of auditor I would like to become.

This report will cover the planning of auditor’s tasks, their role and responsibilities, similarities and differences in their procedures and the advantages of having both audits done in an organization

Summary, Conclusions and Recommendations

As internal auditors monitor the internal functions in the organization by designing a system to allow them reach their goals, external auditors audit the internal auditors by reviewing and giving their opinion on whether what was presented on a financial statement is fair and free from material misstatements.

There is a great benefit to an organization as this helps prevent any form of fraud that managements might want to cover up. Although the cost of an external audit could be expensive, it saves an organization the risk of presenting false information and creates a better image for people who are looking to invest in the organization.

Editor:

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Sep 19, 2010
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Thanks you it was truly appreciated
abby

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