Introduction (Meaning of Internal Audit)
Internal audit is part of internal control, set by the management, delegating its supervisory functions to specially assigned staff, with the objective to see that the internal controls are in operation and to assist them in fulfilling their responsibilities such as
1. safeguarding of the assets
2. reliability of financial records and
3. efficiency in operation
Definition
“Internal auditing” means an appraisal activity established within an entity as a service to the entity. Its functions include, amongst other things, examining, evaluating and monitoring the adequacy and effectiveness of the accounting and internal control system.
DIFFERENCE BETWEEN INTERNAL AND EXTERNAL AUDITORS
| INTERNAL AUDITOR | EXTERNAL AUDITOR | ||
| Objective | Accounting system and internal control are operating efficiently. | Report on Financial statements. | |
| Responsibility | Responsibility to the management. | Responsibility to the share holders. | |
| Scope of work | Determined by management . | Determined by the statute; otherwise determined through mutual agreement between auditor and the client. | |
