Difference between Internal and external audit

Difference between Internal and external audit

1. Appointment

Internal auditor is appointed by the equity holder in the general meeting.  Internal auditor is selected by the management.

2. Term of office

External auditor is normally appointed for one financial period and then may be reappointed. Internal auditor is appointment is regulated by appointment contract which may vary company to company.

3. Reports

External auditor reports are issued to public and it is public information where the internal audit report is presented to management and it is not published with annual account.

4. Independence

External auditor enjoy total independence from the management where the internal auditor are not fully independent and management has control and exercise some influence on the auditor.

5. Scope of work

External auditor scope of work is defined by the regulator or statue where the internal auditor scope is defined by the management.

6. Removal

Internal can normally be removed by the management while the external auditor once appointed cannot be removed unless the completion of auditor.

7. Form and format of report

Content and format is decided by the management or internal auditor as per convenience however the external audit report content is decided by auditing standard and regulator.

8.Mandatory

External audit is almost mandatory around the globe however the internal audit are mandatory in some countries.