Auditors of all types must be incisive, focused and diligent with a strong sense of purpose, integrity and ethics. However, the difference between Internal Audit and External Audit is not always well-understood. The IIA–Australia, the professional body for Internal Auditors in Australia, has put together this Fact Sheet to help explain the key differences.
External Audit Internal Audit
Appointed from outside the Employees of the organisation, or can be
organisation (independently Status an independent entity through outsourced appointed in the public sector). or co-sourced arrangement.
Independent of management and the Independent of activities audited, but able
governing body (including board of Independence to respond to the needs of the audit directors). committee and management.
Serves third parties that need reliable
financial information, including Serving Serves the needs of the organisation. shareholders (corporate sector) and parliament (public sector).
Audit committee functionally for
Shareholders and board of Reports to operations and chief executive officer directors. for administration.
Varies according to the audit; focused on
True and fair view of financial evaluating controls designed to assure Objective statements. the accomplishment of the organisation’s goals and objectives.
Historical events as expressed in the
financial statements. Focus Forward-looking.
Reviews records supporting the Reviews governance, risk management,
financial statements (usually Coverage and control processes according to risk- annually). based need.
Help organisation to enhance and protect
Opinion on financial statements. Outcome organisation value and accomplish objectives.
Incidentally concerned with
prevention and detection of fraud in Is directly concerned with the prevention general, but is directly concerned Fraud of fraud in any activity reviewed. when financial statements may be materially affected by fraud.
Shareholders, regulators, board of
Reports go to Management and audit committee. directors and audit committee.