The Difference Between an Internal and External Audit

Running a business is not always easy; business management can be hard, especially if you are a small or medium sized organization that needs to grow and expand over time. In addition to proper management and sound financial administration principles, obtaining a professional audit can be very beneficial for your business. The Role of an Auditor Most auditors are seen as an independent advisor who looks at your current business operations and assess whether there are any problems or areas where attention is needed to avoid possible liability. An auditor is also seen as a person who analyzes financial statements for accuracy and validity, to make sure that your business meets its objectives. There are different types of audits, including financial, operational, investigative, and compliance audits. Auditors will do more than simply verify financial statements; they will accurately assess your business and look for any possible areas where you can be liable for not following rules or guidelines, and advise you on how to correct this. They will make sure that your business function properly and that you comply with all the relevant rules and guidelines that govern your particular industry. Here are a few benefits of obtaining a company audit: • Verify your financial statements and profitsrn• Ensure that your company’s resources are used effectivelyrn• Ensure that your company meets its long- and short term goalsrn• Verify that your business is compliant with the law Internal vs. External Audits An internal audit will focus more on the organization itself, its roles, functions and operations. An internal auditor can be part of an organization but they are independent of management, so that they can provide an internal report to an audit committee. An internal auditor has a much broader scope to work with, compared to an external auditor. An external audit refers to the financial and accounting side of an organization. An external auditor is independent from the organization and has a statutory obligation towards shareholders and the public, in terms of accuracy of a company’s financial statements and reports. Where an internal auditor focuses on the business as a whole, including its operations, an external auditor focuses more on the financials. Whether you run a large or a small company, you can always benefit from an audit service. This can help you when you want to submit a tender in order to win a contract, or if you want to sell the business in the future. Having verified financial statements is a clear indication that your business is operating in accordance with the law and all relevant guidelines.