Internal and External Audit
Please choose the following topics that you want to study and research about internal and external auditing:
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What will we study about external audit ?
When we say about external audit, we will consider about International Standard on Auditing (ISA).International Standards on Auditing (ISA) are professional standards for the performance of financial audit of financial statements. Financial Statements are audited included income statement ( statement of comprehensive income), balance sheet ( statement of financial position), statement of change in equity, statement of cash flow and notes to financial statements.
These standards (ISA) are issued by International Federation of Accountants (IFAC) through the International Auditing and Assurance Standards Board (IAASB).
Each country may have different accounting standards or auditing standards, if so external auditors will use these auditing standards to audit financial statements based on local accounting standards. Some countries may allow or use international accounting standard (IAS) / international financial reporting standard (IFRS) or International Standards on Auditing (ISA) for some companies (e.g listed companies), if so external auditors will use these standards for auditing financial statements.
Finally, external audit focuses on financial statements auditing.
What will we study about internal audit ?
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. Word “Independent” is for company, but external parties may think it is not independent. For example, If your company requests loan from bank, bank may request audited financial statements by external auditors (not internal auditors).
Objectives and coverage : evaluate and improve the effectiveness of governance, risk management and control processes. This provides members of the boards and senior management with assurance . Internal auditing covers all categories of risk.
Finally, Internal audit focuses on all areas or departments in company.