Internal audits are conducted by those people who are responsible for ensuring that the company’s policies and procedures are being followed properly. An internal audit is a “solemn opinion” on the internal functioning of an organization, either profit or non profit, regardless of its legal structure or size when such an audit is conducted by an impartial and qualified authority. It is important to point out that an internal audit is entirely separate from the business or operational audits of which it is a part.
External audits refer to those carried out by outside agencies. They include audits conducted by the Governmental Auditor General, the Government Accounting Standards Board and the Financial Services Authority for example. The objective of such external audits is to ensure that the company and its operations are operating in compliance with all relevant laws and regulations.
Internal/external audits can be undertaken by the company itself or by other professionals such as accountants, analysts, risk assessors and auditors. External audits of the companies that do business with the company can also be conducted by third-party audit firms.
Internal audits are performed by the officers and employees responsible for implementing internal control measures. The purpose of internal audits is to verify that the company’s accounting practices are in line with the law and that the company’s internal control processes are robust enough to protect the financial position of the company. Auditors have the duty to ensure that there are adequate controls in place to limit the risks and rewards of the transactions undertaken by the company, and they have to verify that the controls are working effectively. Auditors also have to ensure that the company complies with all the rules and regulations that are in force concerning internal control. In addition, they also have to make sure that there is regular monitoring of the performance of the internal controls and that are in force at the time that the audit is carried out.
External auditors are employed by the companies to perform audits of their business. The purpose of these audits is to provide information to the company about the performance of the business in terms of the financial matters that are important to it, and the business operations of the business.
The internal and external audits are both interdependent and they cannot be carried out without the help from the other process. The internal audit must be the first part of the process and the external audit must be the second part of the process. The reason for this is that they cannot be carried out if the internal audit process has failed to produce information on which they can be based.
As there are many types of audits, the audit is carried out by several processes. The auditor has the responsibility to conduct a comprehensive, thorough and timely audit of the financial records, accounts and books of the company.
The internal audit includes: an assessment of the overall management system; an assessment of the performance of the financial management process; an assessment of the compliance of the processes of the accounting systems of the company with the accounting laws and regulations; an examination of the compliance of the procedures of the accounting systems of the company with the rules and regulations; and an inspection of the internal controls. {of the company, its financial management system and the accounting process. These audits have to be conducted by the auditor according to the established rules of professional standards. The auditors also need to take into account the internal audit plan of the company so that he or she is able to carry out his duties satisfactorily.
Another part of the internal audit is the review and evaluation of the internal audit plan of the company. This review should include an examination of the performance of the controls in respect of financial reporting, bookkeeping, internal control systems, internal control procedures, internal control over financial reporting, audit and the performance of financial management and the internal control over financial reporting systems. An auditor also needs to perform an analysis of the financial statements prepared by the company in order to ensure that the financial records are in line with the requirements of accounting principles.
In order to carry out the internal and external auditing of the company, several internal control procedures have to be followed. An internal audit is effective only when all the controls that exist within the company have been checked and verified and are in proper working condition and when the controls are checked and verified.
