Internal Audit vs. External Audit
Definition of Internal Audit
Internal audit is the one which is carried out by the company for the company. Someone from the employees is appointed who has relative experience and then is appointed with the task of finding the solution. It does not have to be a CPA and does not need to report to a private person. All the matters of company stay between the people and they make sure that the issues are solved in the best possible way. There is no format requirement for such types of audits since they are in-house, different ones such as a formal report, bullet points, a letter or even power point presentation can be used to convey the solution. There is no limit to how many times it can be conducted over the year. There can be many issues which need addressing therefore, several audits can be carried out at the same time.
Definition of External Audit
These types of audits are carried out by a private firm of an independent company. This is carried out if a shareholder wants and has the full backing of the directors. There is a requirement of a competent professional which is usually a Certified Public Accountant who has the knowhow of all the matters and is bound to report to a specific person who is not related with the company in any way. This results in a neutral analysis of the company. Main aim is to make sure that one client is not getting all the favors and others being ignored while all the money related matters have transparency. A proper report structure has to be followed since it is a professional work while the audit can only be carried out once a year since multiple ones will result in company not being able to perform its daily tasks in an orderly manner.