Many will be on edge when they hear about an audit as we all know how auditors are demanding and strict in their challenging work to get efficient and accurate results. However, everyone knows that audits take place to monitor the financial health of a company.
This article will discuss briefly the benefits of both internal and external audits, which in general both have one aim; to improve efficiency in operations and increase financial reliability and integrity.
As the name suggests, internal auditing is carried out by internal auditors who are employed with the company to provide advice and consulting assistance to the various departments within the company itself. In fact, such reports are used by management to be able to act on the findings such as internal controls and the company’s business practices, while looking at risks that the company might be facing, and ultimately how the business is managing the reported risks effectively. That is why internal auditing is sometimes also referred to as an early warning system.
This type of auditing is conducted regularly throughout the year to find and examine such internal issues.
On the other hand, external auditing is conducted by independent auditors that are not associated with the company undergoing an audit to provide an objective overview of the business’ accounting processes.
For this exercise, which is generally conducted once a year for statutory purposes, such auditors must be certified (CPA). Since the reports that they finalise are to be used by stakeholders and investors, they give their experienced opinions on the financial statements of the company.
If you are looking into auditing services, or have any questions about anything in particular, you can contact us.