Essay on The Role Of Internal And External Auditing

1125 Words Aug 18th, 2016 5 Pages
Organisations are formed with the purpose of meeting certain objectives such as vision/mission oriented purposes, progress, productivity and firm’s incessant survival. While some organisations are controlled by the owners in order to meet these objectives, the owners pass the governing of some to others. The obligation to give owners of businesses (owners of resources) an assurance on the performance and reliability of financial statements of an organisation which cannot independently be given by managers who use and control the resources gave rise to the business of external auditing. Internal auditing arose as an increase to external audit in which case managers seek to assure business owners that things are being done dutifully and in manners which are consistent with the terms of their contract so as to get better bonuses/salaries. Internal audit acts as an internal check which assures management’s truthfulness in its internal reporting, it provides affirmations that documents are accurate and certified according to suitable processes. Both internal and external auditing are required to implement the strategies of organisational internal control, risk management and corporate governance to prevent outrages, reputational damages, losses and failures.

An audit is a methodical, objective and independent examination of an entity’s business activities and accounting records, to ascertain and give assurance on the reliability and truthfulness of the entity’s financial…

Related Documents