.1 It is imperative that all the stakeholders in GR8 Prospects understand the difference between Internal Auditing and External Auditing in terms of the primary objectives:
• External Audit:
The external auditors are not the employees of the organisation. They report directly to the Shareholders of the organisation. They main duty is to tests the underlying transactions that form the basis of financial statements. They form an opinion as to whether or not these statements reflect a true view. Reliance may be placed on the systems that produce the accounts that make up the statements thus reducing testing required if the system is found to be sound
• Internal Audit
The internal auditors are the employees of the organisations. They report to the audit committee and the directors of the company. Provide the opinion of the operations and also advise management on whether its major operations have …show more content…
Currently in practice, many internal audit functions take care not to duplicate the work of external audit and thereby do not provide assurance on exclusively internal financial controls. Internal audit will have to determine the basis and methodology by which it can provide a written assessment on the internal financial controls to the audit committee going forward. The audit committee will have to ensure that internal audit is properly resourced and has sufficient budget. Principle 7.1 of King III provides that the board should ensure that there is an effective risk-based internal audit. The Report further suggests that the internal audit function ‘should adhere to the Institute of Internal Auditors’ Standards for the Professional Practice of Internal Auditing and Code of Ethics at a minimum. The implication is that all CSOs should introduce the standards of a professional practice as a minimum requirement into its internal audit
• External Audit:
The external auditors are not the employees of the organisation. They report directly to the Shareholders of the organisation. They main duty is to tests the underlying transactions that form the basis of financial statements. They form an opinion as to whether or not these statements reflect a true view. Reliance may be placed on the systems that produce the accounts that make up the statements thus reducing testing required if the system is found to be sound
• Internal Audit
The internal auditors are the employees of the organisations. They report to the audit committee and the directors of the company. Provide the opinion of the operations and also advise management on whether its major operations have …show more content…
Currently in practice, many internal audit functions take care not to duplicate the work of external audit and thereby do not provide assurance on exclusively internal financial controls. Internal audit will have to determine the basis and methodology by which it can provide a written assessment on the internal financial controls to the audit committee going forward. The audit committee will have to ensure that internal audit is properly resourced and has sufficient budget. Principle 7.1 of King III provides that the board should ensure that there is an effective risk-based internal audit. The Report further suggests that the internal audit function ‘should adhere to the Institute of Internal Auditors’ Standards for the Professional Practice of Internal Auditing and Code of Ethics at a minimum. The implication is that all CSOs should introduce the standards of a professional practice as a minimum requirement into its internal audit