Importance Of Internal And External Audit

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, …show more content…
An audit also serves to give affirmation of compliance with approved procedures and regulatory requirements. Internal and external audit functions complement each other but differs with both having its own importance and expertise. While internal audit can be deemed an internal control approach set up by Management of an organisation meeting the latter purpose of an audit stated above, external audit is an external control methodology imposed by Stakeholders/Owners which meets the former purpose of