Comparing the main differences between internal and external audit

Posted by All Around Moving on October 3rd, 2022

The audit process is extremely important for organizations. After all, its main purpose is to certify the company's assets.

 There is internal and external audit and, although they have the same objective, they have different characteristics.

 Before we understand exactly what these differences are, it is worth remembering that the audit does not only inspect the financial statements.

 It is critical to ensuring transactional and operational processes such as inventory and processes.

 Now that you have a little insight into the importance of Auditors in UAE, it's time to understand the main differences between them, and that's what we'll help you do in this article.

 Keep reading and check it out!

 What is internal and external auditing?

 Internal auditing is the process in which a company's own auditor is used.

 The internal auditor acts primarily to assist the administration and, therefore, is very close to the board or presidency, as their role is to assess whether processes are being carried out correctly and indicate non-conformities.

 The external audit has as main focus the analysis of policies, procedures and financial statements.

 As the name suggests, it is carried out by independent professionals, who must, at the end of the analysis, issue an opinion of what was visualized.

 Large companies are required by law to use external auditors registered with the Securities and Exchange Commission (CVM).

 Understand the differences between audit professionals

 To facilitate the understanding of all the differences, below, we will see the differences between the roles of internal and external auditors in the activities performed.

 Check out the main features of each one:

 Internal Auditor:

• is a professional of the company itself;
• there is no requirement for training, and specialists can be used in the area of ​​greatest need of the company;
• its main action is to analyze internal controls and procedures;
• its main objective is to comply with the determinations of senior management and promote improvements in internal processes and fraud detection;
• at the end of the audit, actions are recommended to optimize processes and ensure greater efficiency;
• although this professional reports directly to senior management, he is not totally independent, and must follow the directives of the board;
• the internal auditor has direct responsibility to the company in which he works;
• As the focus is on internal controls, the work is on-going.

External auditor:

• is an independent professional or a specialist audit firms in Sharjah;
• must have a degree in accounting and be registered with the CRC;
• its main action is in the financial statements and specific needs;
• the main focus is to ensure the accuracy of the financial information and suggest actions to improve the results presented in the financial statements, attesting to the market the fidelity of the information and good practices;
• after the audit, the external auditor must issue an accounting opinion , pointing out the identified opportunities and suggesting improvements;
• the external auditor has high autonomy and independence;
• he is responsible to the client that hired him, the suppliers, the company in which he works and the government;
• The external auditor acts only to perform the contracted activity, that is, its activity is periodic.

 What is the best?

 It is important to make it clear that one audit does not replace the other, but rather complement each other.

 You need to first identify your needs and only then choose the one that will best deliver the results you need.

 For example, if your focus is purely accounting and you want to get loans, investors or increase market value, the suggestion is an external audit.

 If the focus is operational and process improvement or generating information for senior management, choose internal Auditors in Dubai.

 As we have seen, internal and external auditing is of paramount importance to the company, generating trust and credibility for the market, improving processes and increasing productivity and profits.

 Want to know how your company can benefit? Discover our services and let us help you!