Page 101 - Microsoft Word - 00 Prelims.docx

Controls

Distinction between external and

internal audit

External audit Internal audit

Objective Express an opinion on the truth Improve the company’s
and fairness of the financial operations by reviewing
statements in written report. the efficiency and
effectiveness of internal
controls.

Reporting Reports to shareholders. Reports to management
or those charged with
governance.

Availability of report Publicly available. Not publicly available.
Usually only seen by
management or those
charged with
governance.

Scope of work Verifying the truth and fairness Wide in scope and
of the financial statements. dependent on
management’s
requirements.

Appointment and By the shareholders of the By the audit committee
removal company. or board of directors.

Relationship with Must be independent of the May be employees
company company. (which limits
independence) or an
outsourced function
(which enhances
independence).

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