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Chapter 9 3 4

Difference between internal and

external auditors

External audit Internal audit

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

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

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

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

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

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

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