Internal Audit And External Audit - 1136 Words

Introduction Basically, audit is a systematic and independent process that requires qualified accountants, who are the auditors, to verify and evaluate the financial information (books of account, transaction records and relevant documents) of an organization objectively to ensure that whether the financial statements present a true and fair view and are prepared in accordance with law. It can be done internally and externally. One of the main differences between internal audit and external audit is that external auditor is a third party and resides outside of the organization. In recent years, the independence of external auditors is a heated topic and has been highly emphasized by the legislation in different countries in result of several firm’s scandal, directly or indirectly involving auditor, which happened not in just one specific country but across the world. Importance of Auditor Independence 1. Demand for independent audit Auditing services are desired to facilitate dealings between business-related parties, e.g. shareholders, directors, employees, customers and authorities. Communications among them would be costly because the asymmetries of information brings uncertainty on contractual obligations. Financial information are usually compiled by accountants inside the companies. A review of accounts by independent experts, i.e. external auditors, who has no incentive give out favourable opinions due to personal interests, enhances the reliability of theShow MoreRelatedInternal And External Auditing Audit Essay1554 Words   |  7 Pagesagents that ensure the accuracy of financial statements. Although internal and external auditors play different roles with an organization, they must follow auditing standards and procedures to detect fraud. In 1941, The Institute of Internal Auditors (IIA) was founded to provide guidance to internal auditors (Whittington Pany, 2014). â€Å"With over 170,000† international members, â€Å"the IIA has paralleled the recognition of internal auditing as an essential control function in all types of† businessesRead MoreWalmart Internal and External Audit1701 Words   |  7 PagesStrengths 1. Core competency/Cost Leadership- Walmart is known for their â€Å"everyday low prices.† This sets them aside from their major competitors such as Target. Walmart strives for saving people money so they can live better. With the cost leadership strategy in effect, Walmart is ensured a steady and returning flow of customers to their stores. That understood, Walmart has a comparative advantage over their competition. Consumers are able to feel better about their purchases knowingRead MoreThe Relationship Between Internal and External Audit3852 Words   |  16 PagesRELATIONSHIP BETWEEN INTERNAL AND EXTERNAL AUDIT Professor PhD Atanasiu Pop, „BabeÅŸ-Bolyai† University of Cluj-Napoca, e-mail: apop@econ.ubblcuj.ro PhD Student Cristina BoÃ… £a-Avram, „BabeÅŸ-Bolyai† University of Cluj-Napoca, e-mail: botaavram@gmail.com PhD Student Florin BoÃ… £a-Avram, „BabeÅŸ Bolyai† University of Cluj-Napoca, e-mail: botaavramflorin@yahoo.com ABSTRACT: Analyzing the evolution process of internal audit, from its beginnings and so far, we can easily notice that internal audit function was bornRead MoreThe Healthsouth Fraud And Internal And External Audit Failure3212 Words   |  13 Pages The HealthSouth Fraud: An In-Depth Analysis of the Fraudulent Activities and the Internal and External Audit Failure HealthSouth Corporation is one of the U.S.?s largest healthcare companies and is the biggest owner and operator of inpatient rehabilitative hospitals. The present CEO, Richard Scrushy, founded this Fortune 500 company in 1984. It expanded tremendously in the 1990s and received most of its revenue through Medicare. By 1993, it became the largest rehabilitation services company.Read MoreAssessing The Internal Audit Function988 Words   |  4 PagesAssessing the Internal Audit Function Auditing standards are published by the Public Company Accounting Oversight Board (PCAOB). As such, the PCAOB published Auditing Standard Number 5 (AS 5), which recommends integrating an audit of intern controls with the audit of a firm’s financial statements (PCAOBUS, 2007). An auditor’s objectives of the internal controls audit and that of the financial statements are not identical, and the auditor must perform the audits to achieve both objectives. Internal AuditRead MoreSolution Essays1577 Words   |  7 PagesRole of Internal Audit Function Nano Circuits Inc, is a publicly traded company that produces electronic control circuits, which are used in many products. In an effort to comply with SOX, Nano is in the process of establishing an in-house internal audit function, which previously had been outsourced. The company began this process by hiring a Director of Internal Audits. Nano Circuits’ CEO recently called a planning meeting to discuss the roles of key corporate participants regarding the implementationRead MoreImpact of Job Rotation on Employees Performance1032 Words   |  5 PagesAuditing Task: Difference Internal and External Audit. Submitted to: HamzaSiddiq BushraNaeem Section: A3 Roll No: 0072 Submitted by: Definition Of Audit: â€Å"An audit is a person appointed to examine the books of account and the account of the registered company and to report upon them to company member† Types Of Audit: * Internal audit * External audit. Internal auditor: â€Å"An authorized person appointed by the management to check the internal affairs of the organization notRead MoreWorld Com Case Essay1081 Words   |  5 PagesWorldCom: internal audit lessons to be learnt On June 9 2003, the U.S. Bankruptcy Court of New York issued a report on the WorldCom accounting fraud that expands on the courts earlier findings of mismanagement, lack of corporate governance, and concern regarding the integrity of the companys accounting and financial reporting functions. Supervised by former U.S. Attorney General Richard Thornburgh, the study was commissioned by the court to investigate allegations including fraud, mismanagementRead MoreThe National Health Care Billing Audit Guidelines1708 Words   |  7 PagesInternal and outside auditors have a heavy role and responsibility in performing audits, preventing major accounting errors, and following (GAAP) guidelines. Several duties comprise the role of internal and outside auditor to follow specific protocol and ensure ethical standards are priority. The National Health Care Billing Audit Guidelines are relevant to address as well as why audit failures happen. Finally, how internal vary from external audit and why audits are overall important to health careRead MoreThe Independence Of Internal Audit1489 Words   |  6 PagesBecause of the Enron Corporation and other scandals, independence of auditors becomes a vital issue in the audit industry. It is difficult to achieve ‘independent’ fo r auditors as there is the fact that the client pays the audit fee. In this essay, we will focus on the independence of internal audit. Internal audit plays an important role in a company. According to the IIA (1999), â€Å"Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an