While internal audits are conducted by either employees or third-party chartered accountants in order to determine whether specific business practices may be beneficial to a company or organization, external audits are typically conducted by an external accounting firm and are used to determine if annual accounts are accurate. Both internal and external auditing services are essential for identifying and correcting any financial issues that may pose a risk to a business. Access to the right financial services and accounting solutions is essential for ensuring any type of audit is able to be conducted as effectively as possible.
Internal audits are typically used in order to generate data and insight regarding potential risks and future objectives. While these audits are typically conducted by employees who may or may not possess a financial background, use of a third party charted accountant or accounting firm is not uncommon. The agenda of these internal audits is set internally, and auditors will typically provide reports and detailed information to internal management in an effort to ensure that more effective and educated decisions are able to be made. Internal auditors typically create a tailored report detailing financial risks and options with a focus on helping a business improve efficiency or achieve future goals.
These audits are conducted by a third-party accounting firm and are typically used to uncover or identify inaccuracies, omissions, and other issues pertaining to annual financial reporting. The plan of an external audit is set by the auditor depending and may be determined based on the risk of errors, inaccuracies or intentional misstatements within the established financial record. External audits are used to provide shareholders, clients and other external parties with detailed information on whether a businesses financial accounting practice is true, accurate and above board.
Situations That Require an Audit
While the decision to conduct an internal audit is a discretionary one, legal requirements that call for an external audit can vary. Internal audits are typically performed by businesses seeking to determine the effectiveness of existing practices, outline potential options or determine the a future course of action. External audits may be required when businesses are under investigation for financial mismanagement or when called for by banks, shareholders or business partners.
Professional Accounting Services
The services of a qualified chartered accountant or firm may be required when undergoing either an internal or external audit. While internal audits do not need to adhere to the strict oversight and regulations governing an external audit, the services of a professional accountant may still be required in order to ensure all information and reporting is able to be as accurate as possible. Chartered accountants, financial professionals and firms provide a wide range of financial accounting and reporting services that may be required when performing either an internal or external audit.