Audit may sound like a "four-letter word," but last we checked the term definitely had five letters! Plus, an audit isn't as intimidating or frustrating as you may think, especially when you and your business team have realistic expectations about the process.
Many companies utilize both internal and external audits to help maximize the integrity of their operational systems. In this article, we'll explain what both of these audit processes are, how they're different, and how they may apply to your company.
Internal audits come from a department within an organization. An internal auditing team's main task is to monitor the company's processes, controls, and overall efficiency. Internal auditors help with important jobs like detecting fraud, assessing risk and controls, ensuring legal and regulatory compliance, and tracking and protecting assets.
Large, complex, and/or publicly held businesses often rely heavily on internal audits, since these more nuanced organizations are more at risk for breaches and systemic failures.
External audits come from independent accountants from outside an organization. An external auditor is tasked with monitoring and evaluating the accuracy of a business's accounting records, whether a business's financial statements are a fair representation of its financial positions, and whether a business's financial records are prepared in accordance with relevant frameworks. Sometimes, external audits are also triggered to search for fraud.
Now that we have a clearer idea of what internal vs. external audits are, it may be helpful to more clearly define how these two important processes differ. Here are at least eight key differences between an internal audit and an external audit:
As you can see, internal audits and external audits are quite different in terms of implementation and intended use. But depending on the size and nature of your organization, you may very well need both.
Ready to see how the experienced business and technology specialists at Integrity Technology Solutions can help your business sail through your next internal or external audit? Contact our team at 309-664-8150 to schedule a consultation today.