An auditor is an independent person or company appointed to check and verify the accuracy of financial records. An auditor may be an external auditor who examines the financial records and business transactions of an entity in which there is no affiliation or an internal auditor responsible for providing independent and objective evaluations of an entities financial and operational activities.
External auditors are engaged to express an opinion that the financial statements of an entity are free from material misstatements. An external auditor will communicate to management and staff to obtain a detailed understanding of an entity, of the operations of the entity, financial reporting and internal control procedures.
External auditors conduct the audit in accordance with specified audit guidelines and the users of an entities financial statements rely upon the external auditor to present an unbiased and independent audit report.
Internal auditors while employed by the organisation they audit bring a systematic and disciplined approach in evaluating financial and business activities inclusive of the effectiveness of risk management, control and corporate governance. Internal auditors report to management on how to improve the overall structure and business practices of an entity.
Internal auditors are not responsible for implementing the activities of an entity. The role of an internal auditor is to advise the Board of Directors how to better implement their responsibilities. An internal audit report will summarise the findings, recommendations and generally contains an action plan for management to implement.
Please note: Prepared by Leigh Barker Accountant at MWC Group, Tangible Assets, Portfolio Finance, Gordon and West Pennant Hills. Note that all content of this blog is general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstance.