An external auditor performs an audit, in accordance with specific laws or rules, of the financial statements of a company, government entity, other legal entity, or organization, and is independent of the entity being audited. They do audit … When an external auditor examines a company, she must look at the internal workings of the business to evaluate the organization's financial condition.
The primary role of external auditors is to express an opinion on whether an entity's financial statements are free of material misstatements. Most commonly, an external audit is intended to get the certification of financial statements of the company. The main purpose for which the external audit is conducted includes the determination of the completeness and accuracy of the accounting records of the client, to ensure that the records of the clients are prepared as per the accounting framework which applies to them and to ensure that the financial statements of the client present the true and fair results and the financial position. So the company will appoint the auditor who will conduct the external audit of the company and give its audit report in writing, which will be based on the various evidence and information gathered on the true and fair view of the financial statements provided to him to the concerned parties.
Internal Audit is a constant audit activity performed by the internal audit department of the organisation. During a financial audit, the auditor analyzes the fairness and accuracy of a business’s financial statements.
In review auditors are generally required to tick and tie numbers to general ledger and make inquiries of management. Auditors review transactions, procedures, and balances to conduct a financial audit. The extent of liability to 3rd parties is established (in general) by 3 accepted standards: Ultramares, restatement, and foreseeability. The Restatement Standard opens up their liability to named "classes" of individuals. To review the routine activities and provide suggestion for the improvement.
In this case, a company will hire a firm to perform audits on its behalf. Internal Audit provides an opinion on the effectiveness of operational activities of the organisation. Internal Audit is discretionary, but the External audit is compulsory. Example: External Audit: High level of assurance but NOT absolute or 100% A high level of assurance but not the absolute level of assurance is provided, this is known as reasonable assurance. An external auditor performs an audit, in accordance with specific laws or rules, of the financial statements of a company, government entity, other legal entity, or organization, and is independent of the entity being audited. External Audit is an examination and evaluation by an independent body, of the annual accounts of an entity to give an opinion thereon.
The internal auditor's primary responsibility is appraising an entity's risk management strategy and practices, management (including IT) control frameworks and governance processes.