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Unit 6: Internal and External Audit

Unit 6: Internal and External Audit Notes

CONTENTS
Objectives
Introduction

6.1 Meaning of Internal Audit
6.2 Objectives of Internal Auditing
6.3 Essentials for Effective Internal Auditing

6.4 Management Functions and Scope of Internal Audit
6.5 External Audit
6.5.1 Function
6.5.2 Time Frame
6.5.3 Significance

6.5.4 Features
6.5.5 Misconceptions
6.5.6 External Audit Activities

6.6 Similarities and Dissimilarities between Internal and External Audit
6.7 Co-operation between External Auditor and Internal Auditor
6.8 Internal Check and Internal Audit
6.8.1 Internal Check vs Internal Audit
6.9 Summary

6.10 Keywords
6.11 Review Questions
6.12 Further Readings

Objectives

After studying this unit, you will be able to:
 Narrate the concept of internal audit
 Explain the various objectives of internal audit
 Co-relate the management functions and scope of internal audit

 Differentiate between internal audit and external audit
 Describe internal check and internal audit

Introduction

Internal audit is established by management to assist in corporate governance by assessing
internal controls and helping in risk management. The ethical requirements differ from those of

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