ACMA Knowledge Center

L.U.2.9.2: Audits are fun!

Internal vs. External: Summary table

AREA INTERNAL EXTERNAL

1. Main Purpose To independently review financial To ascertain and report that the
accounting and management published accounts are compiled in
accounting systems and procedures. accordance with statutory
To appraise whether resources are regulations and with accepted
being utilised in an efficient and accounting principles and
effective manner, as an aid to conventions, to give a fair view of
management. the financial position of the
undertaking and its operating
results.
2. Appointed by The management. MSF Board (for global) MCT for
mission.
3. Scope of work Guided by the constitution and Letter of agreement will outline
standards procedures. scope of the audit.
Compliance with effectiveness of Bound by world-wide accounting
procedures and internal controls. standards.
Authenticity, regularity and propriety of Authenticity, regularity and propriety
transactions; detection of technical of transactions, detection of
errors and omissions; detection and technical errors and omissions.
prevention of fraud. Compliance with procedures and
effectiveness of internal controls.
4. Focus of review Starts at the organizational chart and Through the Balance Sheet and the
procedures manual. accounts.
Follows with detailed examination. Sample checks in first instance.
5. Qualifications Do not have to have formal Qualified by formal accountancy
accountancy qualification. training and registration as auditor.
Qualified by experience.
6. Employed by Could be an employee of the Will never be an employee of the
organization organization
7. Report Will always produce a report to the Formal opinion reported to the
management outlining findings, Board (or MCT.)
weaknesses and recommendations. Usually produces a Management
Letter.
8. Other Less formal in approach. Formal review.
Continuous reviews. Periodic reviews.
Follow up coaching / training possible. Follow up coaching / training very
unlikely.