What is the difference between an internal auditor and an external auditor ?
• an internal auditor evaluates internal controls • an external auditor evaluates financial statements What are “internal controls”? Internal control is a process consisting of policies, procedures and activities which are designed to work together to provide reasonable assurance that each department: • Operates effectively, with “checks and balances” • Operates efficiently with little risk of asset loss • Complies with the college policies as well as applicable laws and regulations • Reports reliable financial information Types of internal control: • Segregation of duties (for example one person should not be responsible for authorizing transactions, recording them, and handling related assets) • Vacations (and another takes over those duties) • Authorization of data entry transactions • Verification of accuracy/completeness of data entry • Documents numbered and accounted for What is the authority of an Internal Auditor? I have been authorized by the Board of Trustees to have unrestr
The roles of the internal and external auditors differ substantially and provide very different types of assurance to the audit committee and management, namely: • Internal auditors review and test controls at a significantly lower lever of materiality than do external auditors and often review a much broader range of risks than those for external financial reporting. • External audits are designed to report on historical data, whereas internal audits are generally focused on the efficiency and effectiveness of current and future operations.
