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Internal audit is performed by the employees of the company whereas external audit is performed by specific people who come from outside companies
Internal auditors can look into the efficiency of internal control systems like
purchasing, sales , ordering and other systems . ?
And external auditors can only audit the financial statements and nothing else of a company
Am I correct sir
NO … “audit” is a function – internal/external describes its purpose – “internal” supports management/the board in fulfilling their responsibilities. Internal audit may be provided by an “in-house” internal audit department OR outsourced to an external supplier.
External audit means “statutory” audit – yes this will be performed by a firm independent of the company in order to provide an independent auditor’s report see page 32 of the notes.
Internal audit, IF a company has such a function, will look at whatever is specified within its terms of reference but will typically look at matters of operational efficiency and controls over assets, etc.
The external auditor’s opinion is on the financial statements, but an audit examines anything and everything that could have a possible bearing on the financial statements – and that most certainly includes the system of internal controls over all transactions.
Please do READ page 33 of the notes – it is provided early in the course to give you a “flavour” of what the audit involves – you don’t have to understand every word of it.