What is the key difference between internal and external audit?
Answer and explanation
Correct answer: B. Internal audit reviews controls and risk for management; external audit reports on the accounts to shareholders
- Step 1: External auditors are independent and report to shareholders on the financial statements.
- Step 2: Internal auditors work for management and review controls, risk and efficiency.
- Step 3: Only external audit is generally a legal requirement.
Answer
Internal audit reviews controls and risk for management; external audit reports on the accounts to shareholders.
Why not the others: The legal requirement is for external audit of most companies; internal audit is generally voluntary. The roles are reversed. Neither is carried out by these groups; internal auditors are employees or outsourced experts.
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