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Is there a difference between an Internal Auditor and an External Auditor?

Updated: Dec 17, 2022

Yes. Both of these have their own unique qualities that set them apart.

Auditing may primarily be broken down into two categories: internal and external.

An internal audit department is staffed by employees of that entity who will provide internal audit functions that benefit the entity as a whole. However, it is common for businesses to contract out their internal audit function.

This is typically done when the expenses of having an in-house audit function do not outweigh the benefits of having one.

Internal audit departments will conform to their own auditing standards, generally independent of the International Standards on Auditing (ISAs). They will have their tasks outlined by the organisation's management.

Internal auditing serves its purpose by, among other things, examining, evaluating and reporting to management with reports on the adequateness and efficiency of various accounting and internal control systems.

To put it another way, the purpose of an internal audit is to provide value to and enhance an organisation's operations.








On the other hand, an external audit is almost always a requirement that must be fulfilled (either by legislation or other rules and regulations, such as listing rules or because financiers require an audit of the financial statements to be undertaken).

The Companies Act 2016 mandates that all entities established under the Act must have their financial statements audited by a certified auditor, except for those companies exempt from this requirement.

The entity's financial statements will constitute the exclusive and primary focus of the aim of the independent audit (in contrast to the internal audit, which is focused on the operations of the entire business).




The following is a table that compares and contrasts internal auditing with external auditing:


Internal Audit

External Audit


It is developed to enhance the performance of an entity's activities.

​To provide an opinion about whether or not the financial statements are presented fairly (or to give a true and fair view)


Those responsible for governance (such as the audit committee) or management (the board of directors) are the ones who receive reports from this department. Internal audit reports are not made public and are kept strictly confidential.

Contains information that is communicated to the entity's shareholders or members on the truth and fairness of the financial statements. Reports are given to shareholders and anyone else who might be interested in the reporting company. They are also available to the general public.


The work of internal audit relates to the operations of the organisation

The work of the external auditors relates to the financial statements


Employees of the organisation frequently fill positions in the organization's internal audit departments (where the role of internal audit is not outsourced)

Auditors appointed by the company's shareholders are considered external auditors because of their independence from the corporate entity.

Planning and evidence collection

Long-term planning will take place, emphasising the business's overall strategy and the goals it aims to accomplish. There will be no materiality level established, and the evidence gathered by the internal audit will often be internal.

Its purpose is to have external audits done to see if the financial statements are true and fair in how they show the business. The importance of the financial statements and the company's performance will be figured out, and evidence will be gathered in several ways that will be sufficient and appropriate.

There are no legal requirements to become an internal auditor. As a result, internal auditors are not required to be members of a professional body.

This is because business policy, as opposed to external rules or standards, is more likely to be responsible for defining the function of internal audits.

On the other hand, a significant number of internal auditors hold accounting degrees, and there is a recognised institution for internal auditors known as the Institute of Internal Auditors, [the Institute of Internal Auditors Malaysia (IIA Malaysia)], which internal auditors can join as members.




另一方面,相当多的内部审计师拥有会计学位,而且有一个被称为内部审计师协会的认可机构,[马来西亚内部审计师协会(IIA Malaysia)],内部审计师可以作为会员加入。

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