Difference between external audit and internal audit.

This is quite logical, since they carry out the development of budgetary funds, and managers want to see this process as transparent as possible. It can be noted that the higher authorities who are the managers of budget funds most often become the subject of internal audit in government agencies. Formally, they are not included in the staff of the audited organization, but they are legally associated with it.


The main difference between external and internal audit is that in the first case, the auditing authority is legally independent from the audited organization, in the second, it is its staff structure or a higher management body. Moreover, the external auditor is, as a rule, a specialized firm. Internal reviewing structures can be formed from employees of a wide variety of profiles.

External audit is voluntary, unless otherwise expressly specified in the law. Internal - in most private organizations it is also carried out on the own initiative of the management or due to the wishes of the owner. In the state, in turn, it is mandatory due to the requirements of the legislation. At the same time, in state structures, the audit is carried out most often by higher authorities that are managers of budget funds.

In terms of content and objectives, both types of activities are often very similar. The audit methods can also be broadly the same for both internal and external audit control.

After examining what is the difference between external and internal audit, we will display the criteria we have identified in the table.


External audit Internal audit
What do they have in common?
The same goals - improving workflow, optimizing business processes, the same verification methods
What are the differences between them?
Conducted by freelance, legally independent audit firmsConducted by in-house structures or by higher authorities
Voluntary for a significant part of commercial firms, obligatory for certain areas of budgetary relationsVoluntary for most private companies (unless otherwise provided by law), obligatory for all government organizations