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The difference between internal and external audit roles

Written by: ICAEW Jobs
Published on: 13 Nov 2023

Internal and external audit roles

Professionals working within the audit field can either work internally or externally. Both internal auditors and external auditors deliver independent opinions. Internal auditors provide an objective view of risks and risk management and external auditors report on whether an organisation’s financial statements provide a true and fair view.

Do you already work as an internal auditor and are considering moving to an external auditing position? Or are you an external auditor, looking to move into an internal auditing role? Understanding the differences between internal and external auditing positions is key for deciding on the specialism you want to do.

This article identifies the differences between internal and external audit roles.

Where they’re appointed within a business

Within a company, there is a major difference in how internal and external auditors are appointed within an organisation.

Usually, internal auditors are appointed within a company, but can also be recruited externally by an organisation. If you are already working internally as an auditor in your current role, then you will be familiar with how your employer operates, as well as their policies, and processes. As an internal auditor, you play an integral role in the reputation and growth of your organisation

External auditors, on the other hand, are appointed externally, usually by company shareholders, following previous discussions made by leadership. As an external auditor, you should be appointed without having a conflict of interest from another company of your own. 

Differing responsibilities between internal and external auditors

Both internal auditors and external auditors have differing responsibilities from each other.

Before settling on whether you want to work externally or internally as an auditor, it's essential to have a good understanding of what each role is responsible for. With an internal auditor, you are responsible for reporting to the company’s senior management, while an external auditor, reports to the organisation’s shareholders, which may be its owners, government, or the public.

Internal auditors are responsible for assessing the effectiveness of controls in mitigating risks

As an internal auditor, you are responsible for providing objective assurance that boards require that an organisation’s risk management, governance and internal control processes are operating effectively.  Internal audit usually has a very strong focus on processes and systems, focusing less on risk based testing and more on organisation operation.

External auditors report on the truth and fairness of financial statements

With an external auditor, you are hired by the company’s shareholders to assess whether the company’s financial statements provide a true and fair view. In making this opinion external auditors will do a higher level, risk based assessment of processes and systems. 

To give a true and fair view, financial statements must not be materially misstated and must be prepared in all material respects, in accordance with accounting standards and legal requirements. 

Following the ICAEW Code of Ethics is crucial to ensuring that you operate ethically as an external or internal auditor.

Secure your next internal or external audit role with ICAEW Jobs

Understanding the differences between internal and external auditing is essential when it comes to deciding which auditing specialism you want to follow.

Explore our structured learning solutions through the ICAEW Academy, offering world-leading content and valuable advice for your career development.

Thinking about taking the next step in your chartered accountancy career? ICAEW Jobs can help you find your dream internal or external auditor position. Find out more about the latest job opportunities and career advice on the ICAEW Jobs website today.