Some point related to difference between external & internal audit

[rajni]

External audit: Takes place at annual intervals

Internal audit: Takes place continuously / periodically

External audit methodology

 Planning:
Perform risk assessment procedure and identify risk
 Control evaluation:
Evaluate design and implementation of selected controls
 Substantive testing:
Consider if audit evidence is sufficient and appropriate
 Reporting:
Report in a manner that is brief, specific, to the point and based on fact and figures

Different aspects of audit evidence
 Test of controls
 Test performed to obtain AE about operating effectiveness of controls
 Test preventing or detecting and correcting material misstatement at assertion level

Substantive procedures

 Audit procedure performed to detect material misstatement at assertion level
 Include: Test of detail of transactions, account balances and disclosures and Substantive analytical procedures

External auditor:
Reviews effectiveness of internal audit and then decides the extent of audit procedure required

Internal auditor:
Carries out procedure to obtain audit evidence of the reliability and effectiveness of the whole operating system