Internal and External Auditors
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Internal and External Auditors
According to Leitner (2013) auditing is the impartial and detailed evaluation and systematic examination of the books, records, statements, and accounts of an organization to determine if they are accurate and have complied with specific guidelines. There are financial, strategic, and operational and Information and Technology audit, although financial ones are the most popular. Internal auditors are the firm’s actual employees and stakeholders who are tasked with performing general auditing processes throughout the year to ensure that the accounts and records are appropriately done. In terms of discovering fraud, they perform assessment and evaluation of the organization and note whether it is complying with the internal norms, rules and regulations, and the overall set guidelines. However, internal auditors are least preferred because they lack objectivity, are reluctant to uncover shady deals, and are not as thorough as external auditors.
External auditors, on the other hand, are public, independent, and third party agencies such as the Big Four corporations and accountants who work with different organizations and their engagement team to perform the auditing procedures. They assess and evaluate whether a company is complying with the regulatory norms such as the Generally Accepted Accounting Principles (GAAP), among others (Knechel & Salterio, 2016). They ensure that there are no fraud schemes. In as much as auditors try to fraud-proof a firm, they cannot manage to check every figure in the financial report nor look at all the firm’s transactions. Hence, there is a possibility of fraudulent dealings passing them by. Additionally, another concern is the fact that auditors conspire with the organization’s management to cover up their internal weaknesses hence defeating the purpose of the audit itself.
References
Knechel, W. R., & Salterio, S. E. (2016). Auditing: Assurance and risk. Routledge.
Leitner, S. (2013). Information Quality and Management Accounting: A Simulation Analysis of Biases in Costing Systems (Vol. 664). Springer Science & Business Media.