Audit is independent and primary consideration of financial statements of a company, to generate opinion and report. Audit falls in to two categories, internal audit and external audit. Both are examination and then generating report on findings. Still External audit is different from internal audit.
External audit is independent examination to generate opinion that financial statements are giving “true” and “fair” view and are prepared in accordance with the applicable accounting standards. Internal audit is self-governing appraisal activity, which involved various operations of a company and verifying adequacy and effectiveness of internal controls.
External audit and internal audit both involves assessing report, but focus of internal audit report is almost all operations of organization to ensure these are in line with company`s objective, economical and efficient. However, external auditor as opposed to internal auditor works in statutory capacity and generates opinion about component of financial statement. Although, result shown in financial statements are driven from company’s operations but still external auditor works on each operations data by setting “materiality “level.More an item/figure is material for user, more testing and verification will it require.
Work of External auditor is subject to ethical,auditing and accounting regulations .The international regulatory body, IFAC, international Federation of Accountants has imposed certain ethical duties on external auditors:
Due care and Competence
Fair and respectable dealing with everybody come across during or after any audit assignment.High moral values are desired from an auditor during his/her course of work.
Some general auditing regulations are: