What are the similarities and differences between external auditors and internal auditors?

Answer 1

The characteristic that conceptually distinguishes external auditors from internal auditors is their respective constituencies: while external auditors represent outsiders, internal auditors represent the interests of the organization. Nevertheless, in this capacity, internal auditors often cooperate with and assist external auditors in performing aspects of financial audits. This cooperation is done to achieve audit efficiency and reduce audit fees. For example, a team of internal auditors can perform tests of computer controls under the supervision of a single external auditor. The independence and competence of the internal audit staff determine the extent to which external auditors may cooperate with and rely on work performed by internal auditors. External auditors can rely in part on evidence gathered by internal audit departments that are organizationally independent and report to the board of directors' audit committee. A truly independent internal audit staff adds value to the external audit process.