“How do internal and external auditors differ and how should they relate?”
Although they remain independent of the activities they audit, internal auditors are integral to the organization by providing continuous monitoring and assessment of all activities. External auditors, however, are entirely independent of the organization. They strictly assess an annual opinion on its financial statements. Organizations should coordinate the work of the internal and external auditors for optimal effectiveness and efficiency.
The work of internal auditors assists the organization in accomplishing its objectives by improving operations, risk management, internal controls, and governance processes. Concerned with all aspects of the organization-both financial and non-financial-internal auditors focus on future events as a result of their continuous review and evaluation of controls and processes. They also engage in preventive measures to fend off fraud and squelch scandals.
The primary mission of external auditors is to provide an independent opinion on the organization’s financial statements. Their historical approach assists in the organization’s assessment on whether or not the statements conform with generally accepted accounting principles.
Internal and external auditors should meet periodically to discuss common interests, areas of expertise, and perspectives on each other’s work and methods. They should also converse about audit coverage and scheduling to minimize redundancies, provide access to reports, programs and working papers, and jointly assess areas of risk. In fulfilling its oversight responsibilities for assurance, the board should require coordination of internal and external audit work to promote efficiency of the overall audit process.