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How does Internal and External Auditing Benefit you

Find out the benefits of different types of auditing.

By Deepika SharmaPublished 4 years ago 3 min read
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Auditing

Those of you who run a successful organisation would agree with us on the hectic level of patience you need to prove every day. You need to go through your accounts, recheck them, document them, and later revise them regularly. Well, is an internal audit and external audit important? Of course, it is vital for the smooth operations of your company.

Audits are important

You will want to keep your company's books flawless, and for that to happen, audits are inevitable. But doing all those auditions yourself can create an uncertain environment for you to act on. For instance, the time that you could have used for taking crucial business decisions that could have skyrocketed your business, you are now spending on auditing your accounts. Even if you have dedicated employees who carry out the audits every time, it simply isn't giving you enough results in terms of productivity.

You could have used your available workforce to produce something more functional, which in turn will help your business to flourish. It is the main reason why most organisations these days are opting for internal audit services that are being provided by numerous promising startups. Before we move into the discussion of why internal and external audits are beneficial, let's figure out the original purpose of a review.

The purpose of audits

An audit's purpose is to examine any given organization's financial statements independently. Now, whenever a company goes for an inspection, the result is that the value and credibility of the company's financial statements increase significantly. It brings transparency to your business institution's image. As a result of which, you will find new investors who will show more confidence in your finances. More interestingly, audits consequently reduces the cost of your capital.

Different types of audits

The different types of audits, as you already know, are internal audits and external audits.

Internal Audits

Internal auditors, as the name makes sense, are employed by the very company that is auditing the financial statements. The report generated as a result of the internal audit is directly handed over to the board of directors and the management. In this regard, it's important to note that the company does not employ the consultant auditors, and they use the auditing standards set by the very company that they are auditing.

No separate sets of standards are implemented in the case of internal audits. It can be beneficial for the company in concern. The advantage is that irrespective of the size of the accounts, the management has total control over it, and they can bring any change to it.

External Audits

Speaking of external auditors or the audits carried out by people whom you hire from an outside party, can be extremely helpful when it comes to removing any bias while reviewing a company's financial statements. Financial audits aim to identify the presence of any material misstatements within the financials. An external auditor's clean opinion enhances the trustworthiness of your organisational financial statements. With external audits, you can, therefore, gain the confidence of your stakeholders, and it also helps the investors to make more informed decisions.

External auditors generally follow a separate set of standards as compared to that of the company that has hired them. The chief benefit of external audits is that the resulting auditor's opinions are usually candid and honest.

Now that you understand the two different types of audits and their benefits at a more microscopic level, you can now take a more informed decision. When you hire any auditors, whether for internal audit services or external audits, make sure that you rely on their skills. Consult beforehand and choose only the best you can!

business
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About the Creator

Deepika Sharma

I am Deepika Sharma, a professional writer & blogger. I have an experience of more than three years. I always look for new things in writing and content curation and also worked for many websites.

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