There are many different things that differentiate internal and external auditors. Here are a few that I found:
· Internal auditors are hired by the company to work within the company and external auditors are hired from an outside firm by a shareholder vote to work with the company.
· Internal auditors do not have to be CPAs, but a CPA must conduct the external audit team.
· External audits are conducted once a year or only for one year, while internal audits are continuous throughout the year.
· External auditors are responsible to the company’s shareholders, while the internal auditors are responsible to their management.
· External auditors much use specific reporting formats that are used by the stakeholders, but internal auditors can use any type of reporting format that is used by their management.1
· External auditors must be independent of the company they are auditing, while internal auditors cannot be independent since they work for the company.
· During audits, external auditors have “free reign to examine and assess every aspect of the system” while internal auditors are told by management to focus on certain areas.2
· Internal auditors must follow up with the audits depending on the case, but external auditors do not have to follow up with their clients.
· External audits are regulated by many different laws and rules, while internal audits are not regulated, instead, they add value to the company if done correctly.3