Although there are a lot of similarities between the internal and external auditor, the internal auditor is part of the management of the company and does not therefore meet the prime criteria required of an external auditor.

Areas of common interests include:

a. Both are interested in the effective operation of the internal control system.

b. Both are interested in ensuring that the company has maintained complete and accurate accounting records.

C. Both are interested in ensuring that the assets of the company are safeguarded.


  • Scope of work: For an internal auditor the scope is determined by management whereas for an external auditor it is laid down by statutes and professional requirements of the institute (ICPAK).
  • Approach: An internal auditor may have many aims in his work including an appraisal of the efficiency of the internal control system and management information system. The external auditor is primarily concerned with the truth and fairness of accounts.
  • Responsibility: The internal auditor is answerable only to management. The external auditor is responsible to shareholder and the public at large.

Placing reliance on the work of the internal auditor by the external auditor.

Before deciding whether to rely on the work of the internal audit function with the intention of reducing audit procedures the external auditor should evaluate the internal audit function to determine the scope of the function, its independence and hence how much reliance that can be placed on the work that it carries out. The external auditor can only rely on the work of the internal auditor as one element of the internal control system.