Kingston & Knight Audit ensure that your internal audit requirements are met with our focused, inclusive, and diligent internal audit and assurance services. This page sets out the difference between internal audit and external audit services, how internal audits relate to the broader practice of auditing accounting, the internal audit process, and how our auditors Melbourne make your internal audit simple.
In the past, internal audits were usually conducted by staff employed within the entity itself. There is increasingly a trend toward outsourcing the independent audit function to an independent audit and assurance firm. This may be related to the fact that auditor independence is vital to the quality and usefulness of audit findings, in addition to the reduced resources burden associated with outsourcing of specialist services. Regardless of whether the internal audit is conducted by an internal or external auditor, the auditor must be independent of the processes or activities under audit. Unlike the third-party assurance function performed by financial audits and compliance audits, internal audit services aim to assist the entity directly by reporting findings to the audit committee and senior management.
The objective of an internal audit may vary according to the entity’s unique circumstances and requirements, but is generally forward-focused, such as the evaluation of risk-management and internal control processes that are vital for the entity to achieve its objectives. Internal audit services are also known for their focus on prevention and mitigation of fraud or other illicit activities within the entity under audit. Fraud prevention and the independent review of internal systems and processes are the most important ways that internal audit services enable an entity to improve the effectiveness and efficiency of internal processes and systems.
The term auditing accounting is used as a semantic compromise between the specialised services performed by auditors and those performed by accountants, despite both professionals using similar methodology and terminology. Auditing accounting differs from other accounting practices in the following key ways:
- Audit services do not forecast or predict future events. Audits cover a specific accounting period that has already passed, such as the previous financial year, without judging what might occur in the next accounting period. As a result, an audit is unable to provide assurance about whether an entity can continue operating in the future and is reliant on an assumption of going concern.
- Audit and assurance engagements are performed within a specific timeframe, agreed upon between the parties prior to commencement. Auditors are therefore not on-call like an accountant is and may only be present in their communication and cooperation with the entity for a short period.
Auditing accounting differs from regular accounting in that the auditor is appointed to examine specific documents, statements, or disclosures, and will not audit other information that falls outside the scope of a specific engagement. Also, auditing relies on selective testing, meaning that not every individual figure in a financial report or other document is checked. In short, audit services are very specific in their nature and quite narrow in their scope, unlike accounting services, which may be broad and comprehensive.
The audit committee does not conduct the audit, or prepare the materials subject to audit, they act as a link between independent auditors and the entity’s board, ownership, or other senior management figures. Listed companies and other large entities often appoint an audit committee to oversee their internal control and financial reporting obligations. Therefore, it is usually the audit committee who will communicate with an appointed auditor during the internal audit process, with the aim of preserving auditor independence and streamlining communication between the parties.
Regulations affecting corporate governance are also concerned with how and why audit committees are formed, with the aim of preserving independence from the board and enabling appointed auditors to operate without interference from management. As a result, the audit committee plays a vital role in the successful completion of any internal audit engagement.
Kingston & Knight Audit auditors Melbourne provide your organisation with internal audit services designed to promote effective, efficient governance and control. We provide audit and assurance services to public sector, corporate, and not-for-profit organisations, reflecting the expanding role of internal audit services in an era of rising governance and control standards.
Allow our auditors Melbourne to deliver an unbiased, independent assessment of the processes and systems that enable your entity to operate. This information can be utilised in the improvement and expansion of governance and control systems within your organisation, creating a raft of related benefits that simply cannot be ignored. In short, you can rely on a Kingston & Knight Audit internal audit to inform your entity about what it needs to know, when it needs to know it, and in language that is plain and accessible. Our focus is on your effectiveness, so by working together we can enhance your stability and capability moving forward.
To learn more about how internal audit services can improve the governance and control of your entity, contact Kingston & Knight Audit today for a free telephone consultation. Reach our auditors Melbourne on 1800 283 471, or email us via firstname.lastname@example.org, for more information on our internal audit services.