How do internal audits differ from external audits?

Internal audits are primarily conducted by an organization's own staff, which allows them to assess their processes, compliance with internal policies, and effectiveness of risk management practices specific to the organization. This internal perspective enables the organization to identify areas of improvement and ensure that it adheres to its standards and objectives.

On the other hand, external audits are performed by third-party entities. These independent auditors evaluate the organization's financial statements, compliance with laws and regulations, and overall operational effectiveness from an objective standpoint. The involvement of external auditors provides a level of credibility and assurance to stakeholders, such as investors, customers, and regulatory bodies, that the organization's reporting is accurate and transparent.

By focusing on these roles, internal audits are more about continuous improvement and risk management within the organization, while external audits provide a form of scrutiny and validation from outside parties. This distinction is essential for understanding the different purposes and outcomes associated with each type of audit.