This video discusses the difference between an internal auditor and an external auditor. The external auditor is not an employee of the company and is engaged to provide an opinion as to whether the company’s financial statements are free of material misstatements. For audits of publicly-traded companies, the external auditor must also report whether the company’s internal controls have any material weaknesses.
Internal auditors, on the other hands, may be employees of the firm being audited and have a role that closely resembles that of a consultant. Internal auditors assess the company’s risk, identify areas of improvement, and advise management. Internal auditors also examine the company’s internal controls by ensuring that the company is complying with all laws and regulations, that operations are efficient and cost effective, that the financial reporting process is working as it should, and that fraud is not being committed by the company’s employees.