Difference Between Internal And External Audit In Corporate Governance

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Question 1 Corporate governance defined as the process whereby managers or directors of a company are being controlled and monitored during the decision making process, monitoring and accountability. Existence of corporate governance is to resolves problems which rises from the principal and agent relationship. This happen whereby the mangers are more interested in the private interest than maximise the value of the investors’ shares. Therefore, a question is asked whereby either internal or external audit contributes more in a company’s framework of corporate governance, and yet the answer is still unpredictable. Hence, research is carried out to investigate the contribution of each of the internal and external contribution accordingly. …show more content…

As internal auditors are integral parts of corporate governance, therefore their contribution is to ensuring the reliability and integrity for the financial statements of the company. Internal audit are also contribute in such as way where they are evaluating the operational performance of a company, ensuring the effectiveness of internal control system. Besides, internal auditors also review the financial reports to ensure its integrity and transparency so that useful and reliable information are available for the decision making. Moreover, this is to ensure a responsible governance is carried out and prevent fraud from happening. If so happen fraud occurs, internal auditors are there to carry their job to detect the fraud and correct the fraud especially in the financial statements which may threaten the reliability and quality of reports (Mihaela Ungureanu, …show more content…

In this intense scrutiny of business ethics and motives, the important aspects that a company need from an internal audit is a passive audit function from them; yet no one company will accept an internal auditor group that only response to the elimination process when the risk attempt. This is because, when there is no risks involved in the business venture, this also means closes off any rewards that can gain from the risks. Therefore, internal auditing requires good judgement, insight, business knowledge and effective

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