DIFFERENCE BETWEEN INTERNAL CHECK

AND INTERNALAUDIT
Themain diference between these two terms are as follows :
Basis of Diference Internal Check Internal Audit
1. Meaning Lnternal check is the organisation of|Internal audit is continuou8 audit .
staff for checking the work of one by theaccounts by the employees of k
other. business Concern.
2. Object Internalcheck aims at preventing errors Internal audit aims to detect errors ar
and frauds. frauds which have alrealy hee
committed.
3. Nature Internal check consists of aset of rules One the other hand, internal audis
of procedure which are a part of involves thorough examination of the
accounting system. Under internal accounting transactions and system f
check, recording and checking of entries accounting. In internal audit only
is simultaneously done. checking is done.
4. Scope The scope of internal check is limited. On the other hand, the scope of internal
Its main object is to detect errors and audit is comparatively broad. Its main
frauds alongwith to make the object is to prevent errors and frauds.
management effective.
5. Appointment Noone member is employed in the case |In internal audit, the process of auditing
of internal check as duties are so is carried by special staff appointed for
assigned that these involve cross this purpose.
checking;
6. Procedure In Internal check entries are passed in On the other hand, in internal audit, the
such a way that the work of one clerk is work of a clerk is checked automatically
checked by the other at the time of the by another clerk after the former has
making of the entries. finished the work.
7. Detection of While in the case of internal check any On the other hand, in internal audit, any
Frauds and error or fraud is detected at the time of error or fraud is detected at the end of
Errors internal checking. audit work.
8. Period The work of internal check is a On the other hand, internal auit begins
continuous process. It is as like where accounting works come to an end.
as continuous audit. Internal check is
done by employees of the business,
where-as, continuous audit is done by
professional auditors.
9. Suggestions Under internal check system, no In case of internal audit, suggestions are
suggestion is provided to the also provided to the management of the
management, whereas, organisation.
10. Work by The work internal check is performed On the other hand, in case of internal
Chartered by the employees of the organisation. audit there nay or may not be a
Accountant: Chartered Accountant is not involved in Chartered Accountant involved.
this work.
4860
Internal Control, Check and Audit
113
Basisof Difference
Internal Audit External Audit
1. Objectives Internal auditors are the tools ofl External auditors on the other hand, are
Management who help in taking engaged to give an unbiased and
management who help in taking impartial report to the shareholders
managerial decisions. The internal and outsiders on financial position of
auditing is more managerial than the the company.
accounting.
2. Appointment Internal auditor is appointed by the On the other hand, external auditor is
management. His appointment is not either appointed by the shareholders or
compulsory. by the Government. Hisappointment is
compulsory by law.
3. Qualification Professional qualifications are not|But an external auditor must have
required for internal auditor professional qualifications as laid down
in Companies Act. 2013.
4. Procedure The internal auditor carries on his work On the other hand, external auditor
continuously. He performns detailed carries on his work periodically, near the
checking and examination of all the financial year, not devoting his time on
account books and other related records the detailed checking, he adheres to the
and documents. last checking.
5. Status of the Internal auditor is an employee of the External auditor, on the other hand, is
Auditor enterprise, appointed for the purpose of an independent auditor. He is
conducting internal audit. appointed either by shareholders or by
the management. He has independent
status.
6. Scope The scope of internal audit is|On the other hand, the scope of external
determined by the management. It may audit is determined by the law
be enlarged or curtaled at any time. applicable to the enterprise under audit.
It cannot be curtailed in any manner.
Under it, the scope is determined by the
agreemnent between the client and the
auditor.
7. Approach The internal auditor's approach is On the other hand, external auditor's
gOverned by his duty to ensure that the approach is determined by the duties
accounting system is adequate and and liabilities cast on him by the
effective so that the information relevent law in case of statutory audit,
presented to the management round the | by the agreement under which he has
vearis true and based on material facts. been appointed in case of non-statutory
audit. In either case, it is his duty to
give opinion on the truth and fairness of
the assertions under his review.
8. Responsibility The internal auditor is primarily On the other hand, the external auditor's
responsible to the management. responsibility is concerned with the
owners who have appointed him. In
certaiu cases, it may extend to the
interested third parties who have acted
on the faith of his opinion upon the
financial statements examined by him.
9. Suggestions for External auditor is not responsible to On the other hand, internal auditor to
Improvement provide suggestion regarding the books give suggestions to his employer.
of accounts to his client.
external
the other hand, the work offor
10. Importance of The work performed by internal auditor On
auditor is important
all
Work is important for the employer only.
(such as; employer,
concernedparties
outsiders and government too).
114 SBPD Publishing House
DIFFERENCE BETWEEN INTERNAL CONTROL, INTERNAL CHECK AN
INTERNAL AUDIT andr
cashi

Basis of Difference Internal Control Internal Check Internal Audit

1. Meaning All measures to control Internal check is a system Internal audit is thes: and c
every aspect of business in under which works are which the books of RECI
a planned way, is called divided insuch a way that accounts of the
internal control. the work of one employeeorganisation are audited
is checked by the work of| by the internal auditor
another employee. (staff).
It has widest scope. It|It has narrow scope. It is| 1t has narrow scope in
2. Scope includes all types of the part of internal comparision to internal
controlsi.e., economic, non-control. It includes only control and wider scopein
economic and admin-economic control. comparision to internal
stration controls. check. Under it audit
report is prepared when
the examination of books
of accounts is over.

3.Objects |It's main object is to | It's main object is to It's main object is to detect
control various assets, prevent errors and frauds errors and frauds. It helps
and so that books and accountsin finding out the
|liabilities of the
transactions etc. of the organisation can truthfulness
show true and fair view of]transaction in an

the statements. organisation. (

4. Period |It can be applied any time It's time is fixed in It takes place when the
and at any activity. It's advance. It goes side by work of accounting is over.
time is not predetermined. side with the work of (
accounting.
There are various methods Internal control can beAudit has als0 various
5. Techniques e.g
or techniques of internal applied only by sub-| kinds or techniques
audit,
control e.g., cost control, division of work and statutory audit, final
accounting control, | therefore, it is termed asGovernment
audit, management audit,
administrative control, division of labour. cost audit, etc. (
etc.
6. Cost Since it has wider scope, it Since itis performed by theSince itChartered
isconductedAccoun
either
possesses high cost or it isemployee of the by any
uneconomical. organisation, it 1s|tant out or by an efficient
economical for any or honest employeeit of the
is
organisation, in organisation,
comparision to internal |comparatively unecono
control system. mical to internal check
system but economical
to
internal control. CAS
FORMS OF INTERNAL CHECK SYSTEM
nd frauds in