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express an opinion on the 
financial statements
. 
Reporting to
Internal audit reports to the 
board of
directors
, or others charged with 
governance, such as the audit committee. 
The external auditors report to the 
shareholders
, or members, of a company 
on the stewardship of the directors. 
Relating to
Internal audit's work relates to the 
operations of the organisation
. 
External audit's work relates to the 
financial statements
. They are concerned 
with the financial records that underlie 
these. 
Relationship 
with the 
company
Internal auditors are very often 
employees 
of the organisation
, although sometimes 
the internal audit function is outsourced. 
External auditors are 
independent of the
company and its management
. They are 
appointed by the shareholders. 
The table shows that, although some of the procedures that internal audit undertake are very similar to 
those undertaken by the external auditors, the whole 
basis
and 
reasoning
of their work is fundamentally 
different
.
The 
difference
in 
objectives
is particularly important. Every definition of internal audit suggests that it 
has a 
much wider scope
than external audit, which has the objective of considering whether the 
accounts give a true and fair view of the organisation's financial position. 
 EXAM FOCUS POINT 
You must be aware of the primary purpose of an external audit. It is important to understand the 
distinction between the role and duties of internal auditors and those of external auditors, or the 
attributes of both. 
BPP Tutor Toolkit Copy

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CHAPTER 9
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CONTROL, SECURITY AND AUDIT