Differences between Internal Audit & External Audit

 

                               

                                Differences between

Aspect	Internal Audit	External Audit
Independence	Within organisation	Independent of Railways
Authority	Accounts Dept (PFA)	C&AG of India
Purpose	Compliance, control, efficiency	Legality, propriety, true & fair accounts
Scope	Concurrent, risk evaluation	Annual, statutory audit
Frequency	Continuous	Annual / periodical
Reporting To	Railway management	Parliament (through PAC)
Cost	Railway administrative expenditure Major Head 3002 - erstwhile Demand Number 03	Charged to Railway revenues Major Head 3001 - erstwhile Demand Number 02)

Internal Audit and Differences between Internal Check & Internal Audit

 Internal Audit 

And

 Differences between Internal Check & Internal Audit

Internal Audit:

Objectives:

• A Service to Management

• Provides assurance of an effective system of Internal Control that is not excessive.

• Ensure reliability and integrity of accounting and financial system & Operating Performance. 

• Ensure compliance with policies, plans, procedures, laws & regulations. 

• Ensure adequacy of arrangements for safeguarding the Assets.

• Facilitate prevention & detection of frauds. 

• Highlight the deficiencies (in the system, control, practices etc), 

• Efficiency & scope for economy in the utilisation of resources. 

Internal Audit Cell

• Functioning at Hqrs as well as Divisions. 

• Normally consists of one SSO, One TIA and one ISA under the control of Dy.CAO/G or Sr.DFM

•  Theme Based Audit is one of the Important function of the Internal Audit Cell

Differences between Internal Check & Internal Audit

SN	Internal Check	Internal Audit
1	Check of Day to Day transactions.  Work of One person is proved independendently or complementary to the work of another	Selected few topics - Checking in all aspects to ensure effectiveness of System, Compliance of policies & Prevention of frauds.
2	Checking by the Same section staff	Review activity carried out by Persons totally independent of Internal check personnel
3	Frequency  Daily/Regular Basis	Frequency - Periodic Basis
4	Built in device	Not built in device
5	Object: Early detection of fraud or prevention of frauds at the time of passing Bills	Suggests System improvement & ensure compliance, service to the Management, Compliance of policies
6	Checking every aspect	Checking few selected topics thoroughly(in all aspects) in order to achieve the object of System improvement/Service to Management
7	Object: Narrow	Object: Broad
8	Basis: Transaction/Bill/Event	Basis: System as a whole