Although the appearance is seemingly similar, as the two functions share a common word, they are in reality quite different. Larger organizations tend to implement both internal and external audit to ensure that their records, effectiveness of the companys internal controls, regulatory compliance and financial reporting are closely examined on a continuous basis.

Smaller entities may decide not to use an internal audit function, given that it might not be cost effective for them to do so, however in order to understand the difference between the two functions we need to ask ourselves a few fundamental questions.

Question 11

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Mostly External Auditor will perform :

a.

Detailed checking

b.

All options

c.

Selected checking

d.

Test checking

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Question 12

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Scope of work of External Auditor is :

a.

Laid down by the laws.

b.

Laid down by the Audit committee.

c.

Laid down by the management.

d.

Laid down by the Finance Ministry.

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Question 13

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The objective of Internal Audit is :

a.

To serve the need of the management and to prevent errors, fraud and irregularities.

b.

Provide Assurance about whether the financial statements are presented fairly in all material respects and according to applicable financial reporting framework or not.

c.

To serve the need of the enviornmental authorities and to prevent enviornmental polltion activites by the organization.

d.

To serve the need of the government and to prevent errors, fraud and irregularities.

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Question 14

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Which of the below statements regarding the right of the auditor to attend for the shareholder meetings is not correct.

a.

External Auditor has a legal right to attend shareholders meeting and answer any queries made by the shareholders.

b.

Internal Auditor have the right to attend the shareholders meeting.

c.

External Auditor has a legal right to attend shareholders meeting.

d.

Internal Auditor doesnt have the right to attend the shareholders meeting.

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Question 15

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External auditors will examine and assess:

a.

Whether the annual budgets are prepared accordance with the accounting standards and rules

b.

Whether the strategic business plans are prepared accordance with the accounting standards and rules

c.

Whether the finanacial statements are prepared accordance with the accounting standards and rules

d.

Whether the management reports are prepared accordance with the accounting standards and rules