| Nature of Difference |
Internal Audit |
Statutory Audit |
| 1. appointment |
Internal auditor is appointed by the management. |
The external auditor is appointed by the shareholder except in certain cases when he is appointed by the director or government. |
| 2. optional or obligatory |
Appointment of internal auditor is optional. |
Appointment of statutory auditor is obligatory. |
| 3. qualification |
No special qualification is required for the appointment of internal auditor.
|
Statutory auditor must possess the qualification as required by the ‘company ordinance 1984.1 |
| 4. status
|
Internal auditor is an employee of the company. |
Statutory auditor is an independent person. |
| 5. conduct of audit |
An internal audit is a kind of continuous audit. |
Statutory audit is generally conducted after the preparation of final account. |
| 6. scope of work |
Scope of the work of the internal auditor is determined by the management. |
The Scope of work and responsibilities are fixed by the laws. |
| 7. objective |
An internal auditor has the primary duty to find out whether any error or frauds has been committed. |
Statutory auditor has to report whether the balance sheet and the profit and loss account of a company have been drawn up in conformity with law and whether they show true and fair view of the state of affairs of the company. |
| 8. determination of duty |
The scope and duties of an internal auditor can be reduced. |
The scope and duties of statutory auditor cannot reduce. |
| 9. suggestion to management |
Internal auditor has to make suggestion to the management as to how to run the business efficiently and avoid wastage. |
Statutory auditor need not to do so unless he is specifically asked. |
| 10. extent of checking |
Internal auditor has to check all the transactions. |
Statutory auditor may apply test checking. |
| 11. report |
Internal auditor has not to submit any report to the shareholder. |
Statutory auditor has to submit a report on audited accounts to shareholders. |
| 12. application of chartered accountant act |
Internal auditor cannot be prosecuted for professional misconduct unless he is a Chartered Accountant. |
A statutory auditor can be prosecuted for any negligence in the performance of his duty. |
| 13. removal |
Internal auditor can be removed by the management or director. |
Statutory auditor can be removed by the shareholders. |
| 14. satisfaction |
Internal audit is carried out for the satisfaction of the management of the concern. |
Statutory audit is conducted for the satisfaction of the shareholders. |
| 15. remuneration |
Remuneration of the internal auditor is fixed by the management. |
Remuneration of the statutory auditor is fixed by the shareholders. |
| 16. attendance at meeting |
Internal auditor has no right to attend the meeting. |
Statutory auditor has a right to attend the meeting. |
| 17. activities |
The activities of the internal auditor are continuous. |
The activities of statutory auditor are periodic, usual for a year. |
| 18. watch-dog |
The internal auditor act as a watch dog for the management. |
Statutory auditor act as a watch dog for the shareholders. |
