What are the Types of Internal or External Administrative Audit in a Company?

Surely you already know what is the difference and relationship between ‘internal audit’ and ‘external’ but you must bear in mind that each of them has its own types. Therefore today we will talk about what are the types of internal or external administrative audit in a company.

Keeping a control of companies is complicated, an entrepreneur must know the advantages and disadvantages of inventory control systems and also everything related to audits. Read on to learn about the types of internal and external audit.

Types of internal or external administrative audit in a company

In general terms, we can determine that there are two types of audit, the internal audits and external audits. In any case, there are variants in relation to this, which is why both internal and external audits have variations that must be analyzed.

What is an internal audit?

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Internal audit is a process carried out by those in charge of a company with the purpose of evaluating it. Seeking to verify if the procedures carried out in a company are the most appropriate.

person doing external internal audit

This type of audit seeks to find flaws in the company’s action mechanisms. In fact, it could be said that they are carried out precisely to seek operational improvements. It is important to highlight that an internal audit can be carried out both by an employee / internal auditor, and by an external auditor hired by the company.

Administrative audit

In this type of audit, managers seek to assess that all administrative procedures are being carried out properly. The purpose of this is to evaluate that the implemented methods are carried out correctly. In addition, this type of audit looks for flaws with the purpose of comply with everything required by law.

It is carried out by entrepreneurs, but does not focus specifically on operational issues. Instead, the books, other accounting and administrative aspects are evaluated.

Operational audit

Operational audits are very interesting, they look precisely find all those faults involved in the performance of the company. They are applied by those who know the main purposes of planning in an organization. This type of audit seeks to analyze the existing problems in a company in order to eradicate them.

They can be carried out both by people belonging to the company and by external auditors. It is different from conventional internal audits, since it mainly focuses on all the failures that directly intervene in the performance of the company. Here we seek to eradicate the problems so that the profits and the general operability of the company.

What is an external audit?

External audits are those made by entities outside the company, they are usually tied to legality. In other words, they are carried out by institutions governmental or similar characteristics.

types of internal external audits

This type of audit seeks to observe the performance of a company and if it complies with all that is required by law. It is certainly recommended that a company carry out internal audits, with the purpose of knowing the standards of the external auditors.

These external audits are usually carried out by legal entities. The objective of these is to verify that all operations comply with the required standards for the item or business evaluated.

The auditors in this type of procedure are completely outside the company. In other words, they are external auditors, independent of the company to be evaluated. They differ from government audits, since many times this audit is carried out after a lawsuit or similar circumstance.

Government audits

Government audits are similar to statutory audits, in any case, in this type of audit, financial aspects are evaluated. The objective of government audits is to observe that the financial movements are adequate.

Here they will be evaluated paying taxes and diverse movements, the purpose is to observe if there are inconsistencies that could be incurring in illegality. As you can see, it is essential to know the importance of balance sheets in opening a business, in order to comply with what is required by law, without failing audits.

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