Difference between Internal Audit and Internal Control

In every area of life, from the classroom to the workplace to the economy to one's own physical well-being, the ability to exert control is crucial. Inadequate or nonexistent control mechanisms will prevent any corporation from reaching its full potential. Monitoring management is just as important as monitoring employees, finances, and equipment. For this reason, many organizations turn to internal audits and internal control systems. Even though they are often used interchangeably, these two terms are not identical. For more information on these differences, please read this article.

What is Internal Audit?

This is a consulting activity that has been formed on purpose by management in order to enhance the performance of the business, and it is also a kind of assurance that is unbiased, impartial, and objective. It's a rigorous and regulated approach to better risk management, administration, and oversight. The internal auditor oversees a dedicated audit team that reports its findings to an oversight board.

The following scenarios call for an internal audit −

  • Providing expert testimony concerning the accuracy and completeness of the books of account

  • Achieving compliance with all accounting standards

  • The process of detecting and stopping fraudulent behavior

  • Verifying the Incurrence of Legal Obligations for Business Purposes

  • Locating operational holes and suggesting fixes.

  • Providing input towards the creation of periodic action plans

For internal audits to be successful, the following steps must be taken −

  • Procedures for Planning Audits

  • Inspections are made

  • Improvement actions

What is Internal Control?

A compliance assurance process is a method developed by a company's stakeholders to ensure the reliability of the company's reporting, operations, and adherence to regulations (CAP). The organizational chart, the strategic plan, the job structure, the job descriptions, the evaluation systems, the employee handbook, and the reporting systems are all included.

Aims of internal control include −

  • Optimizing operational efficiency and output

  • Protection for priceless possessions

  • Compliance with the existing legal framework

  • Methods for Identifying and Avoiding Fraud

Internal control consists of the following five parts −

  • Monitoring

  • Processes of Regulation

  • Evaluation of Danger

  • Control environment

  • Communication and information sharing

The ways in which these elements are implemented may vary from firm to company despite their inherent interdependence. However, internal controls need to be assessed often so that issues may be detected and addressed. For this purpose, you can use anything from a simple checklist to elaborate flowcharts, questionnaires, and even recorded narratives.

Differences − Internal Audit and Internal Control

The following table shows how an Internal Audit is different from Internal Control −

Characteristics Internal Audit Internal Control


The phrase "internal audit" is used to describe an assurance and consulting activity that is strategic in nature and was created by the management of a company to improve the operation of the business.

Internal control is a framework established by a company's management and employees to ensure reliable reporting, efficient operations, and regulatory compliance.


The goals of an internal audit include the following −

  • to provide a report on the authenticity and accuracy of accounting records,

  • to ensure that accounting standards are complied with, to detect and prevent fraud,

  • to verify liabilities incurred by the business,

  • to identify gaps in the operations,

  • to recommend solutions, and to assist in the development of periodic action plans.

The objectives of Internal Control include the following −

  • to improve operations' efficacy and effectiveness,

  • to safeguard assets,

  • to guarantee that existing laws are followed,

  • to detect and prevent fraud, and

  • to ensure that established laws are followed.


Internal auditing is a term we use to refer to the work we do within the company.

It's possible to view internal control as a structured process.

Work verification

One person's work is reviewed and graded by another in the course of an internal audit.

Internal control involves scrutinizing and rating every facet of an activity.


Conducting an internal audit is a proactive step.

Internal auditing can be compared to the work of a private investigator.


A company's internal control system is the collective effort of those with a vested interest in the company's financial statements, operational procedures, and regulatory compliance. The term "internal audit" is commonly used to describe a consulting activity and quality assurance procedure that has been strategically developed by management to enhance the effectiveness of an organization's operations.

In spite of their differences, both strategies aim to reduce a company's vulnerability to risk while guaranteeing the achievement of the company's goals.

Updated on: 15-Dec-2022

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