Internal Audit: Approaches to Definition, Differences from External Audit

The article is aimed at studying the nature of internal audit, analyzing the proposed by scholars definitions of the term of «internal audit» and comparing internal and external audits according to the main signs. After studying the various approaches to the definition of «internal audit» there comes an opportunity to give an authors’ interpretation: internal audit is a modern form of independent financial and economic control, which provides a comprehensive assessment of efficiency of the management system, the performance results of economic entity and involves the formation of an opinion on the results of its activities both in general and in terms of the structural units, as well as provides the necessary information to all the management services of the enterprise. When comparing the characteristics of internal and external audits, a conclusion is drawn that the internal audit is designed to solve functional tasks of the management of the organization and to make managerial decisions for an efficient operation of the enterprise. External audits are carried out in accordance with applicable law and are designed to provide reliable information to external users. The determining aspect is not always a clear understanding of the role of internal audit in the management process, which, in turn, leads to the fact that internal audit is implemented only to identify certain shortcomings, cases of falsification, etc. That is why internal audit should become a source of information, help managers and owners to objectively estimate the real situation of the organization and make the right managerial decisions.