What Is the Objective Internal and External Audit?


Audit objectives vary based on the types of audit engagement and the audit scope. The internal audit might have a different objective from an external audit or statutory audit.

For example, the objective of an audit on financial statements basically is to assess the financial statements prepared by the audit’s client are true and fair or not.

The external auditor needs to ensure that the supporting documents they obtain are sufficient and appropriate enough to help them express their opinions. This is the main objective of statutory audit.

Internal audit, however, might have a different objective from the external audit. In general, the objective of the internal audit is to exercise audit activities independently and objectively to add value to the organization.

This objective might meet through the review in many different areas like operational audit, financial audit, compliant audit, as well as 3Es audit.

In this article, we will discuss the main objective of external audit and internal audit in detail. Here are they:

The objective of external audit:

The main objective of external auditors or financial audit is to let auditors be able to perform their audit on financial statements independence and objectively and let them issue opinions whether:

  • Financial Statements that prepare by managements are true and fair view in all material respects in all material respect, and
  • Whether those financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework.

And to meet this objective, external audits are required to strictly follow the guideline from IFAC and another related professional body. Sometimes, the external auditor also needs to follow the local professional body which the governments establish.

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Internal policies and internal manuals prepared by their own firm could also help ensure that all audit assignments are performed at the required quality.

In most cases, the form is required to have them and, more importunately, follow them. The audit standard related to audit on financial statements is ISA 200. You might want to check here, ISA 200.

The objective of the audit on financial statements can be found in the audit engagement letter. This letter plays as a contract. It contains much important information, including audit objective, the scope of the audit, timing, audit fee, auditor right and obligation, management right and responsibility, etc.

It is good to note that the external audit mentioned above refers to the audit professional audit form authorized by the authority and run by CPA members. Big four audit firms are the best example of an external audit.

The objective of the internal audit:

The best answer to the question about the objective of internal audit is why this department exists in the entity?

In general, there are two main reasons why it exists. First, it is required by law or regulation where the entity is operating for some entities. Second, it is part of the risks entity risks managements.

Setting up the internal audit department takes some time to meet the requirement of local law. For example, most listed companies must set up an internal audit department to review and assess internal control, operation, and internal control over financial reporting.

This internal audit must be independent, and people who manage this department must be qualified. In some countries, the recruitment of the head of the internal audit department or the chief of internal audit needs to get some approval from certain local authorities or bodies to ensure that this department’s quality meets the requirement.

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Some internal audit departments are sometimes part of the board of directors as the result of risks management. This is not required by law.

In this case, the objective and scope of the internal audit department are set by the board of directors or those in charge of the government. This department is normally under the control of the audit committee. In most cases, the internal audit objectives are determined and defined in The Internal Audit Charter.

In summary, the main objective of internal is to help the organization assess and manage risks through its independence and objectivity with highly disciplined and systematic work.


So, the audit objectives are different based on the types of audit engagements and the scope of the audit. The objective of audit on financial statements is to let independence express their opinion on the financial statements based on their independence and professional examination. Normally, there are four types of audit opinions that auditors will express.

The internal audit objective is to act independently and objectively to add value to the company by introducing the high discipline approach to the organization.

To ensure that the internal auditor could meet this objective, the internal auditor needs to ensure high discipline needs to be introduced. In case there is an impairment on this, the audit committee needs to review the internal audit department again.