An internal check is a routine checking method that involves cross-checking every part of the job completed when it is conducted and recording the results. Internal audit is a more formalized version of an internal check. On the other hand, an internal audit examines every component of the job by independent personnel that has been expressly selected for the purpose.
Internal audit's goal is to provide independent and objective assurance that a company's risk management, governance, internal check, and internal control systems are working correctly. It's also worth noting that the efficiency of any system established in an organization is highly dependent on the personnel assigned to it.
| Basis | Internal Check | Internal Audit |
Meaning |
Internal Check is a system in which labor is divided, and responsibilities are assigned so that another automatically checks the work of one person. |
Internal audit is an internal auditor's continual critical evaluation of a company's financial and operational activities. |
Method |
One person's work is automatically double-checked by another. |
A separate panel examines the work done by the staff. |
Work Commencement |
The timer starts when a transaction is entered |
Once the transaction has been entered into the accounting system. |
Involved Evaluation of |
Accuracy in accounting and clerical work |
Management control effectiveness |
Performed by |
Existing employees. |
A special team of auditors. |
Cost |
Economical |
Expensive |
System's Thrust |
Errors and frauds are avoided. |
Errors and frauds are detected. |
Tool for |
Workflow management |
Inspection of the work |
Checking Period |
When the work is completed, checking is done at the same time. |
Following the completion of the work, the work is examined. |
Report |
A summary of day-to-day transactions serves as a supervisory report. |
They submit a report to the management. |
Key Differences Between Internal Check and Internal Audit
The following points will clarify the distinctions between internal audit and internal check:
1. An internal check is a company-wide procedure in which another employee independently examines one employee's work to minimize the chances of error or fraud. On the other hand, an internal audit is undertaken within the organization, as the name implies. It entails the concern's staff conducting a systematic critical assessment of the books of accounts.
2. The entire process is built logically in an internal check by dividing the job so that no single person has complete control over every aspect of the transaction. On the other hand, an internal audit examines and cross-verifies employees' work by a distinct group that has been explicitly established for the purpose.
3. When a transaction is entered, the internal check begins. Internal audit, on the other hand, begins when the transaction is documented in the books.
4. Internal audit is concerned with the efficacy and scope of management control, whereas internal check is concerned with accounting and clerical accuracy.
5. The internal audit is carried out by current personnel. The corporation, on the other hand, appoints a specific team of auditors for internal auditing.
6. There are no additional costs associated with an internal check because existing employees perform it. On the other hand, an internal audit is more expensive because the job is done by a dedicated team explicitly hired to conduct an audit.
7. Internal audit detects errors and frauds, whereas internal check prevents them from happening.
8. Internal controls are well-known for arranging (designing) work and allocating duties and tasks. An internal audit, on the other hand, entails a review of work.
9. Internal checks are carried out concurrently, that is, at the same time as the task is carried out, allowing for early detection of errors. An internal audit, on the other hand, occurs after the transactions have been recorded.
10. The summary of day-to-day transactions serves as a report to the supervisor in an internal check. In an internal audit, on the other hand, the auditor submits the audit report to management.